Assessee wins partial relief as revision under section 263 partly set aside for bad debts claim

ITAT Ahmedabad partially allowed the assessee's appeal against PCIT's revision order under section 263. The tribunal upheld PCIT's finding regarding incorrect allowance of additional depreciation, following precedent from Dakshin Gujarat Vij Co. Ltd. However, regarding bad debts claim, the tribunal found PCIT's revision unsustainable since PCIT himself was satisfied with assessee's explanation and documents, confirming the claim was legally eligible. The tribunal held that mere lack of examination by AO during assessment proceedings does not render the order erroneous when no actual error exists.

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Issues involved:
The judgment involves issues related to the exercise of revisionary powers under Section 263 of the Income-tax Act, 1961 for the Assessment Year 2014-15, specifically focusing on the incorrect allowance of additional depreciation and the wrong claim of Bad Debts.

Issue 1: Incorrect allowance of additional depreciation:
The ld. PCIT noted that the assessee claimed additional depreciation of Rs. 190,48,38,998/-, which was allowed during the assessment proceedings. The ld. Counsel for the assessee conceded that this issue was covered against the assessee by a decision of the ITAT Ahmedabad Benches in a previous case. The Tribunal confirmed the error in the assessment order regarding the incorrect allowance of additional depreciation based on the previous decision.

Issue 2: Wrong claim of Bad Debts:
The ld. PCIT observed that the assessee claimed Bad & Doubtful Debts written off/provided for, amounting to Rs. 2244.07 lakh, but only added back Rs. 19,15,78,384/- in the computation of income. The ld. Counsel for the assessee argued that there was no finding of error by the ld. PCIT regarding this issue. The assessee provided detailed explanations and documents to justify the claim of bad debts. The ld. PCIT acknowledged the explanation provided by the assessee but held the assessment order erroneous because the Assessing Officer did not examine the case thoroughly.

The ld. PCIT found that the explanations and documents were not submitted to the Assessing Officer during the assessment proceedings, leading to inadequate inquiries on the issue. However, the ld. PCIT himself was satisfied with the explanation provided by the assessee and found no error in allowing the claims. The Tribunal concluded that the ld. PCIT's order was not sustainable in law as there was no error noted in the assessment order regarding the allowance of bad debts. Therefore, the order was set aside on this issue.

In conclusion, the appeal of the assessee was partly allowed, confirming the incorrect claim of additional depreciation but setting aside the finding on the erroneous allowance of bad debts.

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