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2012 (11) TMI 551 - AT - Income TaxWrite -off of Bad debts – revision u/s 263 - Held that:- Sum debited to the Profit & Loss Account under the head ‘bad debts’ in the name of M/s Narang General Stores. AO, has not made any investigation for the justification of the said claim, CIT treated this issue covered u/s 263 of the Act. However, the assessee has filed relevant submission on the issue in question. Therefore, this issue cannot be said to have been not considered by the AO. In view of this, to this extent the order of CIT is not sustainable. Interest free advance – Following the judgement of court in case of [M/s Malabar Industrial Co. V CIT 2000 (2) TMI 10 - SUPREME COURT ] Held that:- CIT has jurisdiction u/s 263 of the Act, if twin conditions are satisfied, namely; (i) the order of the AO, sought to be revised is erroneous; and (ii) it is prejudicial to the interest of revenue. In the present case Assessee had paid interest to the bank and P.F.C. and had raised interest bearing loans and on the other hand, assessee had given interest free advances. The CIT recorded finding that AO had not made any investigation at the time of assessment proceedings in the matter regarding allowability of the claim made by the assessee - having regard to the entirety of the facts and circumstances of the case, speaks about the non-applicability of mind, and non investigation into the issue raised by the CIT - order passed by the CIT u/s 263 of the Act, on this issue is upheld - appeal is disposed of - In the result, appeal of the assessee is partly allowed.
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