TaxTMI 
TaxTMI 
2025 (4) TMI 852
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....ate that the assessment order dated 16/04/2021 is neither erroneous nor prejudicial to the interest of the revenue. 2. Order u/s. 263 dated 05/01/2024 is illegal and invalid. 2.1 The learned Principal Commissioner of Income-tax failed to appreciate that the notice u/s. 263 dated 20/02/2023 being illegal and invalid, the consequent order u/s. 263 dated 05/01/2024 is also illegal and invalid. 2.2 The learned Principal Commissioner of Income-tax failed to appreciate that the order u/s. 263 dated 05/01/2024 is illegal and invalid being without authority in law and without jurisdiction. 2.3 The learned Principal Commissioner of Income-tax failed to appreciate that the assessment order dated 16/04/2021 is neither erroneous nor prejudicial to the interest of the revenue. 2.4 The learned Principal Commissioner of Income-tax failed to appreciate that the two claims under consideration have been correctly allowed by the learned Assessing Officer. 3. The appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal" Brief facts of the case are as under: 2. The assessee is scheduled bank engaged in banking ser....
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....ng of investment is adjustment where the loss is booked in accounts and this loss is a notional loss as no sale has taken place and the asset continues to be owned by the bank. As per IT Act, 1961 there is no provision to recognize a depreciation on shifting of investments. Only of the investments are disposed off or as per RBI guidelines, the profit/loss on account of the same is recognized. In view of the above, provision depreciation on shifting of investment should have been disallowed. Omission to do so has resulted in excess computation of loss of Rs. 8,65,35,469/ -. In view of this the income of Rs. 294,31,89,239/- should have been added back to the total taxable income whcile computing the assessment order u/s. 143(3) r.w.s. 144B of the Act dated 20/04/2021. 4. In view of the above observations the assessment order passed by the A.O., without proper verification of facts and without correct application of law as required while making assessment. Hence, it is proposed to revise/ set-aside the said order u/s. 263 of the IT Act, 1961. 5. Accordingly you are hereby requested to furnish your reply/explanation as to why the said order passed on 07/04/2021 u/s. 1....
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....t of revenue. In view of the facts discussed above, and the legal position discussed above, the Assessing Officer's failure in not conducting the requisite enquiries which were required to be made in this case the assessment order dated 16.04.2021, becomes erroneous in so far as it is prejudicial to the interests of the revenue. 17. Considering the facts of the case and, moreover, that both the conditions specified u/s 263 of the Act are satisfied in this case I am of the opinion that this is a fit case to invoke provisions of Explanation 2 to the section 263. Accordingly, the assessment order dated 16.04.2021 passed by the Assessing Officer u/s 143(3) r..[1]. 143(3A) & 143(3B) of the Act is set aside for the limited purpose, on the issue discussed above, to the file of the Assessing Officer with the directions to conduct requisite enquiries along the lines discussed above and frame the order of assessment accordingly. In the process, adequate opportunity of being heard should be accorded to the assessee to file submissions, details and to furnish their explanation. Order under section 263 of Income Tax Act, 1961 is passed accordingly." Aggrieved, by the order of th....
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....debt or part thereof written off in the previous year and the credit balance in the provision for bad and doubtful debts account made under clause (vila). Thus, the proviso would not permit the benefit of double deduction, operating with reference to rural loans while under section 36(1)(vii). Per S. H. KAPADIA C. J. I. (concurring): The provisions of clause (viia) of section 36(1) relating to the deduction on account of the provision for bad and doubtful debt(s) are distinct and independent of the provisions of section 36(1)(vii) relating to allowance of the bad debt(s). In other words. scheduled commercial banks would continue to get the full benefit of the write off of the irrecoverable debt(s) under section 36(1) (vii) in addition to the benefit of deduction for the provision made for bad and doubtful debt(s) under section 36(1) (viia). Normally, a deduction for bad debt(s) can be allowed only if the debt is written off in the books as bad debt(s). But in the case of rural advances, a deduction would be allowed even in respect of a mere provision without insisting on an actual write off. However, this may result in double allowance in the sense that in respect....
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....pect of correctness of deduction of Rs.8,65,35,469.23/-, as per ICDS-VIII issued by CBDT. The Ld.AR submitted that, the Ld.PCIT referred to CBDT Instruction No.17/2008 dated 26/11/2008 in paragraph 6 of the order. He submitted that, the assessee complied with this CBDT Instruction. It was submitted that the deduction of depreciation on shift investment of Rs.8,65,35,469.23/- claimed and allowed by the Ld.AO is as per Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No. 87/2016 dated 29/09/2016. The Ld.AR submitted that the Ld.AO considered both and allowed the deduction. The Ld.AR submitted that, deduction allowed as per Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notification No. 87/2016 dated 29/09/2016 can not be denied or disallowed by referring to CBDT Instruction No. 17/2008 dated 26/11/2008. 3.5 He thus submitted that based on above details and the decision the Ld.AO accepted assessee's claim. The Ld.AR placed reliance on the observation of the Ld.PCIT in pare 15 of the impugned order to support his argument that 263 if bad in law as it does not satisfy the necessary ingredients envisaged under the act in....
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.... allowed the said claim. 4.4 In paragraph 15 of the order u/s.263, we note that, the Ld. PCIT categorically noted that the present case does not fall under the category of inadequate enquiry. Thereafter passing the impugned order u/s.263 by invoking Explanation 2(a) and (c) claiming the enquiry and verification was not adequate is not acceptable. Further in paragraph 10 and 15 of the impugned order, it is stated that, Instruction of the Board No.17/2018 dated 26/11/2018 has not been followed by the Ld.AO and that makes the assessment order erroneous and prejudicial to the interest of the Revenue for the purpose of section 263. We note that there is no CBDT instruction No. 17/2018 dated 26/11/2018 and nothing has been brought by the revenue inon record in respect of the same. The only relevant CBDT instruction is No. 17/2008 dated 26/11/2008. 4.5 It is noted that, the Ld.AO called for detailed explanation from the assessee on the two issues vide notices referred to in preceding paras, and upon satisfaction allowed the deduction by considering CBDT instruction is No. 17/2008 dated 26/11/2008 and Income Computation & Disclosure Standards (ICDS-VIII) issued by CBDT Vide Notificat....
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....y to the treasury. The section is not enacted to get a sheer escapement of revenue which is taken care of in other provisions of the Act. Prejudice that is contemplated under section 263 is the prejudice to the income-tax administration as a whole. Section 263 is to be invoked not as a jurisdictional corrective or as a review of a subordinate's order in exercise of the supervisory power, but it is to be invoked and employed only for setting right distortions and prejudices to the revenue, which is a unique conception, which is to be understood in the context of and in the interests of the revenue administration. 4.10 We do not find any merit in the present proceedings initiated against the order u/s.143(3) on an issue that falls outside the scope of reasons recorded. We therefore of the opinion that the notice issued u/s. 263 dated 18.03.2024 is voidab- initio as a consequence of which the order passed u/s. 263 dated 29.03.2024 has to be declared to be bad in law. Accordingly, the grounds raised by the assessee stands allowed. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 25/03/2025 ============= Document 1 GO....