TaxTMI 
TaxTMI 
2020 (1) TMI 817
X X X X Extracts X X X X
X X X X Extracts X X X X
....ans advanced by it should have been declared by the assessee in its return of income. When questioned about the same, the assessee submitted that it is registered under Karnataka Co-operative Society's Act and is also falling under Regulatory control of Department of Cooperation, Govt. of Karnataka, NABARD and RBI. It was submitted that, as per provisions of Karnataka Cooperative Society's Act and Rules, the assessee is bound to account for interest income, only on its realization. However, before the AO, the assessee furnished details of "interest accrued but not accounted for" during the year under consideration, which amounted to Rs. 209.81 lakhs. The AO noticed that the Bangalore Bench of ITAT, vide its order dated 14/9/2012 passed in the assessee's own case, had directed that the income of the assessee has to be accounted on mercantile basis as mandated by provisions of sec. 145 of the Act. Accordingly, the AO assessed the above said "interest accrued but not received" by the assessee amounting to Rs. 209.91 lakhs in the hands of the assessee. The assessee also accepted the said addition by not challenging the same before appellate authorities. 3. The AO initiated penalty p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uction under Section 80P of Income Tax Act, 1961, we have been offering the difference between the interest earned on accrual basis and interest accounted on cash basis to tax during the course of assessment. 11. During the current assessment also we have computed and voluntarily disclosed the interest accrued and not received on advances outstanding as on 31/03/2011. 12. Our software is designed to account only the interest earned on cash basis. Hence the computation of interest on accrual basis has to be done manually every year There are a large number of borrower accounts for which interest has to be calculated separately. This work is done at the head office and figures will be available very late. Hence we are unable to offer the said income to tax at the time of filing the returns. Hence the same is offered to tax voluntarily during the assessment. 13. The interest receivable on the loans outstanding as on 31/03/2011, for the period from 01/04/2010 to 31/03/2011 which is Rs. 6,81,36,749/- and in respect of earlier years is Rs. 6,20,05,890/- aggregating to Ps. 13,01,42,639/-. In the Year AY 2010-11 interest outstanding of Rs. 10,91,61,171/- had alre....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Vs. DCIT (ITA No.429/Bang/2011) dated 12/10/2012 and restored the matter to the file of the AO with certain directions. He submitted that the coordinate bench has considered the decision rendered by Hon'ble Supreme Court in the case of UCO Bank Vs. CIT (237 ITR 889) in this regard, wherein it was held that the interest due on loans which were doubtful of recovery need not be recognized as income. Accordingly, the ld AR submitted that the impugned penalty should be deleted. 6. On the contrary the ld DR submitted that the assessee has consciously not declared interest accrued on loans but not received by it in its return of income. When confronted by AO only, the assessee has declared the interest income so not declared by it in the return of income. He submitted that the assessee has accepted the addition made by the AO by not challenging the same in appellate proceedings. All these aspects prove that the assessee has furnished inaccurate particulars of income. He further submitted that the AO has initiated penalty proceedings for furnishing of inaccurate particulars income and also levied penalty on the very same limb. Accordingly, he submitted that the ld CIT(A) was justif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A 2011-12 and A 2012- 13. As may be seen from the above table, the accrued interest not received of Rs. 2,09,81,4681- was added to the income during AY 2011-12 to give effect to Section 145 of the IT Act, 1961. Whereas during AY 2012-13 the interest received was more than the interest accrued and hence, the adjustment u/s 145 leads to deduction from the returned income amounting to Rs. 3,63,76,2851- . The Appellant has not claimed this deduction during AY 2012-13 and the same has also not been deducted during the course of assessment u/s 143(3) for AY 2012-13. This has resulted in double tax payment on an amount of Rs. 3,63,76,285/-" 8. On perusal of the above table, we notice that the interest adjustments warranted an addition of Rs. 209.81 lakhs during the year under consideration and, while in the succeeding asst. year i.e. asst. year 2012-13, it warrants reduction of the total income by Rs. 363.76 lakhs. According to the assessee it has not claimed deduction of above said amount in asst. year 2012-13. These facts would show to that the interest income is not altogether concealed, but accounted for in the succeeding years on 'receipt basis', According to the assessee....