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2006 (12) TMI 257 - AT - Income TaxValidity of order u/s 263 - Of orders prejudicial to interest of revenue - Non speaking order - Deduction u/s 36 - Bad debts - income from interest under the head ‘Income from other source’ - HELD THAT:- Merely because the order of the Assessing Officer is not elaborative on the point of allowability of the claim of the assessee i.e., the claim of the bad debts does not give rise to a presumption that the particular issue was not looked into by the Assessing Officer. It is an accepted norm of passing assessment order wherein the claim of the assessee is accepted, no comments about the same are usually found in the body of the assessment order, though in cases wherein if disallowance of a particular claim is made by the Assessing Officer, the observations to that effect are incorporated in the body of the order. Enquiries were made by the Assessing Officer in respect of the expenditure claimed by the assessee i.e., bad debts against the income from bill discounting. The assessee had filed detailed explanation along with supporting documents with regard to its claim of bad debts, which was allowed by the Assessing Officer after taking into consideration the explanation of the assessee. In the assessment order, though it was noted that the assessee is carrying on the business of financing and bill discounting, an elaborate discussion was not made on the assessability under different head of income. The claim of bad debts against such income was considered during the course of assessment, but no discussion was made in the assessment order. Such an order cannot be called erroneous. The CIT can exercise the jurisdiction u/s 263 of the Act only after holding that the assessment order passed by Assessing Officer is both erroneous and prejudicial to the interest of revenue. Thus, the exercise of jurisdiction by the CIT u/s 263 of the Income-tax Act in setting aside the assessment is incorrect. Hence, the grounds of appeal raised by the assessee are allowed. In the result, the appeal filed by the assessee is allowed.
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