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M/s National Jewellers Versus Commissioner of Income Tax –14, Mumbai

2016 (3) TMI 536 - ITAT MUMBAI

Revision u/s 263 - claim of bad debts or loss arising on theft of jewellery stock allowed by AO - CIT took the view that the assessing officer has failed to examine the claim in a proper perspective by duly considering the reasons for rejection of the insurance claim - Held that:- A perusal of the assessment order relating to AY 2006-07 would show that the assessing officer has examined the claim of the assessee in that year and has taken the view that the same is not allowable in that year. He .....

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nt order relating to AY 2007-08 that the assessing officer has proceeded to compute the total income by considering the total income as disclosed by the assessee in the revised computation of income, which shows that the assessing officer has duly recognized and accepted the revised computation of total income. There is no dispute that the revised computation of income was filed by the assessee only to make the claim of bad debts or loss arising on theft of jewellery stock. Thus, we notice that .....

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is mind on due examination of the relevant details.

It is well settled principle that the assessment order would not be rendered erroneous merely because the assessing officer has taken one of the possible views. We are of the considered view that the decision of the AO to allow the claim of the assessee is one of the possible views. Further, the Ld CIT would get jurisdiction to revised the assessment order only if both the conditions prescribed in sec. 263 of the Act, viz., (a) the o .....

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ndent : Shri Ms.Rupinder Brur ORDER Per B R Baskaran, AM: The appeal filed by the assessee is directed against the order dated 01.03.2012 passed by Ld CIT-14, Mumbai u/s 263 of the Act for assessment year 2007-08. The assessee is challenging the validity of assuming jurisdiction for revision of the assessment order dated 12.11.2009 passed by the assessing officer. 2. The facts relating to the issue under dispute are discussed in brief. The assessee is a partnership firm and is engaged in the bus .....

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Insurance company rejected the said claim on the reasoning that the assessee could not conclusively prove the claim of loss by way of theft. The assessee filed a suit against such rejection before the a Court (as per assessee it was Consumer court‟ and as per the Ld CIT, it was High Court), but it was also rejected. Accordingly the Ld CIT took the view that the assessing officer has failed to examine the claim in a proper perspective by duly considering the reasons for rejection of the in .....

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ver, the Insurance company rejected the claim on 27.02.2002 on technical reasons and hence the assessee filed a suit in the appropriate court and the order of the court was received on 29-04-2006. According to Ld A.R, the assessee itself withdrew its petition and accordingly the Court has passed the order dismissing the petition of the assessee. Since the assessee took the view that the amount is not recoverable, it wrote off the amount as bad debts in the accounts relating to AY 2006-07. The AO .....

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.10.2009 before the assessing officer explaining the details of additional claim by duly attaching all the relevant documents. The AO has accordingly allowed the claim of the assessee. Accordingly, the Ld A.R submitted that the assessing officer has allowed the claim after due application of mind and he has taken a possible view of the matter. Accordingly, he submitted that the Ld CIT(A) was not justified in revising the impugned assessment order. 4. On the contrary, the Ld D.R submitted that th .....

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ly examining all these details. Accordingly he submitted that the Ld CIT was justified in passing the impugned revision order. 5. We heard the parties and perused the record. Before going into the merits of the issue, we would like to discuss about the legal position with regard to the power of Learned CIT to invoke revision proceedings under section 263 of the Act. The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the ca .....

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and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be erroneous in so far as it is prejudicial to the interests of the Revenue . This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the S .....

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n that category. The expression prejudicial to the interests of the Revenue , the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : The phrase prejudicial to the interests of the Revenue‟ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, .....

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een laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282. 6. According to Ld A.R, the assessing officer has examined the issue during the course of assessment proceedings relating to AY 2006-07 as well as in AY 2007-08 by examining the relevant documents. We find merit in the said submissions. A perusal of the assessment order relating to AY 2006-07 would show that .....

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t of total income by making the above said claim, subsequent to filing of return of income u/s 139(1) of the Act. We also notice from the assessment order relating to AY 2007-08 that the assessing officer has proceeded to compute the total income by considering the total income as disclosed by the assessee in the revised computation of income, which shows that the assessing officer has duly recognized and accepted the revised computation of total income. There is no dispute that the revised comp .....

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