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TMI Blog2024 (1) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... s to why he decided, if at all, to accept the explanation of the assessee despite the fact that the said amount was not debited for the provision for doubtful account and consequently, the provision of doubtful debts account has not been obliterated. Thus, it is only for disclosure purposes that the amount was shown as a reduction from the trade receivables in the balance sheet. The assessee has not included the said amount as written off debts, but was hopeful of getting it back at some point of time. We cannot find fault with the PCIT for having exercised his jurisdiction u/s 263. Consequently, the order passed by him after hearing the appellant and directing the AO to re-examine the said issue is perfectly justifiable and legal. Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 11,88,92,410/-. The return was selected for scrutiny under Section 143 (3) of the Income Tax Act, 1961 and was completed by order dated 27.3.2015. Since the 1st respondent-Department did not accept the claim of deduction under Section 80-IA and also made various other disallowances, the appellant preferred appeal against the order and the same is stated to be pending. During the said financial year, the appellant debited to the profit and loss account an amount of Rs. 1,00,33,280/- towards the provision for bad and doubtful debts and the said amount was reduced from the amount of trade receivables and short-term loans and advances. Since the Provision debited in the profit and loss account is simultaneously obliterated from the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 on 21.2.2017 disallowing the deduction of the claim of doubtful debts amounting to Rs.1,00,33,280/-. It is stated that the order is also under challenge in a separate appeal preferred before the Tribunal. In the appeal before us, the assessee has raised the following questions of law, for our consideration: "i. Whether on the facts and in the circumstances of the case the Appellate Tribunal is right in holding that the Commissioner was justified in invoking the revisionary jurisdiction under Section 263 of the Income Tax Act? ii. Whether on the facts and in the circumstances of the case and in the light of Annexure C and D replies by the Appellant there was any evidence or material before Appellate Tribunal to justify its findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the learned Senior Standing Counsel appearing for the 1st respondent-Department contended that though a provision for bad debts was made in the profit and loss account, the same is not seen obliterated. He further pointed out that even in the profit and loss account, especially clause 2.15.1, it is specifically stated by the appellant that the Company is hopeful of recovering the aforesaid amount at some point of time. 6. We have considered the rival submissions raised across the bar. 7. The question that falls for our consideration is as to whether the Commissioner can exercise revisional jurisdiction under Section 263 of the Income Tax Act, 1961, if he is satisfied that the order of the assessing officer sought to be revised is erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to proceedings under Section 263 of the Income Tax Act, 1961. To invoke Section 263, the Principal Commissioner of Income Tax must be satisfied that the erroneous order also causes prejudice to the Revenue. The real purport of Section 263 is to remove the prejudice caused to the Revenue by the erroneous order passed by the assessing officer and it empowers the Commissioner to initiate suo motu proceedings, when either the assessing officer takes a wrong decision without considering materials available on record or renders a decision without enquiry. The role of the assessing officer under the Income Tax Act, 1961 is not only that of an adjudicator but also of an investigator and he cannot remain oblivious in the face of a claim with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is evident that the assessing officer did not show any application of mind and mechanically accepted the statement of the assessee. When the assessee is found to have claimed deduction for Rs. 1,00,33,280/- towards the "provision for doubtful assets" for the purpose of computation of book profit under Section 115-JB of the Income Tax Act, 1961, the assessing officer did not state any reason as to why he decided, if at all, to accept the explanation of the assessee despite the fact that the said amount was not debited for the provision for doubtful account and consequently, the provision of doubtful debts account has not been obliterated. Thus, it is only for disclosure purposes that the amount was shown as a reduction from the trade recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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