Amrit Hatcheries Pvt. Ltd, Kolkata V. DCIT, Central Circle-2(1), Kolkata, Kolkata

ITA 754/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1169 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order; Transfer pricing; Search and seizure; Opportunity of being heard; Maximum Marginal Rate; International transaction; Bad and doubtful debts; Provision of bad debts
• Section: 92C; 143(3); 92E; 115JB; 80IB; 37; 263; 132; 15; 139

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 753 / KOL / 2017 ASSESSMENT YEAR :2013-14 AMRIT FEEDS LTD. 158, LENIN SARANI, 2 ND FLOOR, KOLKATA-13 [ PAN NO.AACCA 5571 D ] V/S . DCIT, CENTRAL CIRCLE- 2(1), 110, SHANTIPALLY, EM BY-PASS, KOLKATA-107 /APPELLANT .. / RESPONDENT ITA NO.754/KOL/2017 ASSESSMENT YEAR: 2013-14 AMRIT HATCHERIES LTD. 158, LENIN SARANI, 2 ND FLOOR, KOLKATA-13 [ PAN NO.AACCA 5987 A ] V/S . DCIT, CENTRAL CIRCLE- 2(1), 110, SHANTIPALLY, EM BY-PASS, KOLKATA-107 /APPELLANT .. / RESPONDENT ITA NO.755 - 756/KOL/2017 ASSESSMENT YEAR: 2011-12 & 2013-14 AMRICON AGROVET PVT. LTD. 158, LENIN SARANI, 2 ND FLOOR, KOLKATA-13 [ PAN NO.AADCA 1610 Q ] V/S . DCIT, CENTRAL CIRCLE- 2(1), 110, SHANTIPALLY, EM BY-PASS, KOLKATA-107 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI D.S. DAMLE, AR /BY RESPONDENT SHRI G. MALLIKARJUHA, CIT-DR /DATE OF HEARING 06-09-2017 /DATE OF PRONOUNCEMENT 31-10-2017 ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 2 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- OUT OF FOUR APPEALS TWO BY ONE ASSESSEE AND OTHE R TWO APPEALS BY SEPARATE ASSESSEE FOR ASSESSMENT YEARS 2011-12 AND 2013-14 RESPECTIVELY AGAINST ORDER OF PRINCIPAL COMMISSIONER OF INCOME T AX-I, KOLKATA DATED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT) VIDE HIS ORDER DATED 24.03.2017 & 31.03.2017. SHRI D.S. DAMLE, LD. AUTHORIZED REPRESENTATIVE APPE ARED ON BEHALF OF ASSESSEE AND SHRI G.MALLIKARJUNA, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. AT THE OUTSET IT WAS OBSERVED THAT APPEALS BY TH E ASSESSEE ITA NOS. 753-754 & 756/KOL/2017 INVOLVE THE COMMON GROUNDS O F APPEAL EXCEPT ITA NO. 755/KOL/2017, THEREFORE WE DECIDED TO HEAR ALL THE APPEALS TOGETHER AND ACCORDINGLY THESE ARE BEING DISPOSED OF BY WAY OF C OMMON ORDER. THUS, WE ARE TAKING THE FACT OF THE CASE FOR A.Y 2013-14 IN ITA NO.754/KOL/2017 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE AND PASS A CO NSOLIDATE ORDER FOR ALL THE APPEALS. 3. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS:- 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT WAS UNJUSTIFIED IN LAW AND ON FACTS IN REVISING THE ASSESSMENT ORDE R PASSED U/S 143(3) DATED 30.03.2015 EVEN THOUGH THE ASSESSMENT ORDER WAS NOT ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS CONTE MPLATED BY SEC. 263 OF THE ACT. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT WAS UNJUSTIFIED IN CONSIDERING THE ASSESSMENT ORDER TO BE ERRONEOUS FOR NOT MAKING REFERENCE FOR TRANSFER PRICING ASSESSMENT BY THE TRANSFER PRICING OFFICER; OVERLOOKING THE LEGAL PROPOSITION THAT IN LAW THE REFERENCE TO TPO WAS PE RMISSIBLE IF AND ONLY IF THE AO WAS OBJECTIVELY SATISFIED THAT REFERENCE WAS NECESSARY FOR DETERMINATION OF ARMS LENGTH PRICING OF SPECIFIED DOMESTIC TRANSACTIONS. 3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT WAS UNJUSTIFIED IN HOLDING THE ASSESSMENT WAS ERRONEOUS BECAUSE THE AO HAD NOT ENQUIRED OR VERIFIED THE ASPECT RELATING TO TRANSFER PRICING EV EN THOUGH THE FACTS ON RECORD CLEARLY PROVE THAT PRIOR TO COMPLETION OF THE ASSESSMENT TH E AO HAD CONDUCTED SUCH ENQUIRY AND DETAILED EXPLANATIONS IN THAT RESPECT WERE FURN ISHED. 4) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT'S REVISION ORDER CONTAINED SEVERAL CONTRADICTORY FINDINGS AND THE SA ID ORDER HAVING BEEN PASSED FOR THE REASONS DIFFERENT & DISTINCT FROM THE SHOW CAUS E NOTICE THE ORDER U/S 263 IS LIABLE TO BE CANCELLED. 5) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT OUGHT TO HAVE APPRECIATED THAT REFERENCE TO TRANSFER PRICING OFFI CER FOR DETERMINATION OF ALP WAS PERMISSIBLE IF AND ONLY IF ADJUSTMENT WAS TO BE CAR RIED OUT IN RESPECT OF SPECIFIED ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 3 TRANSACTIONS AND NOT IN RELATION TO OTHER ASPECTS A ND SINCE THE AO HIMSELF HAD EXAMINED THE SAID SPECIFIED TRANSACTIONS & WAS SATI SFIED THAT NO FURTHER REFERENCE U/S 92C WAS CALLED FOR; THE CIT IN EXERCISE OF POWERS U /S 263 COULD NOT DIRECT THE AO TO MAKE REFERENCE TO TRANSFER PRICING OFFICER. 6) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT SHOULD HAVE APPRECIATED THAT SINCE THE AO HAD REJECTED THE APPE LLANT'S CLAIM FOR DEDUCTION U/S 801B OF THE ACT NO FURTHER REFERENCE WAS PERMISSIBL E U/S 92C IN RELATION TO SPECIFIED DOMESTIC TRANSACTIONS CONNECTED WITH DEDUCTION CLAI MED U/S 801B OF THE ACT AND IN THAT VIEW OF THE MATTER THEE AO'S ACTION OF NOT MAK ING REFERENCE TO TPO UNDER 92C COULD NOT BE HELD BY THE CIT TO BE ERRONEOUS. 7) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT FAILED TO APPRECIATE THAT THE TRANSACTIONS OF THE APPELLANT W ITH THE PARTIES COVERED U/S 40A(2)(B) HAD BEEN EXAMINED BY THE AO AND FURTHER T HE SAME PERSON BEING THE AO OF RELATED PERSONS & HAVING FOUND THAT TAXES WERE P AID BY ALL THE RELATED PERSONS AT THE SAME RATE HE, WAS SATISFIED THAT THERE WAS NO A VOIDANCE OF TAX; REQUIRING NO REFERENCE UNDER 92C FOR DETERMINATION OF ALP. 8) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE ORDER OF THE CIT BE CANCELLED SINCE THE CIT ULTIMATELY CONSIDERED THE A O'S ORDER TO BE ERRONEOUS FOR THE REASONS DIFFERENT & DISTINCT FROM THE REASONS SET O UT IN THE SHOW CAUSE NOTICE. 9) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT'S ORDER U/S 263 BE CANCELLED AND THE ORDER OF THE AO BE RESTORED. 10) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE CIT BE CANCELLED SINCE THE CIT WAS NOT LEGALLY PERMITTED TO PASS THE ORDER U/S 263 / 143(3) OF THE I. T. ACT. 11) FOR THAT THE APPELLANT CRAVES LEAVE TO FILE ADD ITIONAL GROUNDS AND OR AMEND OR ALTER THE GROUNDS ALREADY TAKEN EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 4. SOLITARY ISSUE RAISED BY ASSESSEE IN ALL THE GRO UNDS OF APPEAL IS THAT LD. PR. CIT PASSED HIS ORDER U/S 263 OF THE ACT ERRED I N HOLDING THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 5. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF HATCHERIES, COMM ERCIAL FARMING AND PROCESSING OF GROUNDNUT. A SEARCH OPERATION U/S 132 OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 30.08.2 012 AND THEREFORE THE YEAR UNDER CONSIDERATION IS THE YEAR OF SEARCH. AS YEAR UNDER CONSIDERATION WAS THE SPECIFIED ASSESSMENT YEAR I.E., YEAR OF SEA RCH, THEREFORE, IT WAS TAKEN UNDER COMPULSORY SCRUTINY ALONG WITH OTHER SIX ASSE SSMENT YEARS. 6. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION F ILED ITS RETURN OF INCOME DATED 30.11.2013 DECLARING TOTAL INCOME OF 13,06,40,260- ONLY. THE INCOME OF THE ASSESSEE WAS ASSESSED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 4 14,15,42,120/- ONLY AFTER MAKING CERTAIN ADDITIONS/ DISALLOWANCES TO THE TOTAL INCOME OF THE ASSESSEE. 7. SUBSEQUENTLY, LD. PR. CIT U/S 263 OF THE ACT OB SERVED CERTAIN DEFECTS IN THE ASSESSMENT ORDER FRAMED BY AO U/S 143(3) OF THE ACT VIDE ORDER DATED 31.03.2015. THE INSTANT CASE WAS SELECTED UNDER SCR UTINY UNDER CASS MODULE ALONG WITH TRANSFER PRICING (TP FOR SHORT) P ARAMETERS. HOWEVER, THE AO COMPLETED THE ASSESSMENT WITHOUT REFERRING THE M ATTER TO THE TRANSFER PRICING OFFICER (TPO) FOR THE DETERMINATION OF ARM S LENGTH PRICE (ALP FOR SHORT) AS ENVISAGED UNDER THE PROVISION 92CA OF THE ACT. ACCORDINGLY, LD. PR. CIT U/S 263 OF THE ACT ISSUED NOTICE DATED 28.03.20 17 FOR SEEKING EXPLANATION FROM THE ASSESSEE. IN RESPONSE THERETO, ASSESSEE SU BMITTED AS UNDER:- I) THE FOLLOWING TRANSACTIONS UNDERTAKEN BY ASSESS EE DURING THE YEAR ARE FALLING UNDER THE CATEGORY OF SPECIFIED DO MESTIC TRANSACTIONS A) DEDUCTION CLAIMED BY ASSESSEE FOR ITS UNIT ELIGI BLE FOR DEDUCTION U/S. 80IB OF THE ACT AND CLAIMED A DEDUCT ION OF 1,09,01,866/- B) PAYMENT MADE TO THE PERSONS SPECIFIED U/S. 40A(2 )(D) OF THE ACT FOR THE PURCHASE OF MATERIALS AND SERVICES. II) THE REPORT IN RESPECT OF SPECIFIED DOMESTIC TRA NSACTIONS WAS DULY FURNISHED ALONG WITH RETURN OF INCOME IN PRESCRIBED FORM 3CEB OF THE ACT. IV) AS THE INSTANT YEAR WAS THE YEAR OF SEARCH AND ALL THE DOCUMENTS, BOOKS OF ACCOUNT AND OTHER RECORDS WERE SEIZED BY T HE DEPARTMENT, THEREFORE, THE ALLEGATION THAT THE ASSE SSMENT ORDER WAS FRAMED WITHOUT EXAMINING AND VERIFYING THE SPEC IFIED DOMESTIC TRANSACTIONS IS WITHOUT ANY BASIS. IN FACT , THE AO VERIFIED THE DOMESTIC TRANSFER PRICING REPORT IN FORM 3CEB, BOOKS OF ACCOUNT AND OTHER RECORDS SEIZED DURING THE SEARCH PROCEEDINGS U/S. 132 OF THE ACT. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 5 V) THE INSTANT ASSESSMENT WAS COMPLETED BY THE AO AFTER OBTAINING THE PRIOR APPROVAL FROM THE ACIT UNDER THE PROVISIO N OF SECTION 153D OF THE ACT. VI) THE AO AFTER VERIFIED THE REPORT IN RESPECT OF SPECIFIED DOMESTIC TRANSACTIONS FURNISHED IN FORM 3CB/10CCB OF THE ACT OBSERVED THAT THE DEDUCTION U/S. 80IB OF THE ACT IS NOT ALLO WABLE TO THE ASSESSEE ON THE GROUND THAT THE ACTIVITIES OF ASSES SEE ARE NOT MANUFACTURING IN NATURE. THEREFORE, AO DISALLOWED T HE DEDUCTION U/S. 80IB OF THE ACT ON PRELIMINARY GROUND. AS SUCH , THERE WAS NO REASON FOR REFERRING THE MATTER TO SPECIFIED DOMEST IC TRANSACTIONS TO THE TPO FOR THE PURPOSE OF DETERMINATION OF ALP. VII) THE QUESTION OF MAKING A REFERENCE U/S 92CA O F THE ACT TO THE TPO ARISES WHEN THE DEDUCTION U/S 80IB OF THE ACT I S ALLOWED TO THE ASSESSEE. VIII) AGAINST THE ORDER OF AO FOR DISALLOWING THE DEDUCTION U/S 80IB OF THE ACT, THE ASSESSEE FILED AN APPEAL BEFORE LD. CI T-A VIDE NO.15/CIT(A)-20/CC-2(1)-15-16 WHEREIN IT WAS HELD T HAT THE ASSESSEE IS CARRYING OUT MANUFACTURING ACTIVITIES A ND THEREFORE IT IS ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. IX) SIMILARLY, ALL THE DETAILS OF THE TRANSACTIONS MADE BY THE ASSESSEE WITH THE SPECIFIED PERSONS U/S. 40A(2)(B) OF THE AC T WERE DULY VERIFIED BY THE AO AT THE TIME OF ASSESSMENT PROCEE DINGS. THE TRANSACTIONS WITH THE SPECIFIED PERSONS WERE CARRIE D OUT BY THE ASSESSEE IN EARLIER YEARS AS WELL AND NO DISALLOWAN CE OF WHATSOEVER WAS MADE IN THE EARLIER ASSESSMENT YEARS . V) WITHOUT PREJUDICE TO THE ABOVE, ASSESSEE ALSO S UBMITTED THAT LD. CIT FAILED TO BRING ANY SPECIFIC REASON IN THE SHOW -CAUSE NOTICE ISSUED U/S. 263 OF THE ACT SUGGESTING THAT ORDER OF AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 6 IN VIEW OF ABOVE THE ASSESSEE BEFORE LD. CIT SUBMIT TED THAT ORDER FRAMED U/S 143(3) OF THE ACT CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 8. HOWEVER, LD. CIT OBSERVED THAT THE CASE WAS SELE CTED UNDER SCRUTINY UNDER CASS MODULE AND UNDER THE PARAMETERS OF TP. T HEREFORE, IT WAS NECESSARY FOR THE AO TO REFER THE MATTER TO THE TPO FOR THE DETERMINATION OF ALP IN RELATION TO SPECIFIED DOMESTIC TRANSACTIONS. IN VIEW OF THE ABOVE, LD. CIT AFTER HAVING RELIANCE ON VARIOUS JUDICIAL PRONO UNCEMENTS HELD THAT THE ORDER PASSED BY AO U/S 143(3) OF THE ACT IS ERRONEO US IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE BY OBSERVING AS UNDER:- 6. AS REGARDS THE FURTHER CONTENTION OF THE ASSESSE E, MADE IN THE WRITTEN SUBMISSION, ABOUT THE DISALLOWANCE MADE BY THE AO I N RESPECT OF THE ISSUES OF 80IB, WHICH WAS ALLEGED TO COVER THE ADJUSTMENTS ON ACCOU NT OF TPO, I FIND THAT SINCE NO REFERENCE HAD BEEN MADE TO THE TPO, THIS ISSUE IS P REMATURE TO BE DETERMINED AT THIS STAGE AS TO WHETHER REFERENCE TO TPO WOULD HAV E MADE A BEARING ON THE OUTCOME OF THE ASSESSMENT PROCEEDINGS. THE PLEA OF THE ASSESSEE ON THIS COUNT ALSO APPEARS TO BE HYPOTHETICAL AND HENCE, DOESNT HAVE LOGICAL OR LEGAL FORCE. THE ASSESSEE FURTHER CONTENTED THAT THE AO BEING SATISF IED HAD NOT MADE ANY REFERENCE TO THE TPO. IN THIS REGARD, IT IS HEREBY RELEVANT T O POINT OUT THAT THE AO HAD NOT MADE PROPER ENQUIRIES AND VERIFICATION OR RECORDED HIS S ATISFACTION THAT NO REFERENCE TO TPO WAS INVITED IN THE INSTANT CASE. IT WAS FURTHER ARG UED UPON BY THE ASSESSEE THAT THE MATTER RELATING TO ISSUE OF DEDUCTION U/S. 80IB HAD BEEN ALLOWED BY THE LD. CIT APPEAL. IN THIS CONTEXT, I FIND THAT REVISIONARY PR OCEEDINGS U/S. 263 HAD BEEN INITIATED FOR NOT MAKING A REFERENCE TO THE TPO AND NOT ON TH E ISSUE OF WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB, I ALS O FIND THAT THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS RESORTED TO ARGUMENTS THAT HAD NOT B EEN EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3)/153 AND THUS, THESE ISSUES NEEDS ELABORATE EXAMINATION BY THE AO BY CON DUCTING DETAILED ENQUIRIES AND VERIFICATIONS AS EXPLAINED ABOVE BY MAKING A REFERE NCE TO THE TPO U/S. 92CA AND COMPUTE THE INCOME OF THE ASSESSEE BASED UPON THE A RMS LENGTH PRICE, AS DETERMINED BY THE TPO, IN LIGHT OF THE PROVISIONS O F THE INCOME TAX CT, 1961. IN LIGHT OF THE ABOVE DISCUSSION AS NARRATED ABOVE, I SET AS IDE THE IMPUGNED ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR THE AY 2013-1 4, PASSED BY THE AO ON 30.03.2015, U/S. 143(3)/153A, ON THE AFORESAID POIN TS, AND DIRECT THE AO TO PASS FRESH ASSESSMENT ORDER BY MAKING PROPER VERIFICATIO N AND ENQUIRY IN RESPECT OF MATTER OF REFERENCE TO TPO U/S. 93CA AND REFER THE MATTER TO THE TPO, ACCORDING TO THE PROVISIONS OF LAW. THE AO IS DIRECTED TO PASS F RESH ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR THE AY 2013-14, AFTER ALLOWING THE ASSESSEE A FAIR AND REASONABLE OPPORTUNITY OF BEING HERD, AND ACCORDING OF THE PROVISIONS OF LAW. BEING AGGRIEVED BY THIS ORDER OF LD. CIT IS IN APPE AL BEFORE US. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 7 9. LD. AR BEFORE US SUBMITTED THAT THE IMPUGNED ASS ESSMENT WAS SELECTED SCRUTINY UNDER CASS MODULE AND ALL THE NEC ESSARY DETAILS WITH REGARD TO SPECIFIED DOMESTIC TRANSACTIONS WERE DULY SUBMITTED TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. LD. AR IN SUPPORT O F ASSESSEES CLAIM FILED THE COPY OF SUBMISSION MADE BEFORE THE AO AT THE TI ME OF ASSESSMENT ALONG WITH FORM 3CEB WHICH IS PLACED ON RECORD. AS PER LD . AR THE AO VERIFIED ALL THE NECESSARY DETAILS IN RESPECT OF DEDUCTION CLAIM ED U/S 80IB/80IE OF THE ACT AFTER EXAMINING THE NECESSARY DETAILS AND THEREAFTE R AO REACHED THE CONCLUSION THAT THE ACTIVITY OF THE ASSESSEE IS NOT IN THE NATURE OF MANUFACTURING AND THEREFORE IT IS INELIGIBLE FOR DE DUCTION U/S. 80IB/80IE OF THE ACT. HOWEVER, THE LD. CIT IN HIS IMPUGNED ORDER HAS HELD THAT THE ACTIVITY OF THE ASSESSEE IS IN THE NATURE OF MANUFACTURING AND THEREFORE IT IS ELIGIBLE FOR DEDUCTION U/S 80IB/80IE OF THE ACT. THUS, THE ALLEG ATION OF LD. CIT THAT THE DEDUCTION CLAIMED U/S. 80IB OF THE ACT WAS NOT VERI FIED BASED ON WRONG FACTS. MOREOVER, THE ORDER OF AO GOT MERGED WITH THE ORDER OF LD. CIT(A). HENCE, SAME CANNOT BE REVISED U/S. 263 OF THE ACT. 9.1 THE LD. AR FURTHER SUBMITTED THAT AS PER THE PR OVISION OF U/S 92CA OF THE ACT THE REFERENCE TO THE TPO SHALL BE MADE IF THE A O CONSIDERS IT NECESSARY OR EXPEDIENT TO DO SO AND AFTER OBTAINING THE APPRO VAL OF PR. CIT / CIT. AS SUCH, THE AO IN THE INSTANT CASE DID NOT CONSIDER I T NECESSARY OR EXPEDIENT TO REFER THE MATTER TO TPO AND THEREFORE NO REFERENCE WAS MADE. THE ASSESSEE HAS BEEN CLAIMING THE DEDUCTION U/S. 80IB/80IE OF T HE ACT FOR THE LAST SEVERAL YEARS AND UP TO AY 2012-13 NO DISALLOWANCE ON ACCOU NT OF UNREASONABLE/ EXCESS EXPENSES WAS MADE. ALL THE PERSONS SPECIFIED U/S 40A(2) OF THE ACT WERE PAYING THE TAXES AT THE MAXIMUM MARGINAL RATE AND THEREFORE IT CANNOT BE HELD THAT THERE WAS ANY LOSS TO REVENUE ON ACCOU NT OF PAYMENT MADE TO THE SPECIFIED PERSONS. LD. AR FOR THE ASSESSEE SUBM ITTED THAT ALL THE NECESSARY DETAILS/ BOOKS OF ACCOUNTS WERE UNDER THE POSSESSION OF THE DEPARTMENT AS A RESULT OF SEARCH AND SEIZURE OPERAT ION. THEREFORE, THE AO WAS CONSCIOUS TO THE FACT OF ALL THE EXPENSES AS WE LL AS DEDUCTION CLAIMED BY ASSESSEE AND ACCORDINGLY NO DISALLOWANCE WAS MADE I N THE ASSESSMENT ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 8 ORDER. THERE WAS NO ALLEGATION IN THE SHOW CAUSE NO TICE ISSUED U/S 263 OF THE ACT ALLEGING THAT THERE WAS LACK OF ENQUIRY. HOWEVE R, LD. CIT WHILE HOLDING THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL T O THE INTEREST OF REVENUE HAS HELD THAT THE NECESSARY ENQUIRY WAS NOT CONDUCT ED BY THE AO. 10. ON THE OTHER HAND LD. DR SUBMITTED THAT AS PER THE INSTRUCTION NO.15/ 2015 DATED 16.10.2015 ISSUED BY THE CBDT, IT WAS NE CESSARY FOR THE AO TO REFER THE MATTER TO THE TPO. THE RELEVANT EXTRACT O F THE INSTRUCTION IS REPRODUCED:- 3 .5 SINCE TRANSFER PRICING CASES ARE NOW BEING SELEC TED FOR SCRUTINY ON THE BASIS OF RISK PARAMETERS, THERE IS NO REQUIREMENT OF SELECTI NG A TRANSFER PRICING CASE FOR SCRUTINY ON THE BASIS OF THE VALUE OF THE INTERNATI ONAL TRANSACTION. CONSEQUENTLY, THERE WOULD BE NO REQUIREMENT OF REFERRING AN INTERNATION AL TRANSACTION TO THE TPO FOR DETERMINATION OF IT ALP MERELY BECAUSE THE VALUE OF THE INTERNATIONAL TRANSACTION IS ABOVE A PARTICULAR LIMIT. IN PARTICULAR, WHEREAS CA SE HAS BEEN SELECTED FOR SCRUTINY ONLY ON NON-TP ISSUES AND THE CASE ALSO INVOLVES IN TERNATIONAL TRANSACTIONS WITH AES, THE CASE SHALL NOT BE REFERRED TO THE TPO IRRE SPECTIVE OF THE VALUE OF THE INTERNATIONAL TRANSACTION OR AGGREGATE VALUE OF ALL INTERNATIONAL TRANSACTIONS. THE ONLY EXCEPTION TO THIS WOULD BE A CASE SELECTED FOR SCRU TINY ON NON-TP PARAMETER WHERE THE AO COMES TO KNOW THAT THE TAXPAYER HAS ENTERED INTO INTERNATIONAL TRANSACTION OR TRANSACTIONS BUT THE TAXPAYER HAS EITHER NOT FILED THE ACCOUNTANTS REPORT UNDER SECTION 92E OR HAS NOT DISCLOSED THE SAID INTERNATI ONAL TRANSACTION OR TRANSACTIONS IN THE ACCOUNTANTS REPORT FILED. IN SUCH EXCEPTIONAL SITUATIONS, THE AO MAY REFER THE MATTER TO THE TPO AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE TAXPAYER. 11. LD. DR HAS ALSO RELIED ON THE ORDER OF HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LIMITED VS. CIT 34 5 ITR 193 (DEL) WHEREIN IT WAS HELD AS UNDER:- IT IS NOT IN DISPUTE THAT SECTION 92CA ENABLES THE ASSESSING OFFICER TO REFER COMPUTATION OF ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION, UNDER SECTION 92C, WHEN THE ASSESSING OFFICER CONSIDERS I T NECESSARY OR EXPEDIENT TO DO SO. THUS, DISCRETION LIES WITH THE ASSESSING OFFICE R. HAVING REGARD TO THE CIRCUMSTANCES OF A PARTICULAR CASE REFERENCE TO THE TPO IS NOT MANDATORY. IN MARUTI SUZUKI INDIA LTD. V. ADDL. CIT [2010] 192 TAXMAN 317 (DELHI) THIS COURT OBSERVED THAT ORDINARILY THE ASSESSING OFFICER WOULD MAKE REFEREN CE TO THE TPOS IN THOSE CASES WHERE HE IS NOT IN AGREEMENT WITH THE PARTICULAR PR ICE DISCLOSED BY THE ASSESSEE OR WHERE, ON ACCOUNT OF COMPLEX NATURE OF THE TRANSACT ION, HE FEELS THAT THE ARMS LENGTH PRICE NEEDS TO BE DETERMINED BY THE TPO. SO FAR SO GOOD. HOWEVER, FURTHER QUESTION THAT HAS ARISEN FOR CONSIDERATION IS AS TO WHETHER IT BECOMES MANDATORY ON THE PART OF THE ASSESSING OFFICER TO MAKE REFERENCE TO TPO F OR DETERMINATION OF ALP WHEREVER THE AGGREGATE VALUE OF INTERNATIONAL TRANS ACTION EXCEEDS RS. 5 CRORES? INSTRUCTION NO.3 OF THE CBDT DATED 25-5-2003 MAKES A STIPULATION TO THIS EFFECT. THE CENTRAL BOARD OF DIRECT TAXES, THEREFORE, HAVE DECI DED THAT WHEREVER THE AGGREGATE ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 9 VALUE OF INTERNATIONAL TRANSACTION EXCEEDS RS. 5 CR ORES, THE CASE SHOULD BE PICKED UP FOR SCRUTINY AND REFERENCE UNDER SECTION 92CA BE MA DE TO THE TPO. [PARA 11] IT WAS A COMMON CASE THAT THE CBDT HAS ISSUED THIS INSTRUCTION IN EXERCISE OF ITS POWERS UNDER SECTION 119. SPECIAL BENCH OF THE TRIB UNAL IN THE CASE OF AZTEC SOFTWARE & TECHNOLOGY V. ASSTT. CIT [I.T. APPEAL NO. 826 OF 2007, DATED 21-10-2008] HAS UPHELD THE VALIDITY OF THIS INSTRUCTION. WHILE DOING SO, THE SPECIAL BENCH HAS RELIED UPON THE JUDGMENT OF THIS COURT IN SONY INDIA (P.) LTD. V. CBDT [2007] 157 TAXMAN 125 (DELHI). THE CONTENTION OF THE REVENUE BEFORE THE TRIBUNAL WAS THAT THE AFORESAID VIEW OF THE SPECIAL BENCH WAS ERRONEOUS A ND RATHER CONTRARY TO THE DECISION OF THIS COURT IN SONY INDIA (P.) LTD. ( SUPRA ). [PARA 12] THE TRIBUNAL HAVING DISMISSED THE ASSESSEE'S SUBMIS SION, CONCLUDED THAT ONCE VALIDITY OF CBDT CIRCULAR WAS UPHELD, AS PER THE SA ID CIRCULAR THE ASSESSING OFFICER WAS DUTY BOUND TO REFER THE MATTER TO THE TPO HAVIN G REGARD TO THE PURPOSE OF SPECIALIZED CELL CREATED BY THE DEPARTMENT TO DEAL WITH COMPLICATED AND COMPLEX ISSUES AND SINCE THIS CHANNEL WAS NOT RESORTED TO B Y THE ASSESSING OFFICER IN THE INSTANT CASE, THE COMMISSIONER WAS RIGHT IN PASSING THE ORDER UNDER SECTION 263. [PARA 13] NO DOUBT, THE VALIDITY OF THE SAID INSTRUCTION WAS UPHELD ON THE TOUCH STONE OF ARTICLE 14 OF THE CONSTITUTION HOLDING THAT IT WAS BASED ON REASONABLE CLASSIFICATION AND THERE WAS RATIONALE NEXUS WITH THE OBJECTIVES SOUGH T TO BE ACHIEVED. AT THE SAME TIME, WHILE DOING SO THIS COURT HAD ALSO LAID DOWN THE RIGOURIS OF THE SAID CIRCULAR NO. DOUBT, THIS COURT OBSERVED, IN THE PROCESS THAT THE SAID INSTRUCTION ACTED AS A GUIDELINE TO THE ASSESSING OFFICER. HOWEVER, MUCH M ILEAGE CANNOT BE DRAWN BY THE ASSESSEE FROM THOSE OBSERVATIONS AS THESE OBSERVATI ONS WERE MADE WHILE DEALING WITH THE CONTENTION OF THE PETITIONER IN THE SAID P ETITION. THAT INSTRUCTION COMPLETELY TAKES AWAY THE DISCRETION OF THE ASSESSING OFFICER IN RELATION TO AN INTERNATIONAL TRANSACTION IF THE AGGREGATE VALUE THEREOF EXCEEDED RS. 5 CRORES. [PARA 14] THUS, THE TRIBUNAL RIGHTLY HELD THAT THE JUDGMENT O F SPECIAL BENCH IN AZTEC SOFTWARE & TECHNOLOGY ( SUPRA ) IS NOT IN CONFLICT WITH SONY INDIA (P.) LTD. ( SUPRA ) ONCE THE VALIDITY OF SAID INSTRUCTION IS UPHELD BY THIS COUR T, THE FOLLOW UP THEREOF IS THAT THE ASSESSING OFFICER WAS SUPPOSED TO REFER THE MATTER TO THE TPO HAVING REGARD TO THE FACT THAT SPECIALIZED CELL WAS CREATED BY THE DEPAR TMENT TO DEAL WITH THE COMPLICATED AND COMPLEX ISSUES ARISING OUT OF THE TRANSFER MECH ANISM. THE TRIBUNAL WAS RIGHT IN HOLDING THAT EVEN THE INSTANT CASE ITSELF PROVIDES A GOOD EXAMPLE FOR NEED TO REFER THE MATTER TO TPO IN SUCH CASES. WHEN CIRCULAR IS ISSUE D UNDER SECTION 119 AND ITS VALIDITY IS UPHELD IT IS BINDING ON THE ASSESSING O FFICER. NOT TAKING RECOURSE THERETO AND PASSING THE ORDER AMOUNTED TO MAKING ASSESSMENT WITHOUT CONDUCTING PROPER INQUIRY AND INVESTIGATION AS ENJOYED BY LAW WHICH W AS ALSO WARRANTED IN THE FACTS OF THIS CASE AND, THEREFORE, THE COMMISSIONER WAS RIGH T IN HOLDING THAT SUCH ASSESSMENT WAS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE. [PARA 16] 12. HE, FURTHER SUBMITTED THAT THE FIRST INSTRUCTI ON WAS ISSUED BY CBDT VIDE NO.3/2003 DATED 28.05.2003, WHEREIN IT WAS INSTRUCT ED TO THE ASSESSING OFFICER TO REFER THE MATTER TO THE TPO IF THE INTER NATIONAL TRANSACTIONS INVOLVE CERTAIN VALUE. THOUGH THE INSTRUCTION WAS ISSUED IN RELATION TO INTERNATIONAL TRANSACTIONS BUT THE PRINCIPLES OF IT ARE EQUALLY A PPLICABLE TO THE SPECIFIED DOMESTIC TRANSACTIONS AS WELL. THEREFORE, THE INSTR UCTION NO. 3/2003 ISSUED BY ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 10 CBDT IS NEEDS TO BE MANDATORILY FOLLOWED BY THE ASS ESSING OFFICER IN RELATION TO SPECIFIED DOMESTIC TRANSACTIONS. LD. DR HEAVILY RELIED ON THE ORDER OF LD. CIT. 13. IN REJOINDER LD. AR SUBMITTED THAT THE INSTRUCT ION NO.3/2003 WAS ISSUED IN RELATION TO INTERNATIONAL TRANSACTIONS AND IT CANNO T BE APPLIED TO THE SPECIFIED DOMESTIC TRANSACTIONS. MOREOVER, THE IMPUGNED ASSES SMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 30.03.2015 WHEREAS THE INSTRUCTION NO.15/2015 WAS ISSUED VIDE DATED 16.10.2015, THEREF ORE, EVEN INSTRUCTION NO.15/2015 CANNOT BE APPLIED TO THE INSTANT CASE. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; IN CLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. IN T HE INSTANT CASE, LD. CIT IN HIS IMPUGNED ORDER PASSED U/S 263 OF THE ACT HELD T HAT THE ORDER OF AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT THE AO FAILED TO VERIFY SPECIFIED DOMESTIC TRANSACT IONS BY REFERRING THE SAME TO THE TPO. 15. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND TH AT THE INSTANT CASE WAS SELECTED FOR SCRUTINY UNDER CASS MODULE. THE ASSESS EE, DURING THE ASSESSMENT PROCEEDINGS HAS FURNISHED ALL THE NECESS ARY DETAILS WITH REGARD TO SPECIFIED DOMESTIC TRANSACTIONS IN THE FORM OF 3CEB ALONG WITH INCOME TAX RETURN. IT IS ALSO OBSERVED THAT THE AO DENIED THE DEDUCTION TO THE ASSESSEE U/S 80IB/80IE OF THE ACT ON THE GROUND THAT ASSESSE E WAS NOT CARRYING ANY MANUFACTURING ACTIVITY. THUS, IT IS CLEAR THAT THE DEDUCTION CLAIMED BY THE ASSESSEE WAS NOT VERIFIED BY THE AO BUT THE ENTIRE DEDUCTION HAS BEEN DISMISSED ON TECHNICAL ISSUE. SIMPLY SUBMISSION OF NECESSARY DETAILS IN FORM OF 3CEB DOES NOT PROVE THAT THE AO HAS VERIFIED THE DETAILS REGARDING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB/80IE OF THE ACT. IT IS UNDISPUTED FACT THAT LD. CIT(A) HAS HELD THAT ASSESSEE WAS VER Y MUCH CARRYING OUT THE MANUFACTURING ACTIVITY AND THEREFORE IT IS ELIGIBLE FOR DEDUCTION U/S 80IB/80IE OF THE ACT. BUT THE QUANTUM OF DEDUCTION U/S 80IB/80IE OF THE ACT WAS NOT DECIDED BY THE LD. CIT(A) AS THIS ISSUE WAS NEVER R AISED BEFORE HIM. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 11 FURTHERMORE THE ISSUE OF QUANTUM OF DEDUCTION U/S 8 0IB/80IE OF THE ACT WAS NEVER VERIFIED BY THE AO DURING ASSESSMENT PROCEEDI NGS AS THE AO REJECTED THE ISSUE OF DEDUCTION ON TECHNICAL GROUND AS DISCU SSED ABOVE. IN THIS REGARD THE ARGUMENTS WAS PLACED BY LD. AR THAT THE ORDER O F AO GOT MERGED WITH THE ORDER OF LD. CIT(A). HOWEVER, WE DISAGREE WITH THE ARGUMENTS PLACED BY LD. AR ON THE GROUND THAT THE ORDER OF AO GOT MERGED WI TH REGARD TO THE DETERMINATION OF THE QUESTION WHETHER THE ACTIVITY OF ASSESSEE IS MANUFACTURING IN THE NATURE OR NOT. AS SUCH, THERE WAS NO ISSUE BEFORE LD CIT(A) REGARDING THE AMOUNT OF DEDUCTION CLAIMED BY ASSESSEE U/S. 80IB/80IE OF THE ACT. AS SUCH, ON THE ISSUE OF AMOUNT OF DEDU CTION U/S. 80IB/80E OF THE ACT, WE HOLD THAT THE ORDER OF AO DID NOT GET MERGE WITH THE ORDER OF LD. CIT(A). INDEED, CIRCULAR NO.3/2003 ISSUED BY CBDT W AS IN RELATION TO INTERNATIONAL TRANSACTIONS AND SAME WAS MANDATORY I N TERMS OF JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LIMITED (SUPRA). T HE CONCEPT OF SPECIFIED DOMESTIC TRANSACTIONS CAME INTO FORCE WITH EFFECT FROM ASSESSMENT YEAR 2013-14 UNDER THE PROVI SION OF SECTION 92C OF THE ACT. PRIOR TO THE AY 2013-14, THERE WAS NO CONC EPT OF DETERMINATION OF ALP IN RELATION TO SPECIFIED DOMESTIC TRANSACTIONS. THEREFORE, WE HAVE NO HESITATION IN HOLDING THAT THE PROVISIONS AS CONTAI NED IN CBDTS INSTRUCTION NO.3/2003 CANNOT BE APPLIED TO THE SPECIFIED DOMEST IC TRANSACTIONS. THUS, IN OUR CONSIDERED VIEW, THERE WAS NO INSTRUCTION FROM THE CBDT FOR REFERRING THE MATTER OF SPECIFIED DOMESTIC TRANSACTIONS TO THE TP O FOR THE DETERMINATION OF ALP TILL THE ISSUANCE OF INSTRUCTION NO.15/2015 BY THE CBDT WHICH WAS ISSUED DATED 16.10.2015. 16. THE UNDISPUTED FACT IS THAT THE ASSESSMENT FOR THE YEAR UNDER THE CONSIDERATION WAS COMPLETED VIDE ORDER DATED 30.03. 2015 WHEREAS THE INSTRUCTION NO.15/2015 WAS ISSUED ON A LATER DATE I .E. 16.10.2015. THUS, IT IS CLEAR THAT AT THE TIME OF FRAMING THE ASSESSMENT IN THE INSTANT CASE THERE WAS NO INSTRUCTION FROM THE CBDT WHICH CAN BE SAID IN F ORCE. MOREOVER, THE CBDT IN INSTRUCTION NO.15/2015 HAS ADMITTED THE FACT THA T IT WOULD ISSUE A SEPARATE INSTRUCTION FOR THE SPECIFIED DOMESTIC TRANSACTIONS AND TILL SUCH TIME THE ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 12 GUIDANCE PERTAINED TO THE SPECIFIED DOMESTIC TRANSA CTIONS WILL BE FOLLOWED IN ACCORDANCE WITH THE PARAGRAPH NO.3.5 OF INSTRUCTION NO.15/2015. THE RELEVANT PORTION OF CBDT INSTRUCTION NO.15/2015 IS REPRODUCE D BELOW:- 3,5 SINCE TRANSFER PRICING CASES ARE NOW BEING SELE CTED FOR SCRUTINY ON THE BASIS OF RISK PARAMETERS, THERE IS NO REQUIREMENT OF SELECTI NG A TRANSFER PRICING CASE FOR SCRUTINY ON THE BASIS OF THE VALUE OF THE INTERNATI ONAL TRANSACTION. CONSEQUENTLY, THERE WOULD BE NO REQUIREMENT OF REFERRING AN INTERNATION AL TRANSACTION TO THE TPO FOR DETERMINATION OF ITS ALP MERELY BECAUSE THE VALUE O F THE INTERNATIONAL TRANSACTION IS ABOVE A PARTICULAR LIMIT. IN PARTICULAR, WHERE A CA SE HAS BEEN SELECTED FOR SCRUTINY ONLY ON NON-TP ISSUES AND THE CASE ALSO INVOLVES IN TERNATIONAL TRANSACTIONS WITH AES, THE CASE SHALL NOT BE REFERRED TO THE TPO IRRESPECT IVE OF THE VALUE OF THE INTERNATIONAL TRANSACTION OR AGGREGATE VALUE OF ALL INTERNATIONAL TRANSACTIONS. THE ONLY EXCEPTION TO THIS WOULD BE A CASE SELECTED FOR SCRUTINY ON NON-T P PARAMETERS WHERE THE AO COMES TO KNOW THAT THE TAXPAYER HAS ENTERED INTO IN TERNATIONAL TRANSACTION OR TRANSACTION BUT THE TAXPAYER HAS EITHER NOT FILED T HE ACCOUNTANTS REPORT UNDER SECTION 92E OR HAS NOT DISCLOSED THE SAID INTERNATI ONAL TRANSACTION OR TRANSACTIONS IN THE ACCOUNTANTS REPORT FILED. IN SUCH EXCEPTIONAL SITUATIONS, THE AO MAY REFER THE MATTER TO THE TPO AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE TAXPAYER. 17. A PLAIN LOOK AT THE ABOVE MAKES IT CLEAR THAT SPECIFIED DOMESTIC TRANSACTIONS CAN BE REFERRED TO THE TPO ONLY IN SPE CIFIED CIRCUMSTANCES AND SUCH SPECIFIED CIRCUMSTANCES ARE NOT APPLICABLE TO THE INSTANT FACTS OF THE CASE. HOWEVER THE UNDISPUTED FACT IS THAT THE IMPUG NED CASE WAS SELECTED UNDER SCRUTINY ON THE PARAMETERS OF SPECIFIED DOMES TIC TRANSACTIONS. THUS THE AO MUST HAVE VERIFIED THE NECESSARY DETAILS WITH RE GARD TO THE DEDUCTION CLAIMED U/S 80IB/80IE OF THE ACT. THE LD. AR HAS AL SO NOT BROUGHT ANYTHING ON RECORD SUGGESTING THAT THE AO HAS RAISED SOME QUERI ES IN WITH REGARD TO THE DEDUCTION CLAIMED U/S 80IB/80IE OF THE ACT OTHER TH AN SUBMISSION THAT THE FORM 3CEB WAS AVAILABLE BEFORE THE AO. 18. AFTER CONSIDERING THE FACTS IN TOTALITY WE REAC H TO THE CONCLUSION THAT THE AO HAS NOT MADE ANY VERIFICATION FOR THE QUANTUM OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB/80IE OF THE ACT. WHEN THERE WAS NO EXAMINATION BY THE AO BECAUSE THE AO HAS NOT EVEN RAISED ANY QUERY ON THIS ISSUE, THEN IT IS A CLEAR CASE OF NON- CONDUCT OF ANY ENQUIRY ON THE IS SUE. THE AO DID NOT ASK ANY QUESTION, ANY RECORD OR EXPLANATION TO JUSTIFY THE QUANTUM OF DEDUCTION CLAIMED UNDER SECTION 80IB/80IE OF THE ACT. HENCE, IT IS A CASE OF COMPLETE LACK OF ENQUIRY WHICH RENDERS THE ORDER OF THE AO E RRONEOUS SO FAR AS ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 13 PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THE MATTER WHEN THERE IS A COMPLETE AND ABSOLUTE LACK OF ENQUIRY AND NON-APPLI CATION OF MIND ON THE PART OF THE AO, DECISIONS RELIED UPON BY THE LEARNED AR OF THE ASSESSEE WOULD NOT HELP THE CASE OF THE ASSESSEE. THUS IN THE ABSENCE OF ANY RECORD AS WELL AS ANY OTHER MATERIAL TO INDICATE THAT THE AO HAS COND UCTED THE ENQUIRY DURING ASSESSMENT PROCEEDINGS ON THE ABOVE DISCUSSED CONTE XT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT. 19. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. COMING TO ITA NO. 753 & 756/KOL/2017 FOR A.Y 13-14 . 20. IN THE REMAINING APPEALS, SINCE THE FACTS ARE E XACTLY IDENTICAL, BOTH THE PARTIES ARE AGREED WHATEVER VIEW TAKEN IN THE ABOVE APPEAL IN ITA NO.754/KOL/2017 MAY BE TAKEN IN THESE APPEALS ALSO, WE HOLD ACCORDINGLY. COMING TO ITA NO.755/KOL/2017 FOR A.Y. 11-12 . 21. SOLITARY ISSUE RAISED BY ASSESSEE IS THAT LD. C IT U/S 263 OF THE ACT ERRED IN HOLDING THAT THE ORDER OF AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 22. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRI VATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF PROCESSING OF ANIMAL FEEDS. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME U/S 139 OF THE ACT DATED 29.09.2011 DECLARING TOTAL INCOME OF 1,96,17,935/- ONLY. SUBSEQUENTLY A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED AT THE BUS INESS PREMISES OF ASSESSEE DATED 30.08.2012 AND ACCORDINGLY THE INCOM E OF ASSESSEE WAS ASSESSED U/S. 143(3)/153A OF THE ACT VIDE ORDER DAT ED 30.03.2015 AT 2,81,57,858/- ONLY. SUBSEQUENTLY, LD. CIT U/S 263 O F THE ACT OBSERVED CERTAIN DEFECTS IN THE ASSESSMENT ORDER FRAMED BY A O DATED 30.03.2015 ON THE GROUND THAT ASSESSEE HAS CLAIMED PROVISION FOR DOUBTFUL DEBTS WHICH WAS ALLOWED UNDER THE NORMAL COMPUTATION OF INCOME WHER EAS THE AO WHILE DETERMINING THE PROFIT UNDER THE MINIMUM ALTERNATE TRANSACTION (MAT) TREATED THE PROVISIONS FOR DOUBTFUL DEBTS AS UNASCERTAINED LIABILITY OF THE ASSESSEE AND ACCORDINGLY MADE THE ADDITION TO THE BOOK PROFIT DE TERMINED U/S. 115JB OF THE ACT. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 14 23. IN VIEW OF ABOVE, LD. CIT U/S 263 OF THE ACT WA S OF THE VIEW THAT ONCE IT HAS BEEN ESTABLISHED THAT THE PROVISION OF DOUBTFUL DEBTS REPRESENTS THE UNASCERTAINED LIABILITY THEN THE SAME CANNOT BE ALL OWED AS DEDUCTION UNDER THE NORMAL COMPUTATION OF INCOME U/S 36(1)(VII) OF THE ACT WHILE DETERMINING THE PROFIT UNDER THE NORMAL COMPUTATION OF INCOME. HOWEVER, THE AO HAS ALLOWED THE SAME AND THEREFORE THE ERROR HAS BEEN C ROPPED UP IN THE ASSESSMENT ORDER. ACCORDINGLY, LD. CIT ISSUED NOTIC E U/S. 263 OF THE ACT VIDE DATED 16.11.2016 TO ASSESSEE FOR ALLOWING AN OPPORT UNITY OF BEING HEARD. IN RESPONSE THERETO ASSESSEE SUBMITTED THAT THE PROVIS ION OF BAD AND DOUBTFUL DEBTS WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT AN D SIMULTANEOUSLY THESE WERE ADJUSTED / NETTED AGAINST THE BALANCE OF SUNDR Y DEBTORS. ONCE THE AMOUNT OF BAD DEBTS HAS BEEN ADJUSTED AGAINST THE S UNDRY DEBTORS AND THE SAME HAS BEEN REFLECTED IN THE BALANCE SHEET THEN T HE SAME CANNOT BE TREATED AS UNASCERTAINED LIABILITY OF ASSESSEE. THE ASSESSEE IN SUPPORT OF ITS CLAIM RELIED ON THE ORDER OF FOLLOWING ORDERS:- I) VIJAYA BANK VS. CIT REPORTED IN 323 ITR 166 (SC) II) DEEPAK INDUSTRIES LTD. VS. ITO ITA NO.2207/K OL/2010 DT. 10.06.2011 III) M/S TRIGYN TECHNOLOGIES LTD. VS. ITO ITA NO.20 11/MUM/2012 DT 03.12.2014 24. HOWEVER, LD. CIT DISREGARDED THE CONTENTION OF ASSESSEE AND HELD THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL T O THE INTEREST OF REVENUE BY OBSERVING AS UNDER:- 5. THE ASSESSEE HAD PRIMARILY OBJECTED TO THE REVIS IONARY PROCEEDINGS U/S. 264 MAINLY ON THE FOLLOWING ISSUES WHICH ARE DEALT IN A S HEREUNDER:- 5.A THE ASSESSEE MAINLY ARGUED THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. AT THE O NSET, IT WOULD BE RELEVANT TO POINT OUT THAT THE ASSESSING OFFICER HAD TREATED TH E AMOUNT OF RS.29,71,000/- ON ACCOUNT OF PROVISIONS FOR DOUBTFUL DEBT AS UNAS CERTAINED LIABILITY WHILE DETERMINING THE BOOK PROFIT UNDER THE PROVISIONS OF SECTION 115JB, IN THE IMPUGNED ASSESSMENT ORDER. THE PROCEEDINGS U/S 263 HAS BEEN INITIATED FOR THE ERRONEOUS APPLICATION OF LAW ON THE FINDINGS OF THE AO. IT IS A WELL SETTLED FACT THAT PROVISION FOR UNASCERTAINED LIABILITIES I S NOT AN ALLOWABLE EXPENDITURE UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. T HE ASSESSING OFFICER HAD ERRONEOUSLY ALLOWED THE CLAIMS OF SUCH EXPENDITURE OF THE ASSESSEE IN CONTRAVENTION TO HIS OWN FINDING THAT PROVISIONS FO R DOUBTFUL DEBT IS AN UNASCERTAINED LIABILITY. THE AO DURING THE COURSE O F ASSESSMENT PROCEEDINGS ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 15 U/S. 143(3)/153A, HAD ACCEPTED THE CLAIM OF EXPENSE S OF THE ASSESSEE WITHOUT APPLYING HIS MIND AND IN CONTRAVENTION TO T HE PROVISION OF LAW. 5.B IT TRANSPIRES FROM THE ABOVE ARGUMENT OF THE AS SESSEE THAT THE AHEAD ALSO OBJECTED TO THE PROCEEDINGS U/S. 263 ON ACCOUNT OF THE FACT THAT THE PROVISION FOR DOUBTFUL DEBT OF RS.29,71,000/- WHICH THE ASSES SEE COMPANY DEBITED TO THE PROFIT & LOSS ACCOUNTS, AND WHICH WAS NETTED OF F AGAINST SUNDRY DEBTORS BALANCE IN THE BALANCE SHEET, THE ASSESSEE COMPANY WAS ENTITLED TO CLAIM DEDUCTION U/S. 36(1)(VII) OF THE INCOME TAX ACT. TH E ASSESSEE ALSO FURNISHED RECORDS AND DOCUMENTS IN SUPPORT OF ITS CLAIMS AND RELIED UPON JUDICIAL PRONOUNCEMENTS. IN THIS REGARD, I FIND THAT A PROVI SION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF C ERTAINTY. TO RECOGNIZE A PROVISION THE FOLLOWING CRITERIA MUST BE EXAMINED ( A) WHETHER SUCH ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF PAST EVENT; (B) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT WITH CERTAIN AMOUNT OF CERTAI NTY. IF THESE CONDITIONS ARE NOT MET, NO PROVISION CAN BE RECOGNIZED. THE AS CERTAINMENT OF PROVISIONS DEPENDS FROM UPON THE FACTS AND CIRCUMSTANCES OF TH E CASE. IN THIS REGARD I FIND THAT THE AO HAD HELD THAT PROVISION FOR DOUBTF UL DEBTS IS AN UNASCERTAINED LIABILITY. THE FACT AND ARGUMENTS RELIED UPON BY TH E ASSESSEE DURING THE COURSE OF HEARING UNDER REVISIONARY PROCEEDINGS U/S . 263 HAD NOT BEEN FURNISHED BEFORE THE ASSESSING OFFICER DURING THE C OURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3)/153A AND AS SUCH THESE ISSU ES WERE NOT EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS. HENCE, I FIND THAT THE CLAIMS OF THE ASSESSEE MUST BE FURTHER EXAMINED BY THE ASSESSING OFFICER, IN CONTEXT OF THE PROVISIONS OF LAW. THUS, THE AO HAD FAILED AS AN INVESTIGATOR AND ADJUDICATOR TO EXAMINE THIS ISSUE ACCORDING TO THE PROVISIONS OF LAW AND APPLY HIS MIND BEFORE PASSING THE ASSESSMENT ORDER U/S. 143(3)/153A. THEREFORE THE ASSESSMENT ORDER PA SSED BY THE AO, IN CONTRAVENTION TO THE PROVISIONS OF SECTION 37 OF TH E INCOME TAX ACT IS ERRONEOUS, AND THUS, SUFFERS FROM INFIRMITY ON THE ABOVE GROUND. THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ARE CLEARLY DISTINGUISHABLE AND HENCE NOT APPLICABLE TO THE FAC TS OF THE INSTANT CASE. IT IS WELL ESTABLISHED THAT THE ASSESSING OFFICER BEING A QUASI-JUDICIAL AUTHORITY CANT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF T HE ASSESSEE/REVENUE, WITHOUT MAKING PROPER INQUIRIES AND PROPER EXAMINATION OF T HE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF EXISTING PROVISIONS OF LAW . THE ASSESSING OFFICER HAS BEEN ENTRUSTED THE ROLE OF AN INVESTIGATOR, PROSECU TOR AS WELL AS ADJUDICATOR UNDER THE SCHEME OF THE INCOME TAX ACT. IF HE COMMI TS AN ERROR WHILE DISCHARGING THE AFORESAID ROLES AND CONSEQUENTLY PA SS AN ERRONEOUS ORDER CAUSING PREJUDICE TO THE REVENUE, THE ORDER SO PASS ED BY HIM IS LIABLE TO BE CORRECTED. IN THIS CONTEXT, IT MAY BE MENTIONED HERE THAT IN T HE CASE OF COMMISSIONER OF INCOME TAX., CENTRAL-I KOLKATA VS MAITHAN INTERNATIONAL, I T WAS HELD BY CALCUTTA HIGH COURT (2015)56 TAXMANN.COM 283 (CALCUTTA) THAT IT IS NOT THE LAW THAT THE ASSESSING OFFICER OCCUP YING THE POSITION OF AN INVESTIGATOR AND ADJUDICATOR CAN DISCHARGE HIS FUNC TION BY PERFUNCTORY OR INADEQUATE INVESTIGATION. SUCH A COURSE IS BOUND TO RESULT IN ERRONEOUS AND PREJUDICIAL ORDER. WHERE THE RELEVANT ENQUIRY WAS N OT UNDERTAKEN, AS IN THE CASE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO AND THEREFORE REVISABLE. INVESTIGATION SHOULD ALWAYS BE FAITHFUL AND FRUITFU L. UNLESS ANAL FRUITFUL AREAS OR ENQUIRY ARE PURSUED THE ENQUIRY CANNOT BE SAID TO H AVE BEEN FAITHFULLY CONDUCTED. THE HON'BLE SUPREME COURT, FURTHER, IN THE CASE OF RAMPYARI DEVI SARAOGI-VS CIT(1958) 67 ITR 87 (SC) AND SMT. TARA DEVI AGGARWA L VS-CIT (1973) 88 ITR 323 ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 16 (SC) HAS HELD THAT IN ABSENCE OF PROPER ENQUIRIES, THE ASSESSMENT ORDER WOULD BECOME ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISE-VS-ADDL. CIT (1975) 99 ITR 375 HAS ALSO HELD AS UNDER:- THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STAT EMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACC EPTED BY A CIVIL COURT IN THE ABSENCE OF REBUTTAL. THE CIVIL COURT IS NEUT RAL. IT SIMPLY GIVES DECISION ON THE BASIS OF PLEADING AND EVIDENCE WHICH COMES B EFORE IT. THE INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVE STIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF RETURN WHICH IS APPARENTLY I N ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF F ACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF CASE ARE SUCH AS TO PROVOKE AN ENQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT, IT IS BECAUSE IT IS INCUMBENT ON THE INCOME TAX OFF ICER TO FURTHER SUCH AN ENQUIRY PRUDENT THAT THE WORDS ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY/. THE ORDER BECOMES ERRONEO US BECAUSE SUCH AN ENQUIRY HAS NOT BEEN AND NOT BECAUSE THERE IS ANYTH ING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREAFTER ASSUMED TO BE CO RRECT. IN VIEW OF THE FACTS AND THE LEGAL POSITION STATED ABOVE, I AM OF THE VIEW THAT THE ORDER PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW AND WITHOUT MAKING REQUISITE INQUIRIES WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PRE-JUDICIAL TO THE INTEREST OF THE R EVENUE WITHIN THE MEANING AND SCOPE OF SECTION 263 OF THE INCOME TAX ACT, 1961. 6. AS REGARDS THE FURTHER CONTENTIONS OF THE ASSESS EE, MADE IN THE WRITTEN SUBMISSION, IT IS HEREBY RELEVANT TO POINT OUT THAT THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES HAD NOT BEEN BROUGHT INTO THE NOTICE OF THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3)/15 3A. I ALSO FIND THAT THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS RESTORED TO ARGUMENTS THAT HAD NOT BEEN EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS U/S 143(3) AND THUS, THESE ISSUES NEEDS ELABORATE EXAMINATION BY T HE AO BY CONDUCTING DETAILED ENQUIRIES AND VERIFICATIONS AS EXPLAINED ABOVE TO A SCERTAIN THE NATURE OF THE PROVISIONS OF DOUBTFUL DEBTS OF THE ASSESSEE AND EX AMINE THEIR ALLOWABILITY IN LIGHT OF THE PROVISIONS OF THE INCOME TAX ACT, 1961. IN LIGH T OF THE ABOVE DISCUSSION AS NARRATED ABOVE, I SET ASIDE THE IMPUGNED ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR THE AY 2011-12, PASSED BY THE AO ON 30 .03.2015, U/S 143(3)/153A, ON THE AFORESAID POINTS, AND DIRECT THE AO TO PASS FRE SH ASSESSMENT ORDER BY MAKING PROPER AND ADEQUATE VERIFICATION AND ENQUIRY IN RES PECT OF THE CLAIM OF EXPENDITURE UNDER THE HEAD PROVISIONS FOR DOUBTFUL DEBTS . THE AO IS DIRECTED TO PASS FRESH ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR TH E AY 2011-12, AFTER ALLOWING THE ASSESSEE A FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD, AND ACCORDING OF THE PROVISIONS OF LAW. BEING AGGRIEVED BY THIS ORDER OF LD. CIT ASSESSEE P REFERRED AN APPEAL BEFORE US. 25. LD. AR BEFORE REITERATED THE SUBMISSIONS THAT W ERE MADE BEFORE THE LD. CIT AND STATED THE ISSUE MAY BE DECIDED ON MERIT WH EREAS LD. DR VEHEMENTLY RELIED ON THE ORDER OF LD. CIT. ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 17 26. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INST ANT CASE RELATES TO WHETHER THE PROVISION OF BAD DEBTS REPRESENTS THE UNASCERTA INED LIABILITY IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. IN THE INSTANT CASE IT WAS OBSERVED THAT THE PROVISION FOR BAD DEBT WAS CREATED BY THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION FOR 29.71 LAKH ONLY. THE AO WHILE DETERMINING BOOK PROF ITS U/S 115JB OF THE ACT HAS TREATED THE PROVISION FOR DOUB TFUL DEBTS AS UNASCERTAINED LIABILITY AND ACCORDINGLY ADDED TO THE BOOK PROFIT. HOWEVER, WHILE DETERMINING THE PROFIT UNDER THE NORMAL COMPUTATION OF INCOME H E HAS OMITTED TO MAKE THE ADDITION OF THE PROVISION FOR DOUBTFUL DEBTS. ACCOR DINGLY, LD. CIT HELD THE ORDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 26.1 ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND TH AT ASSESSEE HAS NOT CHALLENGED THE ADDITION MADE BY AO ON ACCOUNT OF PR OVISION FOR DOUBTFUL DEBTS WHILE DETERMINING THE BOOK PROFIT U/S 115JB OF THE ACT ON THE GROUND THAT THE PROFIT WAS DETERMINED BY AO IN HIS ASSESSMENT ORDER UNDER MINIMUM ALTERNATE TAX (MAT FOR SHORT) AS WELL AS UNDER NORM AL COMPUTATION OF INCOME. AS THE LIABILITY UNDER THE NORMAL COMPUTATION OF IN COME WAS GREATER THAN THE LIABILITY OF TAX DETERMINED UNDER MAT PROVISION, TH E ASSESSEE PAID THE TAX UNDER THE NORMAL COMPUTATION OF INCOME. AS SUCH, TH ERE WAS NO EFFECT ON THE TAX LIABILITY DETERMINED TO BE PAID BY THE ASSESSEE UNDER MAT PROVISIONS. THEREFORE, THE ASSESSEE DID NOT PREFER ANY APPEAL A GAINST THE ADDITION MADE BY THE AO ON ACCOUNT OF PROVISION OF DOUBTFUL DEBTS UNDER MAT CONSIDERING THE SAME AS UNASCERTAINED LIABILITY. 26.2 NOW COMING TO THE ISSUE WHETHER THE IMPUGNED P ROVISION FOR DOUBTFUL DEBTS REPRESENT THE UNASCERTAINED LIABILITIES. AFTE R PERUSAL OF BALANCE-SHEET OF ASSESSEE WE FIND THAT THERE REMAINS NO AMBIGUITY TH AT THE AMOUNT OF PROVISION OF DOUBTFUL DEBTS WAS ADJUSTED AGAINST THE SUNDRY D EBTORS AS SHOWN IN THE BALANCE-SHEET OF THE ASSESSEE AS DETAILED UNDER:- ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 18 SUNDRY DEBTORS (UNSECURED CONSIDERED LOAN) OVER SIX MONTHS 15,932.687 11,268,990 UNDER SIX MONTHS 40,527,856 40,361,839 56,650,543 51,576,829 CONSOLIDATED DEBITED 10,847,866 10,817,855 LESS: PROVISION FOR DOUBTFUL DEBTS 8,912,583 5 ,941,583 1,935,283 58,395,826 4,506,583 56,483,112 ON PERUSAL OF ABOVE BALANCE-SHEET, WE HOLD THAT THE PROVISION OF DOUBTFUL DEBT HAS BEEN DULY ADJUSTED AGAINST THE SUNDRY DEBTORS. THEREFORE, THE AMOUNT SHOWN UNDER THE HEAD PROVISION FOR DOUBTFUL DEBT AM OUNTING TO 29.71 LAKH CANNOT BE TREATED AS UNASCERTAINED LIABILITY. IN HO LDING SO, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF VIJAYA BANK VS. CIT 323 ITR 166 (SC) WHEREIN THE RELEVANT QUESTION RAI SED BY HON'BLE APEX COURT AND THE FINDING THEIR LORDSHIP S TAND AS UNDER:- AFTER INSERTION OF EXPLANATION TO S. 36(1)(VII), AS SESSEE IS REQUIRED NOT ONLY TO DEBIT THE P&L A/C BUT SIMULTANEOUSLY ALSO REDUCE LOANS AN D ADVANCES OR THE DEBTORS FROM THE ASSETS SIDE OF THE BALANCE SHEET TO THE EXTENT OF THE CORRESPONDING AMOUNT SO THAT AT THE END OF THE YEAR THE AMOUNT OF LOANS AND ADVANCES/DEBTORS IS SHOWN AS NET OF PROVISION FOR IMPUGNED BAD DEBT; ASSESSEE-BANK H AVING, BESIDES DEBITING THE P&L A/C AND CREATING A PROVISION FOR BAD AND DOUBTFUL D EBTS, SIMULTANEOUSLY OBLITERATED THE SAID PROVISION FROM ITS ACCOUNTS BY REDUCING TH E CORRESPONDING AMOUNT FROM LOANS AND ADVANCES/DEBTORS ON THE ASSETS SIDE OF TH E BALANCE SHEET, IT WAS ENTITLED TO BENEFIT OF DEDUCTION UNDER S. 36(1)(VII); IT WAS NOT NECESSARY TO CLOSE THE INDIVIDUAL ACCOUNT OF EACH DEBTOR IN THE BOOKS. BESIDES WE ALSO FIND SUPPORT AND GUIDANCE FROM THE ORDER OF THIS CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DEEPAK INDUSTRIES LTD VS. ITO IN ITA NO.2207/KOL/2010 DATED 10.06.2011. THE RELEVANT EXTRACT OF THE ORDE R IS REPRODUCED BELOW:- 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. IT IS WELL SETTLED THAT BEFORE ASSUMPTION OF JURISDICTION U/S. 263 BY LD. CIT, TWO CONDITIONS HAVE TO BE SIMULTANEOUSLY F ULFILLED. FIRSTLY, ASSESSMENT ORDER SHOULD BE ERRONEOUS AND SECONDLY, THE ORDER SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF EITHER OF THE INGREDIENT MISSING, T HE PROCEEDINGS U/S. 263 OF THE ACT CANNOT STAND. IN THE PRESENT CASE, THE MAIN ASPECT TO BE EXAMINED IS WHETHER THE SUNDRY DEBTORS HAD BEEN WRITTEN OF OR NOT. THE DETA ILS OF SUNDRY DEBTORS IS AS UNDER:- SUNDRYDEBTORS OUTSTANDING FOR A PERIOD EXCEEDING S IX MONTHS CONSIDERED GOOD 1,88,96,530/- 2,31,44,97-/- CONSIDERED DOUBTFUL 1,76,63,989/- 1,24,55,468/- LESS: PROVISION 1,76,63,989/- 1,24,55,468/- OUTSTANDING FOR A PERIOD OF LESS THAN SIX MONTHS 19,09,51,709/- 13,84,56,260/- ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 19 16,16,01,230/- 20,98,48,239/- THUS, TO THE EXTENT, THE DEBTS WERE CONSIDERED DOUB TFUL, THE SAME WERE WRITTEN OFF BY ACTUALLY WRITING OFF IN PROFIT AND LOSS ACCOUNT AND ALSO IN THE BOOKS OF ACCOUNT BY CREDITING THE SUNDRY DEBTORS ON THE ASSET SIDE OF B ALANCE SHEET. THIS METHODOLOGY WAS IN CONFORMITY WITH THE DECISION OF HON'BLE SUPR EME COURT IN THE CASE OF VIJAYA BANKS CASE (SUPRA) AND, THEREFORE, COULD NOT BE DI SPUTED. 6.1 THE OTHER ASPECTS POINTED OUT BY LD. CIT REGARD ING CIRCUMSTANCES UNDER WHICH THE ASSESSEE WROTE OFF THE AMOUNT COULD NOT B E GONE INTO BECAUSE AFTER 01.04.89, THE ONLY REQUIREMENT IS OF WRITING OFF TH E AMOUNT. ONCE ACTUAL WRITE OFF THE AMOUNT. ONCE ACTUAL WRITE OFF OF THE AMOUNT IS THEE , THEN THE DEDUCTION ON BAD DEBT IS TO BE ALLOWED. SINCE FROM THE RECORDS, IT IS EVI DENT THAT ASSESSEE HAD ACTUALLY WRITTEN OFF THIS AMOUNT, WHICH WAS ALLOWED BY ASSES SING OFFICER, IT COULD NOT BE SAID THAT THE ASSESSMENT ORDER WAS ERRONEOUS. HENCE, LD. CIT WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S. 263 OF THE ACT. WE, ACCO RDINGLY, CANCEL THE ORDER OF LD. CIT. 27. THE PRINCIPLES LAID DOWN BY HON'BLE SUPREME CO URT IN THE CASE OF VIJAYA BANK (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF TH E PRESENT CASE. THEREFORE, WE HOLD THAT THE IMPUGNED ORDER PASSED B Y LD. CIT(A) U/S 263 HOLDING THE ORDER OF AO AS ERRONEOUS IN SO FAR AS P REJUDICIAL TO THE INTEREST OF REVENUE IS NOT SUSTAINABLE IN THE EYES OF LAW. HENC E, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 28. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 29. IN THE COMBINE RESULT, ASSESSEES APPEALS IN ITA NO .753, 754 & 756/KOL/2017 STAND DISMISSED AND THAT OF ITA NO.755 /KOL/2017 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 31/1 0/2017 SD/- SD/- (' ) ( ) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S )- 31 / 10 /201 7 ITA NO.753-756/KOL/2017 A.YS. 11-12 & 13-1 4 AMRIT FEEDS & AMRICON AGROVETE PVT. LTD. VS. DC IT, CC-2(1), KOL. PAGE 20 / COPY OF ORDER FORWARDED TO:- 1 . /ASSESSEE-AMRIT FEEDS/HATCHERIES PVT LTD/AMRICON AG ROVET PVT. LTD.158, LENIN SARANI, 2 ND FLOOR, KOLKATA-13 2. /REVENUE-DCIT, CC-2(1), 110, SHANTIPALLY, EM BY-PAS S, KOLKATA-107 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ''4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 4,