PME Power Solutions (India) Ltd., New Delhi V. ACIT, Circle-19(2), New Delhi

ITA 1055/DEL/2020

AI Insights

The case involves PME Power Solutions (India) Ltd., the appellant, contesting an order from the CIT (Appeals)-22, New Delhi, which confirmed the AO's addition of Rs.4,35,16,422 to the assessee's income for the Assessment Year 2016-17. This amount was initially claimed as a provision for bad debts, which the AO disallowed, stating it was not actually written off. The CIT (Appeals) upheld this decision, leading to the current appeal. The Tribunal found merit in the assessee's argument that the provision had already been adjusted in the profit & loss account, suggesting a possible double disallowance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113872 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 08-05-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 11-03-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY TRIPATHI
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1055/Del./2020 (ASSESSMENT YEAR : 2016-17) PME Power Solutions (India) Ltd., vs. ACIT, Circle 19 (2), 303, South Delhi, House 12, New Delhi. Community Centre, Zamrudpur, New Delhi – 110 048. (PAN : AAACP1698Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ramesh Goel, CA REVENUE BY : Shri Sanjay Tripathi, Sr. DR Date of Hearing : 09.05.2023 Date of Order : 11.05.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal filed by the assessee is directed against the order of ld. CIT (Appeals)-22, New Delhi dated 28.11.2019 pertaining to Assessment Year 2016-17. 2. The grounds of appeal taken by the assessee read as under :- “1. That the appellant denies its liability to be assessed at total income of Rs.7,87,87,302/- and accordingly denies its liability to pay tax, interest demanded thereon. 2. The Ld. AO is totally unjustified in making addition of Rs.4,35,16,422/- on a/c of provisions for bad debts. The same provision has already been reduced from the expenses in the profit & loss a/c as it was a provision relating to previous year. Just to neutralize the income the ITA No.1055/Del./2020 2 assessee had to be reduced the same amount in the computation of income. So the addition made is totally unjustified. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in passing the ex-parte order and that too without giving adequate opportunity of hearing and in violation of principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) is totally unjustified in confirming the order of the Ld. AO without giving a proper opportunity of being heard to the assessee. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A/234B/234C/ 234D of Income Tax Act, 1961.” 4. Brief facts of the case are that the Assessing Officer observed that assessee was asked to explain the claim of deduction of Rs.5,37,09,570/- claimed under Schedule BP of the ITR along with details in support of such claim. AO noted that this aggregate claim included claim for provision for bad debt written off of Rs.4,35,16,422/-. AO further observed that assessee itself has stated that the above sum is only a provision for bad debt and not actually written off, therefore, AO disallowed the provisions. 5. Upon assessee’s appeal, ld. CIT (A) noted that nobody appeared on behalf of the assessee despite opportunities. He confirmed the addition made by the AO. 6. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. 7. ld. Counsel of the assessee submitted that assessee has already reduced the said provision from the expenses in the profit & loss account ITA No.1055/Del./2020 3 as it was a provision relating to previous year. Hence, ld. Counsel of the assessee pleaded that there is a double disallowance in this regard by the AO. 8. Ld. DR for the Revenue, on the other hand, relied upon the orders of the authorities below. 9. Upon careful consideration, we find that it is the claim of the assessee that assessee has already adjusted the provision by reducing the same in profit & loss account and the AO has fallen into error in adding the same again. On the facts and circumstances as stated above, in our considered opinion and in the interest of justice, the matter deserves to be remitted to the file of AO. AO shall examine whether it is a case of double addition or not by referring to the assessee’s computation of income and books of account. Both the counsels fairly agreed to the above proposition. Needless to add, assessee should be granted adequate opportunity of being heard. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 10 th day of May, 2023. Sd/- sd/- (ANUBHAV SHARMA) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 10 th day of May, 2023 TS ITA No.1055/Del./2020 4 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-22, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.