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

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).

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.

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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

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

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.

Resultantly, this appeal is allowed for statistical purpose.