MADHYA PRADESH MADHYA KSHETRA VIDUT VITARAN COMPANY LIMITED,BHOPAL vs. THE DCIT- 2-(1), BHOPAL

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ITA 551/IND/2023Status: DisposedITAT Indore30 April 2025AY 2012-134 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal accepted the submissions made by both parties. It was held that the learned CIT(A) had dismissed the assessee's first appeal on a wrong assumption of fact, believing that the assessee had settled its case under the 'Vivad Se Vishwas Scheme, 2020'. The Tribunal acknowledged the assessee's clarification that the settlement under VsV pertained to the dispute arising from the assessment order, not the penalty order that was under appeal before the CIT(A). Consequently, the Tribunal set aside the impugned order passed by the CIT(A). The CIT(A) was directed to re-fix the assessee's first appeal and dispose of it on its merits after hearing the assessee. The Tribunal did not decide the merits of the penalty proceedings themselves.

What were the facts?

The assessee, Madhya Pradesh Madhya Kshetra Vidut Vitaran Company Limited, is an electricity distribution company. For Assessment Year 2012-13, it filed a return declaring a loss. The Assessing Officer (AO) passed an assessment order reducing the loss. The Principal Commissioner of Income-Tax (PCIT) found the assessment order erroneous and prejudicial to the revenue, directing the AO to re-examine the deduction of Rs. 57,52,00,000/- claimed on account of "Provisions for bad and doubtful debt". The AO, pursuant to the revision order, disallowed this claim in a fresh assessment order, further reducing the assessee's loss. Consequently, the AO initiated penalty proceedings under Section 271(1)(c) and imposed a penalty of Rs. 18,70,00,000/-. The assessee's appeal against this penalty order before the Commissioner of Income-Tax (Appeals) [CIT(A)] was dismissed.

What were the issues?

1. Whether the learned CIT(A) erred in dismissing the assessee's first appeal on the mistaken premise that the assessee had settled its case under the 'Vivad Se Vishwas Scheme, 2020' (VsV)? (Question of fact and law, turning on the applicability of VsV). Assessee's Contention: The assessee argued that the CIT(A) dismissed the appeal based on a wrong assumption that the assessee had settled its case under VsV. The assessee clarified that it had settled under VsV a dispute arising from the original assessment order dated 24.03.2015, not the penalty order dated 31.03.2018, which was the subject of the appeal before the CIT(A). The assessee relied on Forms No. 1 to 5 of VsV to substantiate this claim. Revenue's Contention: The revenue's Learned Departmental Representative (DR) stated that they had no objection to the submissions made by the assessee's Learned Authorized Representative (AR).

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI

For Appellant: Shri Gagan Tiwari, Advocate & AR
For Respondent: Shri Ram Kumar Yadav, CIT-DR
Hearing: 28.04.2025Pronounced: 30.04.2025

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

1.

Feeling aggrieved by order of first-appeal dated 03.11.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of penalty-order dated 31.03.2018 passed by learned DCIT-2(1), Bhopal [“AO”] u/s 271(1)(c) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on the grounds mentioned in Appeal Memo (Form No. 36).

2.

The background facts leading to this appeal are such that the assessee is an electricity distribution company. For AY 2012-13, the assessee filed return declaring a loss of Rs. 10,82,05,00,000/-. The case was selected for scrutiny and the AO passed assessment order dated 24.03.2015 u/s 143(3) reducing loss to Rs. 1,31,27,00,000/- due to certain additions/disallowances. Thereafter, the PCIT-1, Bhopal [“PCIT”] found the assessment-order passed by AO as erroneous-cum-prejudicial to the interest of revenue, raising an issue that the AO had wrongly allowed deduction of Rs. 57,52,00,000/- claimed by assessee on account of “Provisions for bad and doubtful debt”. The PCIT carried such a view on the footing that the deduction of “Provisions for bad and doubtful debt” is allowed only to banks and financial institutions u/s 36(1)(viia) and not to assessee which is engaged in electricity distribution. Ultimately, the PCIT passed revision- order dated 23.03.2017 u/s 263 directing the AO to re-frame assessment after examining the issue of deduction of “Provisions for bad and doubtful debt”. Pursuant to such revision-order, the AO passed order of fresh assessment dated 15.06.2017 u/s 143(3) r.w.s. 263 wherein he made an addition of Rs. 57,52,00,000/- by disallowing the claim of assessee. This addition/disallowance made by AO further reduced loss of assessee by Rs. 57,52,00,000/-. Therefore, the AO also initiated penalty proceedings u/s 271(1)(c) and ultimately passed penalty-order dated 31.03.2018 imposing a penalty of Rs. 18,70,00,000/- qua the addition/disallowance of Rs. 57,52,00,000/-. Aggrieved by penalty-order, the assessee filed first-appeal to Page 2 of 4 CIT(A) but did not get any success. Now, the assessee has come in next appeal before us.

3. Ld. AR for assessee carried us to Para 2 & 3 of impugned order passed by CIT(A), reading as under:

“2. अपीलीयकाय�वाहीकेदौरान, �रकॉड�परउपल�िववरणकेअनुसार, यहदेखागया हैिकिनधा�रणवष�2012-13 केउपरो�िवचाराधीनअपीलके�लए���करिववादसे िव�ासयोजना, 2020 केतहतफॉम�5 िदनांक10.05.2023 (बकायाकरकेपूण�और अंितमभुगतानके�लएआदेश) कोनािमत�ािधकारीयानी�धानआयकरआयु�के�ारा जारीिकयागयाहै।चूंिकअपीलकता�नेिववादसेिव�ासयोजना, 2020 औरफॉम�5 का लाभलेनेकािवक�चुनाहै, जोपहलेसेहीनािमत�ािधकारी�ाराजारीिकयागयाहै, वत�मानअपीलको���करिववादसेिव�ास, अिधिनयम, 2020 कीधारा4 (2) के �ावधानोंकेअनुसारवापसले�लयागयामानाजाताहै।

3.

प�रणाम��प, सां��कीयउ�े�के�लएअपीलकोवापसलेनेकेआधारपरखा�रज करिदयाजाताहै।”

4.

Referring to above, Ld. AR submitted that the CIT(A) has dismissed assessee’s first-appeal on a wrong assumption of fact that the assessee has settled its case under ‘Vivad Se Vishwas Scheme, 2020’ [“VsV”]. He explained that the correct position is such that the assessee settled under VsV its case of dispute arising from assessment-order dated 24.03.2015 passed by AO u/s 143(3) and not the dispute arising from penalty-order dated 31.03.2018 which was subject-matter of appeal before CIT(A). Ld. AR has also filed copies of Form No. 1 to 5 of VsV at Pages 1-15 of Paper-Book to demonstrate this correct position. Therefore, Ld. AR requested, the order

Page 3 of 4 of first-appeal passed by Ld. CIT(A) deserves to be set aside and the case be restored at the level of CIT(A) for a fresh adjudication on merit.

5.

Ld. DR for revenue does not have any objection to the submissions of Ld. AR.

6.

The submissions made by parties as above are accepted and in view of same, the impugned order passed by CIT(A) is set aside and the CIT(A) is directed to re-fix the first-appeal of assessee and dispose of same on merit after hearing assessee.

7.

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced in open court on 30/04/2025

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