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Income Tax Appellate Tribunal, ‘B‘ BENCH
Before: SHRI M.BALAGANESH & SHRI PAVAN KUMAR GADALE
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y. 2015-16 preferred by the order against the revision order of the ld. Principal Commissioner of Income Tax-2, Mumbai u/s.263 of the Act dated 28/02/2020 for the A.Y.2015-16.
At the outset we find that the appeal is time barred by 64 days. We find that assessee has filed a delay condonation petition explaining the fact that due to Covid-19 pandemic lockdown was imposed from 24/03/2020 and by placing reliance on the Government of India of notification No.218979 dated 31/03/2020 in Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 (No.2 of 2020) dated 31/3/2020 as per Clause 3(1)(b) extending the time limit specified in Income Tax Act which falls during the period from 20th day of March 2020 to 29th June 2020 for the purpose of filing appeal, till 30/06/2020 or such other date as the Central Government by notification specify in this behalf. Subsequently, the Government vide Notification No.35/2020 dated 24/06/2020, has extended the said time limit up to 31/03/2021. In view of the same, we are inclined to condone the delay of 64 days in filing the appeal of the assessee and admit the appeal for adjudication.
2.1. The only effective issue to be decided in this appeal is as to whether the ld. PCIT had validly invoked revision jurisdiction u/s.263 of the Act in respect of issue of disallowance of bad debts written off in the facts and circumstances of the instant case.
We have heard rival submissions and perused the materials available on record. We find that assessee is a public sector bank engaged in the business of banking and had filed its return of income for the A.Y.2015-16 on 27/11/2015 declaring total income at Rs.4441,92,59,570/-. The assessment was completed u/s.143(3) of the Act on 30/03/2017 determining total income at Rs.7229,71,91,450/- after making several disallowances. Aggrieved by such disallowance, the assessee preferred the appeal before the ld. CIT(A).
3.1. Admittedly, the assessee had not made any claim on account of bad debts written off in the return of income originally filed on 27/11/2015 in the sum of Rs.414,14,05,901/-. This claim of deduction was made for the first time only before the ld. CIT(A) by way of raising an additional ground. This additional ground was duly admitted by the ld. CIT(A) vide its order dated 12/12/2017 and the ld. CIT(A) agreed that a portion of bad debts written off after reducing opening credit balance of provision for bad and doubtful debts, is allowable as deduction u/s.36(1)(vii) of the Act and accordingly, directed the ld. AO to verify the opening credit balance figure of provision of bad and doubtful debts. The relevant operative portion of the ld. CIT(A) is reproduced hereunder:-
“11.3. I have carefully considered the facts of the case, oral contentions and written submission of the assessee, discussion of the AO in the assessment order and material available on record. The claim of the appellant is that its actual balance in the provision for bad and doubtful debts is a credit of ₹ 492.90 crore as detailed in Annexure 7 of the submission and after reducing the same from the bad debts written off during the year ₹907.04 crore, the balance ₹414.14 crore should be allowed u/s 36(1)(vii) in respect of bad debts written off. Such contentions of the appellant appear to be acceptable as per the provisions of the law. However the AO is directed to verify the facts of actual availability of the credit balance in the provision for bad and doubtful debts account of the appellant as per the provisions of section 36(1)(viia) of the Act and the facts of actual bad debts written off as per the provisions of section 36(1}{vii) of the Act and after such verification in the terms of the provisions of section 36(1)(vii) read with section 36(1)(viia) and 36(2)(v), allow the claim of the appellant. This ground is accordingly disposed off and for statistical purposes is treated as allowed subject to the directions contained herein above.”
3.2. Pursuant to this order of the ld. CIT(A), the assessee vide its letter dated 07/02/2018 furnished the complete details of bad debts written off of Rs.414,14,05,901/- in a tabular form before the ld AO as under:-
Fin Year Asst. Year Write off Provision Cumulative Cumulative Opening write off Provision Balance 1994-95 1995-1996 314,40,56,393 145,12,89,348 314,40,56,393 145,12,89,348 0 1995-96 1996-1997 221,20,97,000 186,36,84,000 535,61,53,393 331,49,73,348 -169,27,67,045 1996-97 1997-1998 131,21,86,759 244,25,99,049 666,83,40,152 575,75,72,397 -204,11,80,045 1997-98 1998-1999 383,52,39,250 0 1050,35,79,402 575,75,72,397 -91,07,67,755 1998-99 1999-2000 352,40,70,000 23,87,40,000 1402,76,49,402 599,63,12,397 -474,60,07,005 1999-2000 2000-2001 330,42,10,000 27,27,13,351 1733,18,59,402 626,90,25,748 -803,13,37,005 2000-2001 2001-2002 500,17,23,000 25,64,57,000 2233,35,82,402 652,54,82,748 -1106,28,33,654 2001-2002 2002-2003 107,34,95,000 325,46,84,294 2340,70,77,402 978,01,67,042 -1580,80,99,654 2002-2003 2003-2004 434,17,95,000 337,83,46,734 2774,88,72,402 1315,85,13,776 -1362,69,10,360 2003-2004 2004-2005 644,91,99,186 472,52,24,565 3419,80,71,588 1788,37,38,341 -1459,03,58,626 2004-2005 2005-2006 530,74,50,000 428,67,46,464 3950,55,21,588 2217,04,84,805 -1631,43,33,247 2005-2006 2006-2007 701,28,95,000 144,21,47,000 4651,84,16,588 2361,26,31,805 -1733,50,36,783 2006-2007 2007-2008 657,31,33,000 150,07,85,000 5309,15,49,588 2511,34,16,805 -2290,57,84,783 2007-2008 2008-2009 411,77,63,000 531,44,52,000 5720,93,12,588 3042,78,68,805 -2797,81,32,783 2008-2009 2009-2010 384,84,24,524 781,19,57,597 6105,77,37,112 3823,98,26,402 -2678,14,43,783 2009-2010 2010-2011 470,92,91,521 981,33,92,174 6576,70,28,633 4805,32,18,576 -2281,79,10,710 2010-2011 2011-2012 451,11,97,145 1063,45,09,056 7027,82,25,778 5868,77,27,632 -1771,38,10,057 2011-2012 2012-2013 1042,51,98,516 1575,82,77,075 8070,34,24,294 7444,60,04,707 -1159,04,98,146 2012-2013 2013-2014 1708,12,27,000 1613,44,97,790 9778,46,51,294 9058,05,02,497 -625,74,19,587 2013-2014 2014-2015 720,32,99,963 19,33,64,53,859 10498,79,51,257 10991,69,56,356 -720,41,48,797 2014-2015 2015-16 492,90,05,099 Total bad debts written 907.04,11,000 off Opening credit balance 492,90,05,099 Bad Debt u/s.36(1)(vii) 414,14,05,901 3.3. The ld. AO on verification of the same, passed an order giving effect to CIT(A)’s order on 28/03/2018 as under:-
3.4. The ld. PCIT assumed revision jurisdiction u/.263 of the Act by treating the order giving effect to ld. CIT(A) order passed by the ld. AO on 28/3/2018 as erroneous in as much as it is prejudicial to the interest of the Revenue on the ground that the ld. AO had not carried out any enquiries as directed by the ld. CIT(A) vide his order dated 12/12/2017 but had granted relief towards bad debts written off to the assessee. Failure of the ld. AO to make requisite verifications has made the order of the ld. AO erroneous in the opinion of the ld. PCIT. Accordingly, the ld. PCIT by applying the provisions of Explanation 2 to Section 263 of the Act found the order of the ld. AO to be erroneous in so far as it is prejudicial to the interest of the Revenue and set aside the order of the ld. AO for lack of enquiry. But from the perusal of the letter dated 07/02/2018, which was filed by the assessee bank before the ld. AO in the appeal giving effect proceedings to CIT(A)’s order, the assessee had indeed furnished a detailed tabulation commencing from the year of eligibility of claim u/s.36(1)(vii)(a) together with 36(1)(vii) of the Act right from 1995- 96 onwards as is evident from the tabulation supra. The ld. AO has indeed made verification of the same but had not commented about the same in his order giving effect to the ld. CIT(A)’s order. It was vehemently submitted by the ld. AR that merely because the ld. AO does not discuss about the issue in the assessment order, it could not be construed as lack of enquiry or lack of requisite enquiry by the ld. AO. We find that this aspect of the issue is no longer res-integra in view of the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Nirav Modi reported in 390 ITR 292 wherein it was held as under:-
“7. Firstly, the Revenue contends that the exercise of powers under Section 263 of the Act is justified as in this case, as no inquiry in respect of the gifts received during the subject years was done by the Assessing Officer for the Assessment orders for Assessment Years 2007-08 and 2008-09. This according to the Revenue is evident from the Assessment Orders dated 31st December, 2009 and 30th December, 2010 which does not even make a mention of the gifts received much less discuss and/or deal with the same. This issue is no longer res integra as this Court in Idea Cellular Ltd. v. Dy. CIT [2008] 301 ITR 407 (Bom.) has held that if during Assessment proceedings queries were raised and the assessee responded to the same, then even if an Assessment order does not mention the same, it does not mean that the Assessing Officer has not applied his mind to the issues. It would be well- nigh impossible for an Assessing Officer to complete all assessments assigned to him under Section 143(3) of the Act if he is required to deal with all issues which arose during the Assessment Proceedings. Thus, the Assessment Order primarily deal with only those issues in respect of which the Assessee has not been able to satisfy him and give reasons for his conclusion. This would enable the Assessee to challenge the same, if aggrieved. In fact the Gujarat High Court in CIT v. Nirma Chemical Works Ltd. [2009] 309 ITR 67/182 Taxman 183 has observed that if an assessment order were to incorporate the reasons for upholding the claim made by an assessee, the result would be an epitome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing Officer issued a query memos to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent-Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the identities of the donors, the source from where these funds have come and also the creditworthiness/capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue, cannot be accepted.”
3.5. We also find that Section 263 proceedings initiated under similar facts and circumstances with a very minor difference in the case of Bank of India was subject matter of adjudication by this Tribunal in dated 05/11/2020 wherein this Tribunal had quashed the revision proceedings u/s.263 of the Act on this issue. The only difference in the case of Bank of India was that in that case, the bank had indeed claimed deduction on account of bad debts written off u/s.36(1)(vii) of the Act in the return of income and the same was allowed by the ld. AO in the scrutiny assessment which was sought to be revised by the ld. PCIT by invoking revision jurisdiction u/s.263 of the Act. Whereas in the present case, deduction on account of bad debts written off was claimed by the assessee for the first time by way of an additional ground before the ld. CIT(A). The principle and the basis of claim of deduction remains the same in both the cases. Hence, the decision rendered in the case of Bank of India by this Tribunal vide order dated 05/11/2020 would squarely apply to the facts of the instant case also. Respectfully following the aforesaid decision, we have no hesitation in quashing the revision order passed by the ld. PCIT us.263 of the Act. Since, the revision proceedings are quashed, there is no need to adjudicate the issue on merits. Accordingly, the grounds raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on 25/ 11 /2021 by way of proper mentioning in the notice board.