The Pune bench of Income Tax Appellate Tribunal (ITAT) has upheld the deletion of addition worth Rs. 34.50 crores on account of disallowance of “provision for depreciation”.
The bench of R.K. Panda (Vice President) and Astha Chandra (Judicial Member) has observed that the AO for travelled beyond the scope of scrutiny in making an addition of Rs. 34.50 cr as the ground on which the addition was made was not part of the issues notified to the appellant in the initial notice and the AO had not taken appropriate approvals to convert the case of appellant into complete scrutiny from limited scrutiny
The respondent/assessee is a Urban Co-operative Society bank engaged into banking business for more than 105 years, having 67 branches all over the Maharashtra. For the AY 2018-19, the assessee e- filed its original return on 30.10.2018 declaring the total income of Rs. 4,99,34,570/-. The return was subsequently revised declaring the same total income as above.
The case of the assessee was selected for scrutiny under CASS. The statutory notice(s) u/s. 143(2) and 142(1) of the Income Tax Act, 1961 alongwith questionnaires were issued and duly served upon the assessee. In response thereto, the assessee filed its reply which was taken on record and considered by the Ld. Assessing Officer (AO).
The AO observed that during the relevant AY, the assessee bank has made a “provision for depreciation” of Rs. 34.5 Crores, however, the said amount has not been disallowed by the assessee while computing its total income as per the provisions of the Act.
The AO issued a show cause notice to the assessee asking it to show cause as to why the amount of provision of Rs. 34.5 Crores should not be disallowed and added back to the income of the assessee and also noted that the assessee has not furnished any supporting documentary documents in support of its claim. The assessee filed its reply to the said show cause notice but it was not accepted by the AO.
The assessment was completed by the AO at the total income of Rs.39,49,34,510/- vide order dated 24.03.2021 passed u/s. 143(3) r.w.s. 143(3A) & 143(3B) of the Act by making disallowance of “provision for depreciation” of Rs. 34,50,00,000/- u/s.37 of the Act and adding the same to the income of Rs. 4,99,34,510/- returned by the assessee.
The CIT(A) has allowed the claim of the assessee giving the cogent reasons in his appellate order after considering the assessment order and the factual and legal submissions made by the assessee.
The tribunal held that the department failed to bring on record any material to contradict the findings of the CIT(A) as well as the Tribunal in the past years.
Case Details
Case Title: ACIT Versus The Karad Urban Co. Op. GBank Ltd.
Case No.: ITA No.1564/PUN/2024
Date: 04-03-2025
Counsel For Appellant: Mr. Deepak Chintaman Gadgil
Counsel For Respondent: Shri Amol Khairnar
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