TaxTMI 
TaxTMI 
2025 (1) TMI 163
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....ssessee has raised following grounds of appeal : "On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has: I. General Ground: Erred on facts and in circumstances of the case and in law by not accepting the returned income of the Appellant for the captioned AY. II. Disallowance of Rs. 36,60,197 under section 37 of the Act: Erred on the facts and in circumstances of the case and in law by confirming the disallowance for the provision of bad debts written back of Rs. 36,60,197 without appreciating the fact that these bad debts comprise of bad debts written off/ bad debts written back. Erred on the facts and in circumstances of the case and in law by not cons....
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....A) who granted part relief. For the addition sustained by ld.CIT(A), the assessee is in appeal before this Tribunal on the following two issues : (a) Disallowance for provision of bad debts written back at Rs. 36,60,197/- (b) Disallowance for warranty provision of Rs. 12,32,732/-. 4. At the outset, Ld. Counsel for the assessee submitted that the ld.CIT(A) sustained the disallowances only without considering the adjustment being made based on the observation of the Auditor in the Tax Audit Report but the ld.CIT(A) failed to consider the fact that assessee has already added back the provision for doubtful debts and provision for warranty debited in the profit and loss account and has only claimed the actual amount of bad ....
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.... 1 Provision for Bad Debts written backsq 36,60,197 2 Warranty Provision 12,32,732 Total 48,92,929 By doing so, the appellant had reduced the net amount of Rs. 23,88,411/- treating it as liability contingent in nature u/s. 37. In this regard, a question arises as to when the auditor reported Rs. 72,81,340/- as liabilities contingent in nature for disallowance u/s. 37, how the appellant had reduced the liability to Rs. 23,88,411/-. If the claim of the appellant were true regarding incurring expenditure on warranties and writing off bad debts, only resulting amount of Rs. 23,88,411/- ought to have been closing balance of the said two provisions, and reported by the auditor in Form No.3CD for disallowanc....
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....btful debts at Rs. 46,98,270/- and warranty provision of Rs. 25,83,071/-. The total of these two amounts comes to Rs. 72,81,341/-. However, while filing the details in the income-tax return, the assessee in Column 7(i) of Part A - Other Income (mandatory if liable for Audit u/s. 44AB) the amount mentioned as against amount of any liability of a Contingent nature is stated at Rs. 23,88,412/-. The CPC while processing the return, on one hand, took note of the observation of the Auditor mentioning the amount of Rs. 72,98,341/- and, on the other hand, actual amount of liability shown in the income-tax return under the head amount debited to the profit and loss account to the extent disallowable u/s. 37 at only Rs. 23,88,412/-. Accordingly, the ....