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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the Principle Commissioner of Income Tax (PCIT) Mumbai-1 passed u/sec 263 of the Act, 1961. The assessee has raised the following grounds of appeal:
1a. On the facts and circumstances of the case and in law the Ld. PCIT erred in invoking the provisions of Sec. 263 and setting aside the order u/s 143(3) on the grounds that order u/s 143(3) is erroneous so far as it is prejudicial to interest of revenue.
The Greater Bombay Co-op Bank Ltd, Mumbai. - 2 - b. The PCIT erred in arriving at the conclusion that claim of deduction u/s 36(1)(viia) needs examination and verification not appreciating the fact that claim of allow ability of bad debts was verified and that the same issue was subject matter of appeal in earlier years and that the same having been allowed in earlier years by the CIT(A) and for assessment year 2011-12 the claim was allowed by Hon’ble ITAT and as such the action u/s 263 Is uncalled for. c. The appellant submits that order u/s 263 needs to be cancelled.
The appellant craves leave to add or alter any ground of appeal
at the time of hearing.
2. The Brief facts of the case are that the assessee is a co-operative bank engaged in the business of banking. The assessee has filed the return of income electronically on 30.09.2015 for the A.Y 2015-16 disclosing a total income of Rs. Nil. Subsequently the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act are issued. In compliance, the Ld. AR of the assessee appeared from time to time and furnished the details and the case was discussed. The Assessing officer (A.O) on perusal of the details, information and discussions has accepted the returned of income of Rs. Nil and passed the order u/s 143(3) of the Act dated 19.12.2017. Subsequently The Greater Bombay Co-op Bank Ltd, Mumbai. - 3 - the Pr.CIT on verification of assessment records and the facts with respect to claim of bad debts from the computation of income and whereas in the assessment proceedings for the A.Y 2013-14 the A.O. has made addition of bad debts. The Pr.CIT is of the opinion that the bad debts claim made by the assessee bank should not be allowed and the A.O has failed to conduct the verification of the bad debts claim. Accordingly, notice u/s 263 of the Act was issued as the Pr.CIT is of the opinion that the order passed by the A.O. is erroneous and prejudicial to the interest of the revenue.
3. The assessee has filed a reply letter on 26.02.2012 in compliance to notice explaining that, in the course of assessment proceedings the A.O has called for the details of claim of bad debts of Rs. 1,68,89,428/-. The assessee has submitted the details before the A.O. The Ld. AR submitted the details of the A.Y 2012-13 & 2013-14 were against disallowance of bad debts claim, on appeal the CIT(A) has allowed the claim u/s 36(1)(viia) of the Act. The assessee has explained in the revision proceedings that the bad debts claim issue has been verified year to year and The Greater Bombay Co-op Bank Ltd, Mumbai. - 4 - deduction was allowed. But the Pr.CIT has dealt on the provisions of Sec. 36(1)(viia) of the Act and is of the opinion that the assessee has not followed procedure laid as per the provisions of Sec. 36(1)(viia) of the Act and the Auditors certificate in respect of bad debts was not provided. Hence the claim of deduction u/s 36(1)(viia) of the Act should not be allowed. The Pr.CIT dealt on the explanation (2) to sec 263 of the Act and finally the order passed u/s 143(3) dated 19.12.2017 is set aside and directed the Assessing officer to reframe the assessment afresh and passed the order u/s 263 of the Act dated 24.03.2021. Aggrieved by the revision order, the assessee has filed an appeal before the Hon’ble Tribunal.
4. At the time of hearing, the Ld. AR submitted that the Pr.CIT erred in not considering the facts that in the assessment proceedings the A.O has verified the material information pertaining to bad debts claim. Further the Ld.AR substantiated that in the earlier assessment years, the claim was allowed by the A.O and CIT(A). The Ld.AR referred to the notices issued The Greater Bombay Co-op Bank Ltd, Mumbai. - 5 - by the A.O on the claim of bad debts and substantiated with material information and judicial decisions and prayed for allowing the assessee appeal. Contra, the Ld.DR relied on the order of the Pr.CIT.
5. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the ld. AR that the Pr.CIT has erred in set aside the order u/s 143(3) of the Act and the A.O. order does not satisfy the twin conditions erroneous and prejudicial to the interest of the revenue and hence the revision order passed by the Pr.CIT is bad in law. The Ld. AR explained the facts and the notice issued u/s 142(1) of the Act on the claim of bad debts. The Ld. AR referred to notice u/s 142(1) of the Act dated 23.11.2017 at page 14 of the paper book on the claim of deduction and earlier three assessment years orders at item 11&15 of the notice. The assessee has filed a reply to notice U/sec142(1) of the Act on 08-12-2017 referred at page 16 and 17 in particular to s.no.12 and the documents in support of claim of deduction which includes bad debts, contingent provision for standard The Greater Bombay Co-op Bank Ltd, Mumbai. - 6 - asset and computer software. The Ld.AR emphasized that the Honble ITAT and CIT(A) in earlier years of has allowed the bad debts claim.
6. The assessee has furnished the details in the course of assessment in lieu of notice issued u/s 142(1) of the Act and further the claim of the assessee has been accepted in earlier year. In case the claim was not allowed by the revenue, the assessee has filed an appeal before the Honble Tribunal and the directions are issued to the Assessing officer for allow ability of claim. The Ld. AR referred to page 13 of the paper book schedule VII-(c) were the bad and doubtful debts are reflected in comparison to the earlier year which cannot be doubted and the auditors certificate in respect of bad debts was submitted. We find that the A.O. though has not mentioned the specific claim allowed in respect of the bad debts in the assessment order. But the fact remains that the A.O has issued a notice u/s 142(1) of the Act on claim of bad debts and the explanations filed are demonstrated by the Ld.AR. Whereas the Pr.CIT has not considered the facts that the A.O has called for the information and the case was discussed and there The Greater Bombay Co-op Bank Ltd, Mumbai. - 7 - cannot be any non application of mind by the A.O. We find that the A.O has considered one of the possible views based on the information and it is not necessary that the A.O should put all the discussions/observations in the assessment order. Further as per explanations (2) to sec 263 of the Act the authority has to invoke provisions only when there is no verification and enquiry conducted by the A.O. Whereas the A.O has applied his mind and verified the facts. The Ld. AR referred to the submissions, financial statements and explanations filed before the A.O and we rely on the decision of the Hon’ble High Court Bombay in CIT Vs. Gabriel India Ltd.203 ITR 108.(Bom).
We find that the Hon’ble tribunal in assessee’s own case for earlier years on the similar issue has granted the relief in A.Y 2011-12. The Ld. DR submitted that the department has challenged the relief granted to assesee before the Hon’ble High Court and the same is pending. We Considering the overall facts, circumstances, ratio of the judicial decision and the details submitted in the course of hearing are of the view that the if any query The Greater Bombay Co-op Bank Ltd, Mumbai. - 8 - is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt with by the A.O. in the order cannot implied that there is no application of mind. Hence, the Pr.CIT action cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue. Accordingly, we set aside the revision order and allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is allowed.