PME POWER SOLUTIONS (INDIA) LTD.,NEW DELHI vs. ACIT, CIRCLE-19(2), NEW DELHI

The grounds of appeal taken by the assessee read as under :-

“1. That the appellant denies its liability to be assessed at total income of Rs.7,87,87,302/- and accordingly denies its liability to pay tax, interest demanded thereon. 2. The Ld. AO is totally unjustified in making addition of Rs.4,35,16,422/- on a/c of provisions for bad debts. The same provision has already been reduced from the expenses in the profit & loss a/c as it was a provision relating to previous year. Just to neutralize the income the ./2020 assessee had to be reduced the same amount in the computation of income. So the addition made is totally unjustified.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in passing the ex-parte order and that too without giving adequate opportunity of hearing and in violation of principles of natural justice.

Brief facts of the case are that the Assessing Officer observed that assessee was asked to explain the claim of deduction of Rs.5,37,09,570/- claimed under Schedule BP of the ITR along with details in support of such claim. AO noted that this aggregate claim included claim for provision for bad debt written off of Rs.4,35,16,422/-. AO further observed that assessee itself has stated that the above sum is only a provision for bad debt and not actually written off, therefore, AO disallowed the provisions.

Upon assessee’s appeal, ld. CIT (A) noted that nobody appeared on behalf of the assessee despite opportunities. He confirmed the addition made by the AO.

Against this order, assessee is in appeal before us. We have heard both the parties and perused the records.

ld. Counsel of the assessee submitted that assessee has already reduced the said provision from the expenses in the profit & loss account

Ld. DR for the Revenue, on the other hand, relied upon the orders of the authorities below.

Upon careful consideration, we find that it is the claim of the assessee that assessee has already adjusted the provision by reducing the same in profit & loss account and the AO has fallen into error in adding the same again. On the facts and circumstances as stated above, in our considered opinion and in the interest of justice, the matter deserves to be remitted to the file of AO. AO shall examine whether it is a case of double addition or not by referring to the assessee’s computation of income and books of account. Both the counsels fairly agreed to the above proposition. Needless to add, assessee should be granted adequate opportunity of being heard. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 10th day of May, 2023.