TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 56
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....isdiction u/s 263 grossly failed to appreciate that it is not permissible for the Commissioner under the proceedings u/s 263 to re-examine the claim of assessee and substitute his judgment for that of the Assessing Officer. 4. Without prejudice to the foregoing, the CIT has on the merits grossly failed to appreciate that the assessee is ostensibly entitled for deduction u/s 36(1)(viia) as claimed by the assessee in the revised return of income. That the appellant craves leave to Add, to and / or Amend, modify or withdraw the grounds outlined above before or at the time of hearing of the appeal." 3. From the aforesaid grounds, it is clear that only grievance of the assessee relates to the action of the ld. CIT in revision of the assessment order by invoking the provisions u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act). 4. Facts of the case in brief are that the assessee filed its return of income on 30.09.2009 declaring an income of Rs. 52,11,39,000/-. The said return was revised on 30.08.2010 and total loss was shown at Rs. 18,85,37,525/-. Thereafter the return was further revised and filed on 11.10.2010 showing loss of Rs. 13,80,69,000/-. The said ....
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....sed return of income of Bank for A.Y. 2009-10." 5. The ld. CIT pointed out that the AO accepted the submission made by the assessee regarding claim of deduction u/s 36(1)(viia) of the Act and completed the assessment on the figure of returned loss. The ld. CIT observed that subsequently a proposal was submitted by the Adl. CIT, Range-I, Moradabad vide letter dated 06.11.2012 wherein it was mentioned that during the assessment proceedings the details regarding provisions for bad and doubtful debts were not properly examined and there were no details pertaining to the provisions for bad and doubtful debts claimed by the assessee amounting to Rs. 80,15,60,000/-, it was also mentioned in the proposal that no revised balance sheet or profit and loss accounts were filed which could show that deduction was reflected in the final accounts and even revised Audit Report was not filed. The ld. CIT accordingly initiated the proceedings u/s 263 of the Act. The ld. CIT referred to the provisions contained in Section 36(1)(viia) of the Act and observed that the claim would be limited to the amount by which such debt or part thereof exceeds the credit balance in the provisions of "bad and doubtf....
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....ing the taxable profits." 6. The ld. CIT did not accept the contention of the assessee by observing that the decision of the Hon'ble Supreme Court relied by the assessee was delivered with reference to nonbanking financial companies and the issue was not exactly the allowance of deduction u/s 36(1)(viia) of the Act. The ld. CIT further observed that the AO while accepting the claim of loss made by the assessee in the revised calculation of income did not call for relevant details nor the same were furnished by the assessee and that no revised Audit Report u/s 44AB of the Act was furnished by the assessee during the course of assessment proceedings or proceedings u/s 263 of the Act before him. The ld. CIT held that the order passed by the AO was not only erroneous but prejudicial to the interest of Revenue as the AO did not examine properly the claim made by the assessee u/s 36(1)(viia) of the Act. Accordingly, the same was set aside to the file of the AO with the direction to re-examine the claim u/s 36(1)(viia) of the Act afresh. 7. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted ....
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.... of Rs. 80,15,60,000 were submitted (page 15-28 PB): iii. Impact of relevant adjustments in the Revised return of income with respect to computation of deduction u/s 36(1)(viia) was explained; iv. It was explained that the adjustments in the revised return of income with respect to deduction u/s 36(1)(viia) have been made out of the books only. It was explained that the accounts are not impacted by the said adjustments; v. Vide the said submission a reference was made to the discussion with the AO on 01/11 and with respect to the same it was clarified that since the said adjustments are made out of the book only therefore the accounts are not impacted and accordingly there will arise no requirement of furnishing any revised report from auditor; vi. It was submitted that a working of provisions for bad debts of Rs. 14,18,27,000 was filed along with the revised return of income which was re-submitted before the AO (page 13 PB); vii. It was submitted before the AO that since the assessee is a Regional Rural Bank (RRB) sponsored by Syndicate Bank therefore the assessee is under a strict vigilance and control of RBI. It was clarified before the AO that it is not permissible fo....
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.... of claim u/s 36(1)(viia) of the Act as made by the assessee in its revised return of income. It was stated that the ld. CIT only by throwing suspicion had directed the AO to reexamine the matter, the said approach was grossly unsustainable in the eyes of law because the ld. CIT cannot direct the AO to re-examine the claim of the assessee. The reliance was placed on the following case laws: * CIT Vs Sunbeam Auto Ltd. (2010) 332 ITR 167 (Del) * CIT Vs New Delhi Television Ltd. (2013) TIOL 776 HC Del * CIT Vs Gabriel India Ltd. 203 ITR 108 (Bom) * CIT Vs Ganpat Ram Bishnoi 296 ITR 292 (Raj.) * CIT Vs International Travel House Ltd. 344 ITR 554 (Del) * CIT Vs Ashish Rajpal 320 ITR 674 (Del) * A2Z Maintenance & Engineering Services Ltd. Vs CIT (2015) TIOL-1894-ITAT-DEL * Sardhana Papers Pvt. Ltd. Vs CIT (2015) TIOL-2016 (ITAT Del) * ITO Vs DG Housing Projects Ltd. 343 ITR 329 (Del) Ø Director of Income Tax Vs Jyoti Foundation 357 ITR 388 (Del) 10. It was further submitted that the ld. CIT cannot remand the matter to the AO to undertake fresh inquiries which would employ and mean that the ld. CIT had not examined and decided as to whether the order w....
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....passed by Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The only limitation on his powers is that he must have some material(s) which would enable him to form a prima facie opinion that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. Once he comes to the above conclusion on the basis of the 'material' that the order of the Assessing Officer is erroneous and also prejudicial to the interests of the Revenue, the Ld. CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is empowered to cancel the assessment and direct to frame a fresh assessment. He is also empowered to take recourse to any of the three courses indicated in section 263 of the Act. But the Ld. CIT does not have unfettered and unchequred discretion to revise an order, he is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in ....
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.... exercising his jurisdiction under section 263 of the Act, must have material on record to arrive at a satisfaction." (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation be a letter in writing and the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be said to be either erroneous or prejudicial to the interest of the Revenue. 15. Reverting to the facts of the present case, it is noticed that the assessee filed its revised return on the basis of the judgment of Hon'ble Supreme Court in the case of Southern Technologies Vs JCIT reported at 320 ITR 577. Thereafter, the AO vide order sheet entry dated 01.11.2011 (copy of which is placed age page no. 7 of the assesse's paper book) asked the assessee to furnish various details with respect to the following: "i. Brief note on the modus operand of the business activities; ii. Computation of deduction u/s 36(1)(viia); iii. Working of provision for bad debts and claim of bad debts; iv. Bills for fixed assets purchased during the year....
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.... assessee is required to furnish any revised report from auditor, accounts etc. In this regard, it may be noted that since the aforesaid adjustments are made out of the book only i.e. in the computation of income therefore the accounts are not impacted by the aforesaid two adjustments. Therefore, there will arise no requirement of furnishing any revised report from auditor, accounts etc. This deduction has been claimed strictly in accordance with the provisions of section 36(1)(viia). The claim of such deduction also finds support from the decision of the apex Court in the case of Southern Technologies Ltd. vs JCIT (2010) 228 CTR (SC) 440. An elaborate and detailed clarification regarding claim of deduction u/s 36(1)(viia) has already been filed in your office on 06/07/2010. However, for the sake of convenience, a copy of the same is being filed. Under these circumstances, the claim of Rs. 80,15,60,000/-which is equal to the 10% of Rural advances, may kindly be allowed u/s 36(1)(viia) of the IT. Act. 3. The working of provisions of Bad Debts of Rs. 14,18,27,000 was also filed alongwith the revised return of income, same is re enclosed herewith for ready reference. 4. Details ....
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.... order passed by the lower authority is erroneous and prejudicial to the interests of the Revenue. Orders which are passed without inquiry or investigation are treated as erroneous and prejudicial to the interests of the Revenue, but orders which are passed after inquiry/investigation on the question/issue are not per se or normally treated as erroneous and prejudicial to the interests of the Revenue because the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken. In cases where there is inadequate enquiry but not lack of enquiry, the Commissioner must record a finding that the order/inquiry /made is erroneous. This can happen if an enquiry and verification is conducted by the Commissioner and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in law. An order of remit cannot be passed by the Commissioner to ask the Assessing Officer to decide whether the order was erroneous." 21. In the present case also the AO made the proper inquiry/investigation on the issue under consideration and the ld. CIT simply directed the AO to re-exami....