TaxTMI 
TaxTMI 
2026 (7) TMI 1142
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.... Pr. CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the Honorable Pr. CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. 3. The Honorable Pr. CIT, has erred in not appreciating the settled position of law that, where there are two opinions possible on an issue, section 263 cannot be exercised to invoke such an issue. 4. The Honorable Pr. CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the Honorable Pr. CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. 5. Without prejudice to the above the Honorable Pr. CIT ought to have appreciated that the aforesaid issue on which the Honorable Pr. CIT had sought to revis....
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....Andhra Pradesh. Further it was also noted that from note-20 forming part of the profit and loss account that the assessee reported revenue from operations at Rs. 271,13,81,000/-, out of which Rs. 130,01,28,298/- was accounted for M/s. PCL Eagle Infra India Limited-JV. However, the revenue from operations of M/s. PCL Eagle Infra India Limited-JV was offered at Rs. 121,18,48,283/- only and there is a difference of Rs. 8,82,80,015/- as a discrepancy. The learned Pr. CIT observed that the Assessing Officer has not conducted proper enquiry and verified these issues which render the assessment order erroneous so far as prejudicial to the interests of the Revenue. Accordingly, a show cause notice dated 03.01.2025 was issued u/sec. 263 of the Act. In response to the show cause notice, the assessee filed its reply on 09.01.2025 and also sought 15 days' time to collect the necessary documents. The Pr. CIT then passed the impugned order on 10.02.2025 by holding that the Assessing Officer has failed to verify the genuineness of the bad debts and short accounting of revenue from operations while passing the assessment order. Accordingly, the assessment order passed by the Assessing Officer u/se....
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....bad debts. The learned Authorised Representative of the Assessee has submitted that this was not a claim of ordinary regular running bills, but it was additional claim of escalation cost which was not allowed by the Government Department and was pending for a long time. Therefore, the assessee finally treated the said debt as bad debt and written off in the books of account. He has referred to the detailed note filed by the assessee before the Assessing Officer placed at page nos. 82 and 83 of the paper book and also referred to the CBDT's Circular No. 12/2016 placed at page nos-184 and 185 of the paper book and submitted that the CBDT has clarified this issue that the legislative intent behind the amendment w.e.f. 01.04.1989 was to eliminate litigation on the issue of allowability of the bad debts by doing away with the requirement for the assessee to establish that the debts are in fact become irrecoverable. Thus, the learned Authorised Representative of the Assessee has submitted that when there is no legal requirement to establish that the debt has become irrecoverable then, the claim of bad debts is allowable u/sec. 36(1)(vii) r.w.s. 36(2) of the Act once the assessee has trea....
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.... year which was duly replied by the assessee with supporting evidence and details. Therefore, the order of the Pr. CIT passed u/sec. 263 of the Act on this issue is against the law as well as the binding Judgment of Hon'ble Supreme Court in the case of TRF Limited (supra) and the CBDT Circular No. 12/2016. 6. As regards the issue of discrepancy in the operating revenue from M/s. PCL Eagle Infra India Limited- JV, the learned Authorised Representative of the Assessee has submitted that the turnover declared by the assessee in the books of account and particularly in the profit and loss account is matching with the turnover as per 26AS. The entire amount was subjected to TDS and duly reflected in Form-26AS. He has further submitted that the entire receipt cannot be considered as turnover when some of the amount was on account of mobilization advances and material as well as other advances not in the nature of the revenue and particularly revenue for the year under consideration. He has referred to the Form-26AS and submitted that the turnover as per Form-26AS from M/s. PCL Eagle Infra India Limited- JV is shown at Rs. 121,18,48,816/- which is the same amount as part of the tot....
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.... [2012] 343 ITR 329 (Delhi). He has referred to the details of contract receipts earned from the contract executed during the financial year relevant to the assessment year under consideration along with the ledgers as well as bank account statement to show that the assessee has declared the correct turnover and specific turnover/contract receipts from M/s. PCL Eagle Infra India Limited-JV which is placed at page no. 217 of the paper book. The particular ledger account of M/s. PCL Eagle Infra India Limited-JV is placed at page no. 228 of the paper book and date-wise summary of the contract receipts is placed at page no. 229 of the paper book. Thus, the learned Authorised Representative of the Assessee has submitted that the assessee has correctly declared the turnover and contract receipts including the receipts from M/s. PCL Eagle Infra India Limited-JV of Rs. 121,18,48,283/-. The Pr. CIT has taken this amount of Rs. 130,01,28,298/- from the amounts received in the bank account during the year under consideration. Therefore, comparing the amount received in the bank account with the turnover declared by the assessee without considering the nature of the receipt in the bank account....
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....arned DR has submitted that the Pr. CIT has raised a pertinent issue that all the bad debts written off by the assessee pertain to the Government Department, which is not acceptable in the absence of any supporting evidence to show that the claim of the assessee was rejected by the Department. Thus, the writing off the bad debts without establishing the fact that the same has gone bad is not a genuine claim. He has further submitted that the learned Pr. CIT has given an opportunity to the assessee, but the assessee failed to submit the relevant record and details in support of the claim even before Pr. CIT. In support of his contention, he has relied upon the following orders: (i) Herbalife International India (P.) Ltd. vs. CIT-1 [2025] 174 taxmann.com 1009 (Karn.HC); (ii) CIT, Mumbai vs. Amitabh Bachchan [2016] 384 ITR 200 (SC); (iii) CIT vs. Infosys Technologies Ltd., [2012] 341 ITR 293 (Karn.HC); 8.1. He has relied upon the Order of the learned Pr. CIT. 9. We have considered the rival submissions as well as relevant material on record. The Assessing Officer, while passing the scrutiny assessment u/sec. 143(3) r.w.s. 144B of the Act dated 19.12.20....
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....nd needs to be examined thoroughly. Therefore, you are required to furnish clarification, in this regard, along with supporting documents to substantiate the claim. In view of the above, the assessment completed by the Assessing Officer by not verifying the issues, as mentioned above, is erroneous in so far as it is prejudicial to the interest of revenue. You are, therefore, requested to show cause as to why the order under section 143(3) r.w.s 144B of the Income Tax Act, 1961 was dated 19.12.2022 should not be revised/set aside. You are requested to submit your explanation/ objections/ submissions in this regard on or before 10.01.2025 You may also produce necessary evidences on which you may rely in support of your claim. You are requested to upload any further explanations and the necessary documents in e-filing portal on or before 10.01.2025. In case you want to submit any explanation in person you are case is posted for hearing on 10.01.2025 at 03:45 PM. It may please be noted that in the absence of any response on the said date, it will be presumed that you have no objection for the proposed revision and suitable orders will be passed on merits as p....
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....of TRF Ltd. In CA Nos. 5292 to 5294 of 2003 vide judgment dated 9.2.2010, has stated that the position of law is well settled. "After 1.4.1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1)(vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the hooks of accounts of assessee. 4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act." 9.2. Thus, CBDT has clarified that in view of Judgment of Hon'ble Supreme Court in the case of TRF Ltd., the intention of the legislature behind the amendment w.e.f. 01.04.1989 was to eliminate the litigation on the issue of allowability of bad debts by doing away with the requirement by the assessee to establish that the debts have in fact become irrevocable. The Pr. CIT has not doubted or questioned th....
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.... No. PAN of the person Amount in Rs. 1 AAAGE0869C 1,12,59,23,924 2 NOAGL1234N 11,16,29,277 3 AAAAP1497P 15,18,51,614 4 AAAAP1497P 2,71,96,920 9.4. Thus, the Assessing Officer has raised this query about the amounts of bad debts which were claimed as deduction and called upon the assessee to provide the justification, ledger accounts, contract agreements, efforts made to recover the dues etc. The Assessing Officer has given the specific amounts along with the PAN numbers. The assessee in response has provided all the details vide reply dated 28.10.2022, the acknowledge of which is placed at page nos. 134 and 135 of the paper book as under: 9.5. The assessee has also filed a note on entitlement of the claim of bad debt written off which is placed at page nos. 182 and 183 of the paper book as under: "PROGRESSIVE CONSTRUCTIONS LIMITED ASSESSMENT YEAR 2021-22 NOTE ON ENTITLEMENT OF CLAIM OF BAD DEBTS WRITTEN OFF AS DEDUCTION During the year under consideration the company had written off Rs. 141,66,01,735/- In this regard, we bring to your kind attention that the claim for bad debt will be allowed in the ye....
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....mentioned above. We further herewith enclosing the copy of CBDT Circular 12/2016 dated 30.05.2016 for your kind perusal and record. From that it can be seen that the claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfils the conditions stipulated in sub section (2) of sub-section 36(2) of the Act." Since the company has written off amount as bad debt as irrecoverable in the Books of account of the company in the year under consideration and the company had offered income in the earlier years against the corresponding bad debt written off during the year under consideration and thereby the company has fulfilled the condition (2) mentioned. We are herewith enclosing the ledger copies of the receivable written off during the year under consideration along with proof of income offered against the corresponding Bad Debts Written off during the year under consideration for your kind perusal and record. Therefore, company had rightly claimed the bad debts written off as d....
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.... altered by deletion of the word "established", which earlier existed. in Section 36(1) (vii) of the Income Tax Act, 1961 [Act', for short). For the sake of clarity, we re-produce hereinbelow provisions of Section 36 (1) (vii) of the Act, both prior to 1st April, 1989 and post-1 April, 1989: "Pre-1 April, 1989: Other deductions. 36.(1) The deductions provided for in the following clauses shall be allowed in respect with therein, in computing the income referred to in section of the matters dealt 28-- (i) to (vi) xxxx xxxx xxxx (vii) subject to the provisions of sub-section (2), the amount of any debt, or part thereof, which is established to have become a bad debt in the previous year. Post-1^st April, 1989: Other deductions. RI OF IND 36.(1) The deductions provided for in the following clauses shall be allowed in respect matters dealt with therein, in computing the income referred to in section of 28- (i) to (vi) xxxx xxxxx xxxxx (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the acc....
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....2367;खित खाते या दस्तावेज या जानकारी मांगी गई है: 1. The following accounts or documents or information is/are sought under section 142(1) of the Income-tax Act, 1961: Please provide complete information with respect to the following queries and also submit all relevant documentary evidences to support and substantiate your contentions. 1. Brief note on your source of income and detail of business activities carried out during the year. Please provide a detailed note on objectives of the entity. 2. Provide details of the method of accounting followed during the F.Y. 2020-21. In case of deviation in method of accounting, please mention and give a note on it. 3. Please provide copy of computation of total income for the assessment year under consideration. Provide evidences to substantiate the deductions claimed in the ITR. 4. Please provide the details of income tax assessment completed in your case for the previous assessm....
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....ax and specific query under question no. 8 with respect to the contract receipts/fee u/sec. 194C shown in the ITR along with the details of parties, TDS and income credited in the 26AS. The assessee has duly responded to the said query by filing the reply vide acknowledgment dated 14.10.2022 placed at pages nos-130 and 131 of the paper book as under: 10.2. Thus, along with the explanation and reply, the assessee has also filed reconciliation of the turnover. The assessee has declared the turnover as contract receipts at Rs. 271,31,81,000/- which is not in dispute. The Pr. CIT has taken the amount of contract receipt from M/s. PCL Eagle Infra India Limited-JV which is shown by the assessee as income from revenue operations at Rs. 121,18,48,283/-. However, the total amount received from the said company in the bank account is Rs. 130,01,28,298/-. Thus, this discrepancy taken up by the Pr. CIT without verifying the record that during the assessment proceedings the assessee has filed the reconciliation of turnover and also matching with the 26AS. The relevant part of the Form-26AS is as under: Sr. No. Name of Deductor TAN of Deductor Total Amount Paid/ Credit....
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.... - 41155895.00 617338.00 617338.00 18 194C 29-Oct-2020 F 24-Mar-2021 - 13367758.00 200517.00 200517.00 19 194C 05-Oct-2020 F 24-Mar-2021 - 3728003.00 55920.00 55920.00 20 194C 07-Sep-2020 F 24-Mar-2021 - 33552024.00 503280.00 503280.00 21 194C 01-Sep-2020 F 24-Mar-2021 - 1003139.00 15047.00 15047.00 22 194C 02-Jul-2020 F 24-Mar-2021 - 9028248.00 135424.00 135424.00 23 194C 16-Jun-2020 F 24-Mar-2021 - 94047844.00 1880957.00 1880957.00 24 194C 12-Jun-2020 F 24-Mar-2021 - 40207582.00 804152.00 804152.00 10.3. Therefore, even as per Form-26AS the contract receipts subjected to TDS u/sec. 194C from M/s. PCL Eagle Infra India Limited-JV is the same amount as declared by the assessee in the profit and loss account. The other amounts as reflected in the bank account of the assessee are not in the....
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....n u/sec. 263 by the Pr. CIT would amount to misuse and abuse of the provisions of Law. Since the assessee claim is found to be allowable and correct on the facts as well as in law, the decisions relied upon by the learned DR on the legal point are not applicable to the facts of the case and therefore, would not help the case of the Department. Accordingly, in the facts and circumstances of the case as discussed above, we are of the considered opinion that the Assessing Officer has passed the assessment order in accordance with Law as well as the facts and material available before him and therefore, the same cannot be held as erroneous or prejudicial to the interests of the Revenue. Hence, the impugned order of the learned Pr. CIT is not tenable and liable to be set aside. We Order accordingly. 11. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 04.03.2026. ============= Document 1 Acknowledgement Number : 757880901281022 e-Proceedings Response Acknowledgement INCOME TAX DEPARTMENT PROCEEDING DETAILS PAN/TAN AABCP2274M Name PROGRESSIVE CONSTRUCTIONS LIMITED Financial Year 2020-21 Assessment Year 2021-22 Proceeding Nam....