2022 (7) TMI 946 - AT - Income Tax

Revision u/s 263 by CIT - Allowability of provisions for doubtful debts and air conditioner expenses - HELD THAT - AO has specifically carried out the enquiry regarding provisions for doubtful debts and air conditioner expenses and specific reply has been given by the assessee. In the audited P L account the assessee has also shown bad debts written off. PCIT has mentioned provisions for doubtful debts. The assessee during the regular course of business has claimed to have shown sales in the preceding years of which some sales turned bad and the same has been written off in the books of account as bad debt which the assessee is entitled for and therefore the claim is admissible. Similarly for air conditioner charges the assessee filed complete details along with tax deducted on the charges paid and the bills enclosed in the paper book justify the claim of assessee of air conditioner charges. Actually these are maintenance charges and other lift related expenditure which are revenue in nature. Therefore both the issues have been examined by the ld. AO and detailed inquiry has been made and thus in our view Ld. PCIT erred in invoking the revisionary jurisdiction u/s. 263. Employees contribution to PF - As it is not in dispute that there is a delay in depositing the said sum of Rs.9, 16, 893/- before the due date prescribed under the PF Act. It is also not in dispute that alleged sum stands deposited before the due date of filing of return of income u/s. 139(1) of the Act. In view of in view of the ratio laid down by Vijay Shree Ltd 2011 (9) TMI 30 - CALCUTTA HIGH COURT the said sum is an allowable expenditure for the year under consideration as it has been deposited before the due date of filing of return u/s. 139(1) of the Act and do not call for disallowance u/s.36(1)(va) r.w.s 2(24)(x) of the Act. Ld. PCIT ought to have appreciated the settled legal judicial precedence should not have restore the said issue of PF/ESI contribution issues to ld. AO for further examination when all the facts were available on record. Provisions of section 263 of the Act itself provides that ld. PCIT ought to make or cause to make such enquiry as he deems necessary before passing the impugned order. Therefore in our considered view ld. PCIT erred in invoking revisionary jurisdiction u/s. 263 of the Act on this issue also. Assessee appeal allowed.

Summary

Issues:
1. Revisionary jurisdiction under section 263 of the Income-tax Act, 1961.
2. Examination of specific issues by the Assessing Officer.
3. Provision for doubtful debts, delayed PF contribution, and capital expenditure treatment.

Revisionary Jurisdiction under Section 263:
The appeal pertains to the assessment years 2017-18 and challenges the order passed under section 263 of the Income-tax Act, 1961. The Principal Commissioner of Income-tax (PCIT) set aside the assessment order passed by the Assessing Officer (AO) under section 143(3) for further consideration. The key contention revolved around the PCIT's invocation of revisionary powers based on the alleged errors in the original assessment order.

Examination of Specific Issues by the Assessing Officer:
The PCIT identified three issues - provision for doubtful debts, delayed employees' PF contribution, and capital expenditure treatment - that were purportedly not adequately examined by the AO. However, upon detailed analysis, it was found that the AO had indeed conducted thorough inquiries into these matters. The AO had sought relevant details from the assessee, received responses, and made informed decisions regarding the allowability of these expenses. The PCIT's assertion of lack of inquiry by the AO was found to be unsubstantiated.

Provision for Doubtful Debts, Delayed PF Contribution, and Capital Expenditure Treatment:
Regarding the provision for doubtful debts and air conditioner expenses, it was established that the AO had properly investigated these aspects, and the expenses were found to be legitimate and allowable. The treatment of delayed employees' PF contribution was also deemed appropriate as per legal precedents, and the PCIT's decision to set aside the assessment order on these grounds was considered unwarranted. The Tribunal concluded that the PCIT erred in invoking revisionary jurisdiction without sufficient cause and upheld the original assessment order passed by the AO under section 143(3) for the assessment year in question.

This detailed analysis of the judgment highlights the key issues raised by the appellant, the arguments presented by both parties, and the Tribunal's decision based on the legal provisions and factual findings.