TaxTMI 
TaxTMI 
2025 (11) TMI 733
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.... under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act"], for the Assessment Year 2021-22, arising from the intimation issued by the Centralized Processing Centre (CPC), Bangalore, under section 143(1) of the Act dated 28.12.2022. 2. Facts of the Case 2.1 The brief facts of the case are that the assessee, a Regional Rural Bank, filed its return of income on 14.03.2022 declaring a total loss of Rs. 14,88,55,097/-. The said return of income was processed by CPC under section 143(1) of the Act, and in the course of such processing, various adjustments were made resulting in determination of total income at Rs. 33,24,14,410/- as against the returned loss. Consequently, the loss of the assessee to be carried fo....
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....ady been suo motu disallowed under section 37 of the Act while computing income in the return, and therefore any further disallowance would amount to double addition. 2.5 Regarding the addition of Rs. 44,53,31,688/-, it was contended that the amount represented only contingent liabilities disclosed in the balance sheet as per applicable accounting standards and had not been debited to the profit and loss account and therefore could not be regarded as expenditure incurred for the purposes of business. 2.6 On the issue of recovery of bad debts of Rs. 3,27,39,639/-, the assessee submitted that the same was duly credited in Schedule 14 (Miscellaneous Income) of the audited accounts and had already been offered to tax, and therefore any fu....
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....profit and loss account and therefore could not be added as disallowable expenditure. The addition on this account was thus deleted. 2.11 Lastly, with respect to recovery of bad debts of Rs. 3,27,39,639/-, the CIT(A) found that the same was already credited in the income side of profit and loss account and offered to tax and therefore deleted the addition treating it as double taxation. In the result, the appeal was partly allowed by sustaining only the disallowance of employees' contribution to Provident Fund and deleting the other additions. 3. The Revenue, being aggrieved by the relief granted by the CIT(A), is in appeal before us raising following grounds: (i) On the facts and circumstances of the case and in law, the ....
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....2 of the financial statements has been reproduced and further referred to page 12 of the paper book where detailed break-up of the said contingent liabilities is provided. 6. On a specific query by the Bench as to why these figures were also reflected in the Tax Audit Report in Form 3CD, the AR explained that as per clause 21(g) of the prescribed form, it is mandatory on the part of the tax auditor to disclose particulars of contingent liabilities of the assessee. It was thus submitted that there was no basis for CPC to treat such disclosure as expenditure and make addition under section 37 of the Act. The AR accordingly prayed that the order of the CIT(A) deleting the said addition be upheld. The AR also placed reliance on the decision ....
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....ed as expenditure in computation of income. The Revenue has not brought on record any material to demonstrate that the said sums were ever charged to the profit and loss account or claimed as expenditure. The adjustment made by CPC under section 143(1), therefore, is without foundation. 7.2 We also note that the Co-ordinate Bench in case of Mahesh Mohanbhai Patel (HUF) (supra) had an occasion to deal with a similar adjustment made by CPC under section 143(1), wherein contingent liabilities reported under clause 21(g) of the tax audit report were treated as disallowable expenditure. In that case, after considering the revised tax audit report, auditor's certificate, and audited financial statements, the Bench recorded a categorical findin....