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2023 (4) TMI 338 - AT - Income TaxRevision u/s 263 by CIT - Allowability of bad debts (debit balances written off) - As per CIT no verification of the bad debts written off was done by the AO during the course of assessment proceedings to verify whether the claim is in accordance of the provisions of section 36(2) of the Act which shows that the Assessing Officer has not applied his mind to the facts of the case - HELD THAT - During the course of original assessment proceedings, the assessee had given all details of debts and steps were taken by the assessee for recovery of those amounts, which he ultimately failed to recover. AO allowed the deduction after taking into consideration the details filed by the assessee. CIT initiated 263 proceedings on the ground that the claim was not allowable u/s. 36(2) of the Act. In appeal before Tribunal, the ITAT 2007 (3) TMI 313 - ITAT HYDERABAD-A held that the assessee had categorically submitted the details of bad debts before the Assessing Officer during the course of assessment proceedings and the same were considered by the Assessing Officer. Accordingly, the ITAT set aside the 263 order passed by the PCIT. In further appeal to the High Court by the Department, the High Court 2011 (4) TMI 805 - DELHI HIGH COURT held that the PCIT in the instant facts was not justified in setting aside the order of the Assessing Officer and invoking revisional power u/s. 263 of the Act. Thus we are of the considered view that the ld. PCIT has erred in facts and in law in holding that the order passed by the ld. Assessing Officer is erroneous and prejudicial to the interest of revenue - Decided in favour of assessee.
Issues Involved:
The appeal against the order of the Principal Commissioner of Income Tax, Ahmedabad-3, under section 263 for the assessment year 2016-17. Comprehensive Details: Issue 1: The Principal Commissioner revised the scrutiny assessment order, alleging it was erroneous and prejudicial to the interest of revenue. - The PCIT observed that the Assessing Officer had not verified the bad debts written off by the assessee, leading to the initiation of proceedings under section 263. - The PCIT set aside the assessment order for fresh adjudication due to lack of verification by the Assessing Officer. Issue 2: The assessee challenged the PCIT's order, arguing that the Assessing Officer had properly considered and disallowed certain claims under section 36(2) of the Act. - The counsel for the assessee highlighted that detailed submissions were made during assessment proceedings regarding the bad debts written off. - The Assessing Officer had issued notices and considered submissions before making a part disallowance of Rs. 1.21 crores under section 36(2) of the Act. Issue 3: The Tribunal's analysis and decision on the matter. - The Tribunal found that the Assessing Officer had conducted inquiries and considered submissions before making the disallowance. - Citing a judicial precedent, the Tribunal held that the PCIT erred in invoking revisional power under section 263, as the Assessing Officer had properly examined the details furnished. The Tribunal dismissed the PCIT's order under section 263, concluding that the Assessing Officer's decision was not erroneous or prejudicial to the interest of revenue based on the evidence and submissions provided during assessment proceedings. Order pronounced in the open court on 31-03-2023.
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