DCIT, SWARGATE PUNE V. GRIHUM HOUSING FINANCE LIMITED, PUNE

CO 39/PUN/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Addl / JCIT(A) which directed the Assessing Officer to charge tax at the rate of 25% instead of 30% for the assessment year 2019-20. The Revenue contended that the assessee's turnover exceeded Rs.250 crore, thus attracting a higher tax rate of 30%. The assessee argued that their turnover was below the threshold and provided evidence from their financial statements. The Tribunal considered various precedents and the definitions under the Companies Act, 2013, and concluded that the CPC's adjustment was improper as it was based on a debatable issue and lacked a proper hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633129 (ITAT-PUNE)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: Shriram Properties Ltd. vs. ADIT, Bajaj Auto Finance Ltd. vs. CIT, Punjab Stainless Steel Industries vs. CIT, West Coast Paper Mills vs. ACIT, JKs Employee Welfare Trust vs. ITO, Vodafone Idea Ltd. vs. ACIT, Khatau Junkar Ltd. vs. K.S. Pathania, Rajesh Kumar vs. DCIT, Sahara India (Firm) vs. CIT, Peerless General Finance & Investment Co. Ltd. vs. DCIT, New Bridge Centre Pvt. Ltd. vs. DCIT, Microland Limited vs. DCIT, Ponkunnam Traders vs. Addl.ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P MURKUNDE
• Assessee Lawyers: S NIKHIL MUTHA
• Keywords: Business income; Opportunity of being heard; Retrospective amendment; Bad and doubtful debts; Principle of natural justice; Audi alteram partem; Provision of bad debts
• Section: 154; 15

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1883/PUN/2024 Assessment Year : 2019-20 DCIT, Circle 1(1), Pune Vs. Grihum Housing Finance Limited 602, 6th Floor, Zero One IT Park, Mundhva Road, Ghorpadi, Pune – 411036 PAN: AACCG2265N (Appellant) (Respondent) CO No.39/PUN/2024 Assessment Year : 2019-20 Grihum Housing Finance Limited 602, 6th Floor, Zero One IT Park, Mundhva Road, Ghorpadi, Pune – 411036 Vs. ITO, Ward 1, Ahmednagar PAN: AACCG2265N (Cross Objector) (Respondent) Assessee by : S/Shri Nikhil Mutha and Abhilash Hiran Department by : Shri Ramnath P Murkunde Date of hearing : 08-05-2025 Date of pronouncement : 12-06-2025 O R D E R PER R.K. PANDA, VP : This appeal filed by the Revenue is directed against the order dated 19.07.2024 of the Ld. Addl / JCIT(A)-3, Ahmedabad relating to assessment year 2019-20. The assessee has filed the Cross Objections against the appeal filed by the Revenue. For the sake of convenience, the appeal filed by the Revenue and the 2 ITA No.1883/PUN/2024 CO No.39/PUN/2024 Cross Objections filed by the assessee were heard together and are being disposed off by this common order. 2. Facts of the case, in brief, are that the assessee is a company and filed its return of income declaring total income of Rs.28,72,89,390/-. The CPC passed the order u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 15.10.2020 determining the total income at Rs.28,72,90,530/- by making the addition of Rs.1,140/- u/s 36(1)(va) of the Act being the employees’ contribution to LWF. The Assessing Officer also charged tax @ 30% as against 25% computed by the assessee resulting demand of Rs.1,90,90,780/-. 3. Before the Ld. Addl / JCIT(A) it was argued that the tax rate of 30% is applicable for those companies whose turnover is above Rs.250 crores in the previous year 2016-17. It was further argued that while computing the total tax payable for assessment year 2019-20 the assessee had taken the benefit of lower rate of tax of 25% as provided in the Finance Bill, 2018 since the turnover for the previous year 2016-17 was lower than Rs.250 crores. However, in the intimation the tax rate of 30% has been applied on the premise that the turnover for the previous year 2016-17 is more than the required threshold of Rs.250 crores. It was argued that in the audited financial statement of the company for the year ended 31st March, 2017 the total income was reported at Rs.251.04 crore which comprised of revenue from the operations of Rs.248.61 crore and other income of 3 ITA No.1883/PUN/2024 CO No.39/PUN/2024 Rs.2.43 crore. It was argued that in clause (40) of the tax audit report the assessee had reported its turnover of Rs.248.77 crore for the financial year ended 31st March, 2017. The definition of ‘turnover’ as per section 2(91) of the Companies Act, 2013 was also brought to the notice of the Ld. Addl / JCIT(A). The decision of the Chennai Bench of the Tribunal in the case of Shriram Properties Ltd. vs. ADIT vide ITA Nos.1 & 5/Chny/2023 was also brought to the notice of the Ld. Addl / JCIT(A), according to which the applicable tax rate is based on the turnover threshold. The Tribunal has specifically noted that the ‘other income’ items such as income from guarantee commission, fair value gain on financial instruments and gain on extinguishment of financial liability were not directly linked to the business activities of the assessee and these should not be included in the gross turnover or receipts for the purpose of applying the concessional tax rate. 4. Based on the arguments advanced by the assessee, the Ld. Addl / JCIT(A) directed the Assessing Officer to charge the tax at the rate of 25% instead of 30%. 5. Aggrieved with such order of the Ld. Addl / JCIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. The Ld. CIT(A) erred in applying a tax rate of 25% instead of the correct rate of 30% on the total income of the assessee for the Assessment Year 2019-20. 2. The Ld. CIT(A) erred in not including the following amounts in the total turnover/gross receipts, which should have been considered part of the revenue from business operations:  Recovery of Bad Debts Written off: Rs.0.78 lacs  Service Tax Input: Rs.1.49 crore 4 ITA No.1883/PUN/2024 CO No.39/PUN/2024 3. The total turnover/gross receipts, when correctly computed, amounts to Rs.250.88 crore, which exceeds the Rs.250 crore threshold. Thus, the concessional tax rate of 25% is not applicable. The CPC correctly applied the tax rate of 30% as per the provisions. 4. The CIT(A) did not appreciate the correct connotations of the decisions of the Hon'ble ITAT in the case of Shriram Properties Ltd. vs. Asst. Director of Income Tax (ITA Nos. 1 & 5/Chny/2023). 5. The decision of the Ld. CIT(A) to apply a concessional tax rate of 25% is contrary to the legal provisions and the decision of the Hon'ble ITAT Chennai in the case of Shriram Properties Ltd. vs. Asst Director of Income Tax (ITA Nos. 1 & 5/Chny/2023), which stipulates that the total turnover/gross receipts should include all amounts directly related to core business operations and not just operational revenue. 6. The Ld. CIT(A) erred in / failed to recognize that the 'Other Income' items, specifically Recovery of Bad Debts Written Off and Service Tax Input, are directly related to the business operations of the assessee and should be included in the total turnover/ gross receipts for determining the applicable tax rate. 7. The decision of the Ld. CIT(A) is inconsistent with the principles laid down in the Finance Act, 2018, and does not align with the guidelines established by the Hon'ble ITAT in similar case (Supra). 8. The Ld. CIT(A)'s acceptance of a reduced tax rate results in incorrect tax calculation. Therefore, the should be allowed to ensure compliance with the correct tax rate of 30%. 9. The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised at time of proceedings before the Hon'ble Tribunal which may please be granted. 6. The assessee has raised the following grounds in its Cross Objection: 1. Ground 1: Impugned adjustment of the applicable rate of tax is outside the scope of section 143(1) of the Act 1.1 In the facts and circumstances of the case and in law, the learned AO (CPC) erred in making an adjustment/ modifying the applicable rate of tax of 25% (plus applicable surcharge and cess) to 30% (plus applicable surcharge and cess) without appreciating that the provisions of section 143(1) do not permit any such adjustment/modification. 5 ITA No.1883/PUN/2024 CO No.39/PUN/2024 2 Ground 2: Impugned adjustment to the applicable rate of tax is untenable, not falling under the prima facie adjustment covered within the scope of section 143(1) of the Act. 2.1 In the facts and circumstances of the case and in law, the learned AO(CPC) erred in making an adjustment/modifying the applicable rate of tax by regarding certain items classified under the head 'Other Income' as part of \"Turnover/ Gross Receipts', without appreciating that such items cannot be so reclassified in light of various favorable judicial precedents and hence, the adjustment cannot be regarded as a prima facie adjustment to fall within the scope of section 143(1) of the Act. 3. Ground 3: Impugned adjustment to applicable rate of tax is bad-in-law in absence of providing an opportunity of being heard. 3.1 In the facts and circumstances of the case and in law, the learned AO (CPC) erred in adjusting/modifying the applicable rate of tax by not providing an opportunity of being heard, being in violation of the first proviso to section 143(1), thereby rendering the intimation passed under section 143(1) invalid and bad-in-law. 7. The Ld. DR while justifying the adjustment made by the CPC submitted that the turnover or gross receipts from core business activities crosses the figure of Rs.250 crore. While processing the return u/s 143(1), only those figures that were submitted by the assessee in the returns and which were related to the core business activities of the assessee were considered by the CPC and the rate of tax was applied accordingly. The question of any non adjustment does not arise as all the figures have been taken from the return of income itself. Since the turnover / gross receipts crossed Rs.250 crore, therefore, the rate of tax computed was @ 30%. 8. So far as the decision of the Chennai Bench of the Tribunal in the case of Shriram Properties Ltd. vs. ADIT (supra) is concerned, he submitted that only the 6 ITA No.1883/PUN/2024 CO No.39/PUN/2024 notional income not related to the core business activities of the assessee was not considered as part of the turnover / gross receipts and was asked to exclude. Though the assessee has relied upon the decision of the Chennai Bench of the Tribunal in the case of Shriram Properties Ltd. vs. ADIT (supra), however, application of the findings of the said decision do not come to the rescue of the assessee but in fact helps the case of the Revenue. He accordingly submitted that the grounds raised by the assessee should be allowed and the CO filed by the assessee be dismissed. 9. The Ld. Counsel for the assessee at the outset submitted that the adjustment made by the CPC by computing the tax rate at 30% as against 25% is outside the scope of 143(1) of the Act since it is not falling under the prima facie adjustment covered within section 143(1) of the Act. In his alternate ground the assessee has stated that no proper opportunity was granted to the assessee and therefore, the order is bad in law. 10. Referring to the decision of the Hon’ble Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT (2018) 404 ITR 564 (Bom), he submitted that the Hon’ble High Court in the said decision has held that the issue as to whether claim of a provision for bad debts is deductible u/s 36(1)(viii) or not, is debatable, and such a debatable claim cannot be disallowed by way of an intimation under section 143(1)(a) of the Act. He submitted that following the same analogy whether 7 ITA No.1883/PUN/2024 CO No.39/PUN/2024 indirect items can be considered as part of the gross turnover is a highly debatable issue and therefore, the CPC has no power to make any such prima facie adjustment. The Ld. Counsel for the assessee filed the following details and submitted that the revenue from operations is Rs.248.61 crore, bad debt recovered is Rs.78.20 lakh and miscellaneous income is Rs.1.65 crore which comprises of service tax input of Rs.1.49 crore and interest on income tax refund is Rs.16.12 lakh: Sr. No. Particulars Amount as reported in ITR-6 of ASSESSMENT YEAR 2017- 18 Amount as considered by Department in its appeal to be part of the turnover Only considering bad debts recovered Only considering Service Tax Input 1 Revenue from operations 2,48,61,11,000 2,48,61,11,000 2,48,61,11,000 2 Other Income (a) Bad debts recovered 78,20,020 78,20,020 - Miscellaneous income (b) Service tax input 1,48,74,911 1,48,74,911 (c) Interest on income tax refund 16,12,069 1,64,86,980 2,51,04,18,000 2,49,39,31,020 2,50,09,85,911 11. He accordingly submitted that in light of the decision of the Chennai Bench of the Tribunal in the case of Shriram Properties Ltd. vs. ADIT (supra), the turnover of the assessee is less than Rs.250 crore and therefore, the CPC should not have raised the demand by computing the tax rate at 30% as against 25% by the assessee. He also relied on the following decisions: 8 ITA No.1883/PUN/2024 CO No.39/PUN/2024 (a) CIT vs. Punjab Stainless Steel Industries (2014) 364 ITR 144 (SC) (b) West Coast Paper Mills vs. ACIT (2024) 164 taxmann.com 712 (Bom) (c) JKs Employee Welfare Trust vs. ITO (1993) 199 ITR 765 (Raj) (d) Vodafone Idea Ltd. vs. ACIT (2020) 424 ITR 664 (SC) (e) Khatau Junkar Ltd. vs. K.S. Pathania (1992) 196 ITR 55 (Bom) (f) Rajesh Kumar vs. DCIT (2006) 157 Taxman 168 (SC) (g) Sahara India (Firm) vs. CIT (2008) 300 ITR 403 (SC) (h) Peerless General Finance & Investment Co. Ltd. vs. DCIT (1999) 236 ITR 671 (Cal) (i) M/s. New Bridge Centre Pvt. Ltd. vs. DCIT vide ITA No.1620/Bang/2017 order dated 26.06.2020 (j) DCIT vs. Microland Limited vide ITA No.1154/Bang/2024, order dated 15.01.2025 12. Referring to the decision of the Hon’ble Kerala High Court in the case of Ponkunnam Traders vs. Addl.ITO (1972) 83 ITR 508 (Ker), he submitted that the Hon’ble High Court in the said decision has considered whether failure to confirm to principles of natural justice of audi alteram partem would make a judicial or quasi-judicial order void. The Ld. Counsel for the assessee also drew the attention of the Bench to the Notification No.3/2012 [(F.No.142/27/2011-SO(TPL)] SO 17(E), dated 04.01.2012, according to which the Board has issued the guidelines while processing the returns of income by the CPC. He accordingly submitted that both legally and factually the adjustment made by the CPC is not in accordance with law, therefore, the appeal filed by the Revenue should be dismissed and the CO filed by the assessee be allowed. 9 ITA No.1883/PUN/2024 CO No.39/PUN/2024 13. We have heard the rival arguments made by both the sides, perused the intimation of the CPC, order of the Ld. Addl / JCIT(A) and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the assessee in the instance case filed its return of income declaring total income of Rs.28,72,89,390/- and computed the tax rate at concessional rate of 25% on the premise that the turnover of the assessee is less than Rs.250 crore in the previous year 2016-17. Since the total revenue earned by the assessee was Rs.251.04 crore as per the audited financial statements of the company for the year ended 31.03.2017, the CPC computed the tax @ 30% as against 25% computed by the assessee. It is the submission of the Ld. Counsel for the assessee that the Income Tax Act has not defined the word ‘turnover’ and the definition of ‘turnover’ as per section 2(91) of the Companies Act, 2013 is as under: “2 (91) “turnover” means gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year.” 14. It is his argument that since the turnover of the assessee company is less than Rs.250 crore, therefore, the CPC was not justified in computing the tax rate at 30%. It is also his submission that in cases of debatable issues, the CPC cannot make any adjustment / disallowance by way of any intimation u/s 143(1)(a) of the Act. 15. We find some force in the above arguments of the Ld. Counsel for the assessee. Admittedly, the Income Tax Act has not defined the term ‘turnover’. 10 ITA No.1883/PUN/2024 CO No.39/PUN/2024 Section 2(91) of the Companies Act defines the term ‘turnover’ as the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year. However, the guidance note of the tax audit issued by the ICAI states that the term ‘gross receipts’ includes all the receipts arising from carrying on of the business which will normally be assessable as business income under the Act after there is a specific exclusion with respect to interest income (unless assessable as business income) and write back of amounts payable to creditors and/or provisions for expenses or taxes no longer required. A perusal from the details furnished by the assessee shows that the issue of gross turnover i.e. as to whether the service tax input credit, interest on income tax refund and recovery of bad debts recovered in earlier years which the assessee has shown as other income will form part of gross turnover is a highly debatable issue. Further, before making the adjustment, the CPC had not provided any opportunity of being heard to the assessee which in our opinion is in violation of first proviso to section 143(1) of the Act. 16. We find a somewhat identical issue had come up before the Hon’ble Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT (supra). The Hon’ble High Court while quashing the disallowance made by the CPC u/s 143(1)(a) without affording an opportunity of being heard to the assessee, has observed as under: 11 ITA No.1883/PUN/2024 CO No.39/PUN/2024 8. Before dealing with the rival contentions, it would be necessary to reproduce Section 143(1)(a) of the Act, at the relevant time which read as under :- \"143(1)(a) Where a return has been made under Section 139, or in response to a notice under sub-section (1) of section 142, - (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be Uday S. Jagtap 8 of 15 25-2000-ITR-Judgment=.doc deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly ; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee: Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely : (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed: (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed ; .... Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustment. Provided ......\" 9. The written submission as filed by the Revenue ignores the fact that only one question has been referred to us for consideration. The issue referred to us is in respect of applicability of Section 143(1)(a) of the Act to disallow a claim for provision for bad debt by intimation i.e. without calling upon the assessee to explain its claim. On this issue, the written submission proceeds on the basis that a plain reading of Section 36(1)(vii) of the Act would only mean an assured and / or certain irrecoverability of debt. Therefore, it is submitted that the intimation 12 ITA No.1883/PUN/2024 CO No.39/PUN/2024 under Section 143(1)(a) of the Act cannot in the present facts be faulted. In fact, the written submissions states, \"Litera Leges, certainty concept and on the concept that there is no equity on fiscal law irrespective of any judgment of any Hon'ble Court or Tribunal a go-by cannot be given to the aforesaid interpretations given in this written submission\". The above submission that decision of the Court and / or Tribunal interpreting a provision is to be ignored by the Assessing Officer, if accepted will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchal system of jurisprudence in our country. 10. The issue that arises for our consideration is whether an adjustment by intimation under Section 143(1)(a) of the Act can be made where the issue which arises for consideration is a debatable issue. In the present facts, the computation of total income submitted along with return indicates that claim for bad debts has been made by relying upon the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (supra). 11. However, the Assessing Officer completely ignored the note made by the applicant in its computation of return, indicating that the basis of claim for bad debts is the decision in Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (surpa). In the above case, even a provision debited to the profit and loss account was allowed as bad debts, where corresponding credit entires are posted in the bad debts reserve account. It held that is was not necessary to post credit entries in the ledger account of the concerned parties. It was on the basis of the aforesaid decision of the Gujarat High Court that the claim in respect of the provision for bad debts was made by the applicant assessee. Once, reliance is placed upon a decision of a Court and / or Tribunal to make a claim, then even if the Assessing Officer has a different view and does not accept the view, yet the claim itself becomes debatable. This is so laid down in Instruction No.1814 dated 4th April, 1989 issued by the CBDT in respect of the scope of prima facie disallowance under Section 143(1)(a) of the Act. In fact, paragraph no.9 thereof provides that where a claim for deduction has been made on the basis of a decision of a High Court / Tribunal, then, even if there is contrary view expressed by another High Court and / or Tribunal or an appellate Authority, the issue itself becomes debatable. In such cases, no adjustment under Section 143(1)(a) of the Act is permissible. Thus, disallowance of a claim can be made only after hearing the assessee who has made the claim. 12. Further, our Court in Khatau Junkar Ltd. (supra) had while dealing with the word \"prima facie inadmissible\" in clause (iii) of Section 143(1)(a) of the Act has held that the word \"prima facie\" means on the face of it the claim is not admissible. It means the claim does not require any further inquiry before disallowing the claim. The Court observed that where a claim has been made which requires further inquiry, it cannot be disallowed without hearing the parties and / or giving the party an opportunity to submit proof in support of its claim. In the absence of Section 143(1)(a) of the Act being read in the above manner i.e. debatable issues cannot be adjusted by way of intimation under Section 13 ITA No.1883/PUN/2024 CO No.39/PUN/2024 143(1)(a) of the Act, would lead to arbitrary and unreasonable intimations being issued leading to chaos. 13. In the present facts, it is undisputed that the decision of Gujarat High Court was referred to in the computation of income. Thus, the Assessing Officer could not have disallowed the claim on a prima facie view that the same is inadmissible. In fact, there can be no dispute that even according to the Assessing Officer, the issue was debatable. This is evident from the fact when the applicant assessee had filed an application under section 154 of the Act for deletion of the adjustment made of provision of bad debts by intimation under Section 143(1)(a) of the Act, it was disallowed on the ground that it is a debatable issue. This itself would indicate that whether the claim of a provision for bad debts is deductible under Section 36(1)(vii) of the Act or not is debatable. Further, the above claim for deductions as made by the applicant was by following the decision of the Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (Supra). Thus, a debatable issue. Therefore, the same could not have been disallowed by way of an intimation under section 143(1)(a) of the Act. 14. We are conscious of the fact that Section 36(1)(vii) of the Act was amended by the Finance act, 2001 by insertion of Explanation to Section 36(1)(vii) of the Act w.e.f. 1st April, 1989. We are also conscious of the fact that while disposing of a Reference under Section 256(1) of the Act, the question proposed for our opinion shall be answered taking into account the subsequent amendment to the law with retrospective effect, as they are clarificatory in nature. 15. In the aforesaid background, we find that the insertion done by Explanation to Section 36(1)(vii) of the Act (w.e.f. 1989) would arise for consideration while answering the proposed question in respect of Assessment Year 1993-94. The above amendment by addition of Explanation to Section 36(1)(vii) of the Act was a subject matter of consideration by the Supreme Court in Vijaya Bank (supra). In the above decision, the Court while applying the amended law, held that mere debit of a provision to the profit and loss account will not by itself be sufficient to constitute bad debts (write off). This must be accompanied by simultaneously also reducing the loans and advances from the asset side of the Balance Sheet. This would ensure that the amount shown as loans and advances (debtors) is net of the provisions made for bad debts. 16. Therefore, in the present facts, while mere making of provision for bad debts will not by itself (on application of amended law) entitle the party to deduction, yet it would be a matter where the assessee should be given an opportunity to establish its claim. This by producing its evidence of the manner in which it treated the provision of bad debts written off in accounts as well as in its Balance Sheet. Therefore, the disallowance cannot be made by intimation under section 143(1)(a) of the Act, as it requires that a party be given an opportunity to establish its claim before disallowing it. It would have been a completely different matter if the Apex Court had ruled that in no case can provision for bad debts be allowed as a bad debt under section 36(1)(vii) of the Act. The allowance of the claim of provision for bad debt is entirely dependent upon how it is reflected in the Balance 14 ITA No.1883/PUN/2024 CO No.39/PUN/2024 Sheet and its accounts. Therefore, for the above purpose it is necessary that the party to be given an opportunity to establish its claim. Therefore, in the present facts, adjustment by way of disallowing deduction by intimation under section 143(1)(a) of the Act is not proper. 17. In the above view, the question as raised for our opinion is answered in the negative i.e. in favour of the applicant assessee and against the respondent Revenue.” 17. Further, it has been held in various decisions that a debatable claim cannot be disallowed by the CPC by way of an intimation u/s 143(1)(a). In view of the above discussion, we hold that the CPC was not justified in computing the tax at 30% as against 25% on a debatable issue and that too, without giving any opportunity of being heard to the assessee. Accordingly, the CO filed by the assessee is allowed. Since the assessee succeeds on this legal issue, the grounds raised by the Revenue in its appeal become academic in nature and therefore, the same do not require any adjudication. 18. In the result, the Cross Objection filed by the assessee is allowed and the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 12th June, 2025. Sd/- Sd/- (ASHTA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 12th June, 2025 GCVSR 15 ITA No.1883/PUN/2024 CO No.39/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 04.06.2025 Sr. PS/PS 2 Draft placed before author 09.06.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "