TaxTMI 
TaxTMI 
2024 (10) TMI 1834
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 144B of the Act on 22.04.2021 by the Faceless Assessment Unit/AO determining the assessed loss at Rs.13,82,109/- [by disallowing Rs. 50,55,284/- in respect of expenses claimed and added also adjustment made by the CPC to the tune of Rs. 62,080/-]. However, the Ld. PCIT was of the view that the assessment order passed by the AO u/s.143(3) read with section 144B of the Act was erroneous and also prejudicial to the interest of the Revenue on two grounds i.e. i) the action of the AO allowing bad debts written off to the tune of Rs. 41,77,844/- and ii) the action of the AO allowing the claim of employees contribution towards PF/ESI to the tune of Rs.8,36,020/-, (even though, remitted after the due date as per PF/ESI Act). The Ld. PCIT, acknowledged that AO enquired into the issue of bad debts written off to the tune of Rs.41,77,844/- by issue of show cause notice u/s.142(1) of the Act dated 19.02.2021 but, the AO completed the assessment without considering the veracity of the issue by further enquiries. Therefore, he was of the opinion that the AO's action was erroneous and also prejudicial to the interest of the Revenue within the meaning of sec.263 of the Act. Likewise, he fou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Ld. CIT only when it is shown that the said order is prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an "erroneous" order passed by the Assessing Officer. The Hon'ble Supreme Court, held that for invoking powers conferred by S.263; the CIT should not only show that the AO's order is erroneous as a result of any of the situations enumerated above but CIT must also further show that as a result of an erroneous order, some loss is caused to the interest of the revenue. Their Lordship in the said judgment held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. It was further observed that when the Assessing Officer adopts one of the course permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld. CIT does no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s irrecoverable. It is enough if the bad debts are written off as irrecoverable in the accounts/hands of the assessee. In light of the enquiry conducted by the AO and position of law in respect of claim of bad debts, we note that AO verified the claim of assessee and found that the bad debts claimed by it has been written off in its books, and then the AO has accepted the claim and allowed the same, which action can't be held to be erroneous and also prejudicial to the interest of the Revenue. Therefore, we find the Ld. PCIT erred in exercising his revisional jurisdiction on this issue. 6. Likewise, in respect of the next issue i.e. AO's action of allowing deduction regarding remittance of employee's contribution towards PF/ESI. It is noted that the AO had called for details of employee's remittances to PF/ESI which fact is discernable from the notice issued by the AO u/s.142(1) of the Act dated 10.02.2020 which is found placed at Page Nos.11-20 of the Paper Book. It is noted that the AO by asking query No.14 [found placed at Page No.19 of the Paper Book] had asked the assessee to give details about the employee's contribution towards PF/ESI and also asked assessee as to whether....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt would not justify the CIT in treating the AO's decision as erroneous . The power of the CIT under Section 263 of the IT Act must be exercised on the basis of the material that was available to him when he exercised the power . At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the Revenue. The satisfaction of the CIT, therefore, was based on no material either legal or factual which would have given him the jurisdiction to take action under Section 263 of the IT Act. 6. The decisions of the High Courts relied upon by learned counsel appearing for the appellant do not, in our view, assist the Revenue. The Madras High Court in CIT v. Seshasayee Paper Boards Ltd (supra) considered a situation where the AO had relied upon a particular decision in framing the assessment order. The decision relied upon was itself the subject-matter of an appeal before the Supreme Court. In those circumstances, the High Court was of the view, and correctly so that the CIT could have initiated proceeding under Section 263. It is nobody's case that the decision in Dusad Industries (supra) was the su....