2025 (6) TMI 492

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....he order of the Ld. PCIT in setting aside the order passed by the Assessing Officer u/s 143(3) of the Act by invoking the provisions of section 263 of the Act. 3. Facts of the case, in brief, are that the assessee is a company engaged in business of engineering services. It filed its return of income on 25.11.2016 declaring taxable income of Rs. 11,24,37,760/-. The case was selected for scrutiny through CASS and accordingly statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the AR of the assessee appeared from time to time and filed the requisite details. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 144C(13) r.w.s. 143(3A) & 143(3B) of the Act on 13.04.2021 d....

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....of Provision of Doubtful Debts], remained to be taxed. 3. For the reasons stated hereinabove, the order made by the Assessing Officer in your case for AY 2016-17 appears to be erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, and by virtue of the authority vested in the undersigned as per the provisions of section 263 of the Income Tax Act 1961, the said order is proposed to be revised under the said section. 5. You are hereby given an opportunity of being heard to explain as to why the proposed revision should not be carried out. For this purpose, your case is posted for hearing on 25.01.2024 at 04.30 PM." 5. The assessee in response to the same furnished a reply stating that there i....

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....described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenditure of the assessee if it is laid out or expended wholly and exclusively for the purposes of its business. However, the prime condition for such claim under section 37(1) is that it should have crystallized during the impugned accounting year. This condition is admittedly not satisfied in respect of this claim of the assessee. The assessee's working of the net disallowable component of the 'Provisions for VPI' is not supported by any credible evidence and on the other hand, at Column no. 21(g) of the tax audit report for A.Y. 2016-17, the Tax Auditor has clearly and unambiguously listed an amount of Rs. 3,25,70,478/- as a p....

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.... the provisions of section 36(1)(vii) do not come into play. Directions 6. In view of the above facts, I am of the considered opinion that the order passed under section 143(3) on 13.04.2021 by the FAO is erroneous in so far as it is prejudicial to the interests of the revenue and the same is set aside for framing fresh assessment in respect of the issue discussed above in light of the observations made in this order. The assessment is to be completed within the stipulated time-frame after conducting the necessary enquiries and giving due opportunity of being heard to the assessee. Further, wherever applicable, the Assessing Officer is also directed to initiate penalty proceedings as per the provisions of the Income Tax Ac....