2023 (2) TMI 252 - AT - Income Tax

Revision u/s 263 - wrong and excess credit of brought forward MAT - HELD THAT - We find from the facts /records before us that MAT credit has been strictly claimed as determined the order passed u/s 143(3) of the Act a copy of which is placed before us for our perusal. In view this fact ,we do not find any mistake in the claim of brought forward MAT by the assesse and accordingly the assessment order framed is neither erroneous nor prejudicial to the interest of the revenue. Provisions made for doubtful debts on which the PCIT revised the assessment - We observe that there is no mistake in the computation of disallowance. We note that the said observation of the Ld. PCIT is based upon the audit objection which has been replied by the assessee dated 10.11.2021 submitting therein that there is no mistake in making disallowance towards doubtful debts and computation of disallowance have duly been furnished in computation of taxable income. We also observe that the said figure of disallowance was arrived at on the basis of three amounts namely i) provisions for doubtful debts Rs. 55,03,00,000/-, ii) other provisions written back Rs. (- )39,10,00,000/- and iii) provisions for superannuation benefit of Rs. 33,04,58,000/- the net of which comes to Rs. 48,97,58,000/- which has been disallowed in the return of income filed by the assessee a copy of which is placed at page 39 of the PB. Accordingly on the second issue on which the ld CIT(A) revised the assessment order, there is no mistake in the assessment order Assessment order is neither erroneous nor prejudicial to the interest of the revenue. It is settled legal position that in order to invoke the revisionary jurisdiction u/s 263 of the Act , the satisfaction of twin condition is must i.e the order must be erroneous and secondly it must be prejudicial to the interest of the revenue. Even if one of the two condition is satisfied , the jurisdiction u/s 263 of the Act is not available. This is in consonance with the ratio laid down in the case of Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT - In view of this fact, we are inclined to quash the order passed by the PCIT u/s 263 of the Act. Appeal of assessee allowed.

Summary

Issues:
Challenge to revisionary jurisdiction exercised by Ld. PCIT under section 263 of the Income Tax Act, 1961 regarding assessment validity.

Analysis:
The appeal was filed by the assessee against the order of the Ld. Principal Commissioner of Income Tax-Asansol under section 263 of the Income Tax Act, 1961 for the Assessment Year 2016-17. The Ld. PCIT found the assessment to be erroneous and prejudicial to the interest of revenue due to wrong credit of brought forward Minimum Alternate Tax (MAT) and the omission of provisions for doubtful debts. The Ld. PCIT issued a notice under section 263, and after considering the assessee's reply, revised the assessment, directing the Assessing Officer to reassess. The assessee contended that there was no mistake in the MAT claim as determined in the assessment under section 143(3) and argued that the assessment was not erroneous or prejudicial to revenue. Regarding the provisions for doubtful debts, the assessee explained the computation of disallowance, showing no error in the assessment order.

The Tribunal examined the facts and records, finding that the MAT credit was correctly claimed as per the provisions of Section 115JAA(6) based on the assessment under section 143(3). It was observed that the MAT credit was determined in accordance with the assessment order, and thus, there was no error in the MAT claim. Similarly, concerning the provisions for doubtful debts, the Tribunal noted that the disallowance was correctly computed based on the audit objection and the assessee's response, which included provisions for doubtful debts, other provisions written back, and superannuation benefits. The Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the revenue, citing the legal requirement that for revision under section 263, both conditions of error and prejudice to revenue must be met, as established in the case law of Malabar Industrial Co. Ltd. v. Commissioner of Income-tax.

Therefore, the Tribunal allowed the appeal of the assessee, quashing the order passed by the Ld. PCIT under section 263 of the Income Tax Act, 1961. The judgment was pronounced on 5th January 2023.