9911796707
TMI Blog2025 (4) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of the revenue. 2. Order u/s. 263 dated 05/01/2024 is illegal and invalid. 2.1 The learned Principal Commissioner of Income-tax failed to appreciate that the notice u/s. 263 dated 20/02/2023 being illegal and invalid, the consequent order u/s. 263 dated 05/01/2024 is also illegal and invalid. 2.2 The learned Principal Commissioner of Income-tax failed to appreciate that the order u/s. 263 dated 05/01/2024 is illegal and invalid being without authority in law and without jurisdiction. 2.3 The learned Principal Commissioner of Income-tax failed to appreciate that the assessment order dated 16/04/2021 is neither erroneous nor prejudicial to the interest of the revenue. 2.4 The learned Principal Commissioner of Income-tax failed to appreciate that the two claims under consideration have been correctly allowed by the learned Assessing Officer. 3. The appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal" Brief facts of the case are as under: 2. The assessee is scheduled bank engaged in banking services. It filed its return of income on 16/08/2018, declaring total income of Rs. 373,32,38,952/-. The case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he asset continues to be owned by the bank. As per IT Act, 1961 there is no provision to recognize a depreciation on shifting of investments. Only of the investments are disposed off or as per RBI guidelines, the profit/loss on account of the same is recognized. In view of the above, provision depreciation on shifting of investment should have been disallowed. Omission to do so has resulted in excess computation of loss of Rs. 8,65,35,469/ -. In view of this the income of Rs. 294,31,89,239/- should have been added back to the total taxable income whcile computing the assessment order u/s. 143(3) r.w.s. 144B of the Act dated 20/04/2021. 4. In view of the above observations the assessment order passed by the A.O., without proper verification of facts and without correct application of law as required while making assessment. Hence, it is proposed to revise/ set-aside the said order u/s. 263 of the IT Act, 1961. 5. Accordingly you are hereby requested to furnish your reply/explanation as to why the said order passed on 07/04/2021 u/s. 143(3) of the IT Act, 1961 for A.Y. 2018-19 should not be revise/ set-aside u/s. 263 of the IT Act, 1961. Your reply should reach the under signed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iries which were required to be made in this case the assessment order dated 16.04.2021, becomes erroneous in so far as it is prejudicial to the interests of the revenue. 17. Considering the facts of the case and, moreover, that both the conditions specified u/s 263 of the Act are satisfied in this case I am of the opinion that this is a fit case to invoke provisions of Explanation 2 to the section 263. Accordingly, the assessment order dated 16.04.2021 passed by the Assessing Officer u/s 143(3) r..[1]. 143(3A) & 143(3B) of the Act is set aside for the limited purpose, on the issue discussed above, to the file of the Assessing Officer with the directions to conduct requisite enquiries along the lines discussed above and frame the order of assessment accordingly. In the process, adequate opportunity of being heard should be accorded to the assessee to file submissions, details and to furnish their explanation. Order under section 263 of Income Tax Act, 1961 is passed accordingly." Aggrieved, by the order of the Ld.PCIT, the assessee is in appeal before this Tribunal. 3. The Ld.AR submitted that during the assessment proceedings following notices were issued seeking details in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble deduction, operating with reference to rural loans while under section 36(1)(vii). Per S. H. KAPADIA C. J. I. (concurring): The provisions of clause (viia) of section 36(1) relating to the deduction on account of the provision for bad and doubtful debt(s) are distinct and independent of the provisions of section 36(1)(vii) relating to allowance of the bad debt(s). In other words. scheduled commercial banks would continue to get the full benefit of the write off of the irrecoverable debt(s) under section 36(1) (vii) in addition to the benefit of deduction for the provision made for bad and doubtful debt(s) under section 36(1) (viia). Normally, a deduction for bad debt(s) can be allowed only if the debt is written off in the books as bad debt(s). But in the case of rural advances, a deduction would be allowed even in respect of a mere provision without insisting on an actual write off. However, this may result in double allowance in the sense that in respect of the same rural advance the bank may get allowance on the basis of clause (vila) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that, the assessee complied with this CBDT Instruction. It was submitted that the deduction of depreciation on shift investment of Rs.8,65,35,469.23/- claimed and allowed by the Ld.AO is as per Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No. 87/2016 dated 29/09/2016. The Ld.AR submitted that the Ld.AO considered both and allowed the deduction. The Ld.AR submitted that, deduction allowed as per Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No. 87/2016 dated 29/09/2016 can not be denied or disallowed by referring to CBDT Instruction No. 17/2008 dated 26/11/2008. 3.5 He thus submitted that based on above details and the decision the Ld.AO accepted assessee's claim. The Ld.AR placed reliance on the observation of the Ld.PCIT in pare 15 of the impugned order to support his argument that 263 if bad in law as it does not satisfy the necessary ingredients envisaged under the act in the present facts of the case. 3.6 On the contrary, the Ld.DR relied on the orders passed by the Ld.PCIT. We have perused the submissions advanced by both sides in light of records placed before us. 4. The Ld.PCIT in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 2(a) and (c) claiming the enquiry and verification was not adequate is not acceptable. Further in paragraph 10 and 15 of the impugned order, it is stated that, Instruction of the Board No.17/2018 dated 26/11/2018 has not been followed by the Ld.AO and that makes the assessment order erroneous and prejudicial to the interest of the Revenue for the purpose of section 263. We note that there is no CBDT instruction No. 17/2018 dated 26/11/2018 and nothing has been brought by the revenue inon record in respect of the same. The only relevant CBDT instruction is No. 17/2008 dated 26/11/2008. 4.5 It is noted that, the Ld.AO called for detailed explanation from the assessee on the two issues vide notices referred to in preceding paras, and upon satisfaction allowed the deduction by considering CBDT instruction is No. 17/2008 dated 26/11/2008 and Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No.87/2016 dated 29/09/2016. Further, the Deduction allowed as per Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No. 67/2016 dated 29/09/2016 cannot be denied by referring to CBDT Instruction No. 17/2008 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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