TaxTMI 
TaxTMI 
2026 (6) TMI 413
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 of Income Tax Act, 1961 [in short "the Act"]. 2. This order under section 263 of the Act was passed by the Pr.CIT as it was noticed that the assessee has debited an amount of Rs. 20,85,248/- towards "Provision for Bad & Doubtful Debts" in the Profit and Loss account which is an "ascertained liability" and should have been disallowed as this expenditure is prima facie not allowable under the provisions of the Act. The Ld.AO should have examined its allowability and the Assessing Officer [in short "Ld. A.O."] did not make the required disallowance in this regard. Ld. Pr.CIT has observed that the case was selected for complete scrutiny and still the A.O. has not examined the above issue. Apart from this an amount of Rs. 3,11,472/-, excess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....21,020/- instead of Rs. 14,63,78,410/- in the ITBA system, resulting in an excess levy of demand of Rs. 3,11,472/-. This discrepancy reflects a failure to accurately compute the assessed income, which is a key component of the assessment process. The failure to disallow the "Provision for Bad & Doubtful Debts" and the incorrect adoption of assessed income reflects a lack of adequate scrutiny and proper application of the provisions of the Income Tax Act. As such, the assessment order passed on 29.09.2022 appears to be erroneous and prejudicial to the interests of revenue. 3. You are required to explain why the assessment order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, on 29.09.2022 for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee-society the Pr.CIT came to the conclusion that the assessee has not written off the "bad debts" in their books of accounts and held as follows: - "6. On perusal of the same it is noticed that the assessee has not furnished any documents/ offered any explanation as called for vide this office Notice dated. 06.02.2025 to substantiate its claims in connection with Bad/doubtful Debts. It is further observed that the assessee has claimed the said entry of 'Provision for Bad and Doubtful Debts' are not provisional but mis reported in the ITR. In that case the same should be written off to claim it as deduction. However, the letters furnished by the assessee mentioned in the Para '4.1' dated. 10.08.2020 and 13.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eading to an excess levy of Rs. 3,11,472/-: Since the mistake is apparent from Record the same can be rectified by passing Rectification Order u/s.154 of the Act. However, since the assessment order passed u/s 143(3) r.w.s. 144B of the Act on 29-09-2022 in this case is treated now as an order which is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of section 263 of the Act as discussed at Para 4.1, the mistake in adopting income for computation can be rectified while passing the consequential Assessment Order in pursuance of Revision Order passed now u/s.263 of the Act. 6.2) Further, the revision proceedings initiated under Section 263 of the Income Tax Act, 1961, remain valid and enforc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder passed by the A.O. was held as "erroneous" in so far as the same is "prejudicial to the interest to revenue" within the meaning and scope of provisions of section 263 of the Act. 5. The Ld. Pr.CIT has invoked Clause(a) Explanation 2 to Section 263(1) of the Act inserted in the statute w.e.f. 01.06.2015 by the Finance Act, 2015 and held that the order passed by the A.O. shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue if the order was passed without conducting enquiries or verification which should have been made. Applying these provisions, the Pr.CIT invoked revisionary powers under section 263 of the Act and held that the assessment order is incorrect and thereby the issue was set-aside to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e taking the action. The Pr.CIT has categorically held that the A.O. has not applied his mind and no enquires were also caused with regard to the major issue of "Provision for Bad & Doubtful Debts". Hence the order of the Pr.CIT exercising the revisionary jurisdiction under section 263 of the Act is correct and valid and accordingly the same should be upheld. 9. After hearing both the sides, the Bench observed that several adjournment requests were granted over a period of time and finally the Ld. AR of the assessee-society filed a copy of withdrawal letter and requesting the Bench to permit him to withdraw his "Vakalat" and arguing this case. In view of the same, the Bench decides to pass the order based on the material available on rec....