2017 (12) TMI 633

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....tated to be a substantial question of law:- "Whether the Hon'ble ITAT has erred in law in deleting the penalty levied by the Assessing Officer under section 274 read with section 271(1)(c) of the Income Tax Act?" 2. The assessment year is 2009-10. The assessee, a cooperative bank, claimed deduction of Rs. 77,92,437/- at the rate of 10% being statutory allowance for bad and doubtful debts under section 36(1)(viia) of the Act. The said 10% amount arose from aggregate average of advances made by the assessee's rural branches. The Assessing Officer framed a regular assessment on 24.11.2011 disallowing such deduction on the ground that the assessee had not made a provision for bad and doubtful debts under the scheme of statutory allowances. ....

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.... and correctly disclosed in the assessment proceedings and in fact, the disallowance made by the Assessing Officer was based on particulars furnished by the assessee which fact was clearly evident from the assessment order and that this was not a case where the Assessing Officer had discovered any material particulars. It was submitted that this was a case where the assessee had claimed a deduction based on its own understanding of the relevant provisions of the statute, which was not found to be statutorily available by the income tax authorities and hence, was disallowed. Therefore, this was just a case of unsustainable claim in law and not of inaccurate particulars. The Commissioner (Appeals), while setting aside the penalty observed tha....

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.... the disallowance cannot be held as an instance of furnishing inaccurate particulars of income. 8. Thus, from the facts as emerging on record, it is evident that the assessee, after furnishing all necessary particulars, had made a claim for deduction under section 36(1)(viia) of the Act in relation to bad and doubtful debts at the rate of 10% of the average advances made by the assessee's rural branches. The Assessing Officer did not allow the claim and such disallowance was confirmed by the Commissioner (Appeals). In Commissioner of Income-tax v. Reliance Petroproducts (P) Ltd. (supra) the Supreme Court held thus: "20. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, whic....