2023 (4) TMI 383 - AT - Income Tax

Revision u/s 263 - provision for NPA written back - HELD THAT - AO conducted necessary enquiry on this issue of provisioning for non-performing assets and we also find that in the computation of total income under normal provisions, provision for NPA debited during the year is added back i.e. not claimed as deduction. As out of the total amount disallowed by AO/suo-moto disallowed by the assessee it claimed write back of provision for NPA under normal provisions and under MAT provision. These details were filed before ld. AO who has passed the assessment order after conducting the necessary enquiries. We find that since the alleged sum as already added back by the assessee in the computation of income under normal provisions for AY 2009-10 to AY 2014-15 adding the same in the current year would tantamount to double addition. Since the enquiry has been conducted on this issue and the alleged sum has already been offered to tax in the preceding years neither the order of ld. AO is erroneous nor prejudicial to the interests of the Revenue. CSR expenses claimed - From perusal of the computation of income under normal provisions we find that the assessee has suo-moto added back the alleged CSR expenses in the computation of income filed with the revised return of income and offered it to tax. We do not find any justification in the finding of ld. Pr. CIT invoking the revisionary proceedings and restoring it for examination of ld. AO. Excess depreciation - assessee company has claimed excess depreciation on the Block of Plant and machinery (80%) which is required to be disallowed - As in the assessment order passed u/s 143(3) of the Act, the learned AO has also allowed depreciation as claimed by the assessee in the revised return depreciation and not as claimed in the original return. CIT failed to appreciate the submissions filed by the assessee and held that the assessee failed to completely disclose its true and correct income by non-furnishing of details as required under the provisions of Income Tax Act and held that the assessment order is erroneous and prejudicial on this ground - assessee has revised the depreciation claim and reduced it which thus brings to a conclusion that there is no prejudice caused to the Revenue. Pr. CIT erred in invoking the jurisdiction u/s 263 of the Act on the above stated three issues which have been examined by ld. AO and in the alternate the assessee has suo-moto offered it to tax and therefore, for these reasons the order of ld. AO cannot be held to be erroneous and prejudicial to the interests of the Revenue - Decided in favour of assessee.

Summary

Issues Involved:
1. Justification for initiating proceedings under Section 263 of the Income Tax Act, 1961.
2. Examination of the provision for NPA of Rs. 64,74,97,633/- written back.
3. Examination of CSR expenses claimed of Rs. 1.27 Cr.
4. Examination of excess depreciation of Rs. 87,08,860/-.

Summary of Judgment:

1. Justification for Initiating Proceedings Under Section 263:
The Tribunal examined whether the Principal Commissioner of Income Tax (Pr. CIT) was justified in initiating proceedings under Section 263 of the Income Tax Act, 1961. The Pr. CIT had held that the assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interests of the revenue. However, the Tribunal found that the AO had conducted necessary enquiries and verifications, and thus the order could not be deemed erroneous or prejudicial to the interests of the revenue.

2. Provision for NPA of Rs. 64,74,97,633/- Written Back:
The Tribunal noted that the AO had conducted necessary enquiries regarding the provision for NPA written back and found that the amount had already been added back by the assessee in the computation of income for earlier years. The Tribunal concluded that adding the same amount again in the current year would result in double addition, and therefore, the AO's order was neither erroneous nor prejudicial to the interests of the revenue.

3. CSR Expenses Claimed of Rs. 1.27 Cr:
The Tribunal observed that the assessee had suo-moto added back the CSR expenses in the computation of income filed with the revised return of income and offered it to tax. Therefore, there was no justification for the Pr. CIT to invoke revisionary proceedings on this issue.

4. Excess Depreciation of Rs. 87,08,860/-:
The Tribunal found that the assessee had revised its depreciation claim and reduced it by Rs. 87,08,860/- in the revised return of income. The AO had allowed depreciation as claimed in the revised return, and therefore, there was no prejudice caused to the revenue. The Tribunal held that the Pr. CIT erred in invoking jurisdiction under Section 263 on this ground.

Conclusion:
The Tribunal quashed the proceedings initiated under Section 263 by the Pr. CIT and restored the assessment order passed by the AO under Section 143(3) read with Section 144C(1) of the Income Tax Act, 1961. All grounds of appeal raised by the assessee were allowed, and the appeal was decided in favor of the assessee.