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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
ORDER PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 23.01.2024 passed by LD CIT(A)-1, Coimbatore [‘the ld. CIT(A)’] for the assessment year 2021-22.
The facts of the case, in brief, are that the assessee filed its return of income declaring total income of Rs.158,62,41,310/-. The ld. Assessing Officer vide order of intimation u/s 143(1) dated 22.09.2022 determined the total income of the assessee at Rs.169,18,24,801/- by disallowing an amount of Rs.10,55,83,490/- on account of bad debts.
Before the ld. CIT(A), it was submitted that the CPC without prior intimation made the disallowance which is not correct. It was further submitted that the assessee has incurred bad debts of Rs.13,64,59,443/- which was disclosed by giving details of PAN/ Aadhar of the persons where the amount of bad debts was more than Rs.1 lakh. The amount for which PAN/Aadhar wise details were submitted was of Rs.10,55,83,490/-. For the remaining persons, the amount of Rs.3,08,75,953/- was reported as “Others”. It was submitted that while processing the return of income u/s 143(1), the Assessing Officer has given the allowance of only Rs.3,08,75,953/- which is reported in “Others” category and the amount of Rs.10,55,83,490/- was disallowed without providing any reasons for such disallowance.
Based on the arguments advanced by the assessee, the ld. CIT(A) held that the legal issue raised by the assessee is valid but the claim of the assessee that it has claimed bad debts correctly in the ITR filed is not correct. He noted on verification of the ITR that the assessee has not claimed the bad debts correctly in the ITR CPC has corrected the totalling mistake in the ITR only. After considering the various details furnished by the assessee, the ld. CIT(A) directed the Assessing Officer to allow the claim of bad debts of Rs.9,87,11,058/- instead of Rs.3,08,75,953/- by observing as under :- “The appellant has filed the details and the facts are available in the ITR filed. The appellant has entered Rs 6,78,35,105/- in the relevant column but the only mistake is that the bifurcation of figures was given above the total instead. The claim of the appellant is correct and the audited accounts filed along with the return supports it. Although there is a mistake in claim in the ITR according to the software of CPC, technically as per the face of the ITR the appellant has made the correct claim in the ITR. Considering these facts, the grounds raised
by the appellant that Rs 6,78,35,105/- was claimed as bad debts in the return is allowed. The appellant has claimed that the total bad debts is Rs 13,64,59,443/-. It is correct that the appellant has shown in column iv Total Bad Debt (47i + 47ii + 47iii) 47iv 13,64,59,443. But in the inner columns and bifurcations only Rs 6,78,35,105/- + Rs 3,08,75,953 totalling to Rs 9,87,11,058 is only given. Hence the claim as per ITR is only Rs 9,87,11,058 and the claim made in the ITR only can be allowed. The AO is directed to allow bad debts claim of Rs.9,87,11,058 instead of Rs 3,08,75,953 allowed by the CPC. The appellant gets a relief of Rs 6,78,35,105/-. The grounds raised by the appellant are partly allowed.”
5. Aggrieved with the order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :- “1] The ld. CIT(A) erred in not holding that the order passed u/s. 143(1)(a) was invalid since the ld. CPC had not issued any intimation to the assessee of the proposed adjustment and accordingly, the intimation order passed u/s. 143(1)(a) is null and void. 2] The ld. CIT(A) erred in not appreciating that the disallowance of bad debt made by the ld. CPC did not fall within the purview of clauses (i) to (vi) of section 143(1)(a) and accordingly, the entire Rs. .377,48,385/- should have been deleted. 3] The learned CIT(A) erred in not deleting the entire addition of Rs. 10,55,83,490/- in respect of bad debts without appreciating that no addition was warranted at all. 4] The learned CIT(A) erred in holding that the assessee had claimed the bad debts of only Rs. 9,87,11,058/- in ITR without appreciating that the assessee had claimed total amount of bad debts of Rs. 13,64,59,443/- in the ITR and hence, the entire amount of bad debts rightly claimed of Rs. 13,64,59,443/- should have been deleted. 5] The ld. CPC erred in holding that the assesee had filed PAN wise details of bad debts amounting to Rs. 6,78,35,105/- without appreciating that the assessee had filed PAN wise details of bad debts of Rs. 10,55,83,490/- and accordingly, the disallowance sustained by the ld. CIT(A) of Rs. Rs. 377,48,385/- is not correct and the same may kindly be deleted. 6] The ld. CIT(A) erred in holding that the assessee company had not made a correct claim of bad debts in the return of income without appreciating that the assessee’s claim was correct and it had not committed any mistake while filing the ITR and hence, the disallowance of bad debts confirmed by the ld, CIT(A) of Rs.377,48,385/- may kindly be deleted. 7] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal
.”
6. The ld. Counsel for the assessee at the outset drew the attention of the Bench to the copy of reply given by the Assessing Officer and submitted that after verification of all the 445 entries, the totalling comes to Rs.10,55,83,490/-. He submitted that the assessee has correctly entered the details of bad debts in the return of income and, therefore, the ld. CIT(A) was not justified in allowing the bad debts claim of Rs.9,87,11,058/- as against Rs.13,64,59,443/- claimed by the assessee.
The ld. DR, on the other hand, heavily relied on the order of the ld. CIT(A).
We have heard the rival arguments made by both the sides and perused the material available on record. We find the Assessing Officer/CPC processed the return of income and in the intimation determined the total income of the assessee at Rs.169,18,24,801/- as against the returned income of Rs.158,62,41,310/- by making the disallowance of bad debts of Rs.10,55,83,490/-. We find the ld. CIT(A) granted part relief to the assessee by allowing the bad debts of Rs.9,87,11,058/-, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the ld. Counsel for the assessee that the assessee has incurred bad debts of Rs.13,64,59,443/- and it has disclosed the details of bad debts with reference to PAN/ Aadhar where it is more than Rs.1 lakh. Similarly, the amount of Rs.3,08,75,953/- was reported as “Others”. The totalling of 446 entries where the bad debts is more than one lakh works out to Rs.10,55,83,490/- which the Assessing Officer has also admitted in the report given by him. We find merit in the above argument of the ld. Counsel for the assessee. A perusal of the report of the Assessing Officer at para 3 shows that the assessee has claimed the bad debts in respect of 446 entries at Rs.10,55,83,490/-. The relevant observation of the Assessing Officer reads as under :- “3. The contentions raised by assessee in ground Nos. 3 to 6 pertain to the sole issue of allowing its claim of bad debts amounting to Rs. 13,64,59,443/- out of which Rs. 10,55,83,490/- has been claimed in respect of 446 entities for whom PAN/ Aadhaar has been mentioned (as amount exceeded Rs. 1 lakhs for each entry) and Rs.3,08,75,953/- claimed for others amounts being less than Rs. 1 lakh. In .this regard, it is to mention that though the assessee claims that the total claim of bad debts where PAN/ Aadhar details have been furnished is Rs. 10,55,83,490/-; yet the assessee had mentioned total of all the rows where PAN/ Aadhaar had been furnished at Rs.6,78,35,105/- only in column no. 47(i) while filing the return of income. As such, the C1T(A) while partly allowing the appeal filed by the assessee had only granted relief to the extent of Rs. 6,78,35,105/- to the assessee as against its claim of Rs. 10,55,83,490/-. Nevertheless, the assessee has now preferred appeal before thy Hon’ble Tribunal against the order of CIT(A) seeking relief of further amount of Rs. 377,48,385/- on the ground that its claim in the return of income was of Rs. 10,55,83,490/- only and there arises no occasion to disallow the said amount. In order to verify the claims so raised by the assessee, each of the 446 entries as filed by the assessee in the return of income and as processed by CPC while issuing intimation u/s 143(1) of the IT Act has been cross verified. The sum of said 446 entries works out to Rs. 10,55,83,490/- as is being claimed by the assessee in his appeal. Thus, it is deducible that although the entries were correctly filed by the assessee amounting to Rs. 10,55,83,490/-, the total amount in relevant column of the ITR was inadvertently mentioned as Rs. 6,78,35,105/- only.”
Since the Assessing Officer, in the instant case after due verification, has admitted that the sum of 446 entries works out to Rs.10,55,83,490/- and the entries were correctly filed by the assessee amounting to Rs.10,55,83,490/- but the total amount in the relevant column of the ITR was inadvertently mentioned as