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TMI Blog2025 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... has not brought on record any material to establish failure of the Appellant to make a full and true disclosure, the assumption of jurisdiction under section 147 if held to be bad in law.
Write-off of bad debts - In the present case, the assessing authority finds that the assessee has, during the year in question written off bad debts of a sum of Rs. 4.94 crores, restricted to a sum of Rs. 4.07 crores (incidentally, the assessee states that it has filed an appeal as against the said restriction which is pending before the Commissioner of Income Tax (Appeals)). With the aforesaid finding, the claim as regard bad debts is liable to be allowed applying the ratio of the judgement in TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT]
Writ Court has proceeded on the basis that the assessee should be relegated to appeal. In light of the settled legal position as have we have adumbrated above, we see no necessity for the same X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued to the Principal Officer of PHCPL, on 04.10.2011, and since there was no response, a reminder was issued again on 20.10.2011, which met with the same fate. It is clear from the ledger folio of PHCPL as appearing in the books of the assessee for the period from 01.04.2005 to 31.03.2006 that the transactions are in a sense, an unilateral booking which the recipient has not acknowledged. Therefore, the claim of bad debts is restricted to the period ending 31.03.2005 which amounts to Rs. 4,07,03,328/- and such values of bad debts beyond the period from 01.04.2005 and beyond this value of Rs. 4,07,03,328/- is not entertained. 4. While so, a notice under Section 148 of the Act came to be issued on 05.01.2016 and in response to the same, the appellant vide letter dated 01.02.2016 reiterated the return filed by it originally and sought a copy of the reasons of assessment in line with the judgment of the Supreme Court in GKN Driveshafts Income Tax Officer V. (258 ITR 19). The reasons furnished vide letter dated 11.08.2016 read as follows: The assessee filed its return of income of Rs. 29,04,120/- under normal provision and Rs. 2,61,40,681/- under the provision of MAT for AY 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five assessment years. 6. Speaking order dated 19.09.2016 came to be challenged in W.P.No.36522 of 2016 where the assessee sought and obtained interim stay as regards the re-assessment at the time of admission. However, an order of re-assessment came to be passed even prior to the order of stay being communicated to the Department, necessitating the moving of W.P.No.35630 of 2016. 7. The re-assessment proceedings thus came to be the subject matter of both Writ Petitions that came to be dismissed by way of a common order dated 22.04.2021, as against which W.A.Nos.1527 and 1525 of 2021 came to be filed. W.A.No.1527 of 2021 has been closed as infructuous on 26.11.2024 and hence we hear today W.A.No.1525 of 2021 on the merits of the re-assessment proceedings. 8. We have heard the detailed submissions of Mr.M.V.Swaroop, learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper return of income or to make a full and true disclosure of all material facts. As the Appellant has filed a return of income, the first two limbs of the proviso do not apply in the present case. Hence, the Court is required to test whether full and true disclosure has been made at the first instance. 15. The original order of assessment dated 23.12.2011 contains unambiguous findings to the effect that all materials required by the assessing authority to arrive at a proper conclusion in regard to the claim of bad debts, were available before the authority. Paragraph 3.1. of the order of assessment, extracted at paragraph No.3 supra, makes this fact clear. 16. On a comparison of paragraph 3.1 and the reasons extracted in paragraph No.5 supra, we find that no tangible material has been noted/cited by the assessing authority to justify the impugned reassessment, that too, beyond a period of four years. 17. We are supported in this view by the judgments of the Supreme Court in CIT V. Kelvinator of India Ltd. (320 ITR 561) and CIT V. ICICI Bank Ltd. (349 ITR 482). 18. In ICICI Bank Ltd. (supra), the Supreme Court has held as follows: The short point which arises in this batch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for his assessment for that year fully and truly. However, as has been held by the constitution bench of this Court in Calcutta Discount Company Limited (supra), while the duty of the assessee is to disclose fully and truly all primary and relevant facts necessary for assessment, it does not extend beyond this. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration. On the basis of the "balance sheet" submitted by the assessee before the South Indian Bank for obtaining credit which was discarded by the CIT(A) in an earlier appellate proceeding of the assessee itself, the assessing officer upon a comparison of the same with a subsequent balance sheet of the assessee for the assessment year 1993-94 which was filed by the assessee and was on record, erroneously concluded that there was escapement of income and initiated reassessment proceedings. 74. We may also mention that while framing the initial assessment orders of the assessee for the three assessment years in question, the assessing officer had made an independent analysis of the incomings and outgoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (i) to (vi) ..... (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year." This position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the Assessing Officer has not examined whether the debt has, in fact, been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of Companies, the provision is deducted from Sundry Debtors. As stated above, the Assessing Officer has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the above-mentioned aspect only and that too only to the extent of the ..... 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