Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 688 - AT - Income TaxRevision u/s 263 by CIT - Whether no inquiry conducted by the A.O. in allowing the provision for bad and doubtful debts? - HELD THAT:- On perusal of the assessment order, which was subjected to revision u/s 263 of the Act, we notice that there is no inquiry conducted by the A.O. in allowing the provision for bad and doubtful debts. CIT was correct in invoking his revisionary powers u/s 263 . On merits, we notice that the assessee has charged off to its profit and loss account provision for doubtful debts and has simultaneously reduced the same from the value of total sundry debtors in its audited balance sheet. The details of the same are placed from pages 7 to 10 of the paper book filed by the assessee. The Hon’ble jurisdictional High Court in the case of CIT v. M/s.Sandvik Asia Limited [2013 (2) TMI 900 - KARNATAKA HIGH COURT] by following the judgment of the Hon’ble Apex Court in the case of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] held that provision for doubtful debts, which has been debited to the profit and loss account and simultaneously been reduced from the value of the total sundry debtors in its audited balance sheet would be sufficient requirement for write off of bad debts. In the instance, the assessee has reduced the amount of provision for bad and doubtful debts from the amount of sundry debtors in the balance sheet, which is sufficient compliance of write off of bad debts going by the dictum laid down by the Hon’ble jurisdictional High Court, cited supra. Therefore, the A.O. cannot make the addition of provision for bad debts in view of the Hon’ble jurisdictional High Court judgment in the case of CIT v. M/s.Sandvik Asia Limited. [2013 (2) TMI 900 - KARNATAKA HIGH COURT] Hence, there cannot be any prejudice caused to the Revenue. In such circumstances, we hold that the order passed u/s 263 of the Act is to be quashed and we do so. Appeal filed by the assessee is allowed
|