PRITHVI INFORMATION SOLUTIONS LIMITED, HYDERABAD,HYDERABAD V. ACIT, CIRCLE-16(2), HYDERABAD, HYDERABAD

ITA 47/HYD/2017

AI Insights

The case involves M/s. Prithvi Information Solutions Limited, which appealed against the final assessment order passed by the Assistant Commissioner of Income Tax, Circle 16(2), Hyderabad, under sections 143(3), 92CA(3), and 144C(5) of the Income Tax Act, 1961. The appeal was delayed due to the company's liquidation process, during which it lost control over its assets and records. The Tribunal found the delay reasonable and condoned it. The main issues in the appeal included the Transfer Pricing adjustments related to international transactions and the addition of bad debts written off. The Tribunal's decision focused on ensuring a fair opportunity for the assessee to present its case and comply with the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716409 (ITAT-HYDERABAD)
• Duration Of Justice: 8 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2017
• Other Referred Cases: Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur, National Thermal Power Corporation Limited vs. CIT, Rapiscan Systems Private Limited Vs. ADIT (IT)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDER KUMAR NAIK
• Assessee Lawyers: P. MURALI MOHAN RAO
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Transfer pricing; International transaction; Reasonable cause; Bad and doubtful debts; Period of limitation; Principle of natural justice; Assessment record; Time period of passing order; Liquidation; Related party transaction
• Section: 143(3); 142(1); 115JB; 92B; 92C

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री विजय पाल राि, उपाध् यक्ष एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.47/Hyd/2017 (निर्धारण वर्ा/Assessment Year : 2010-11) M/s. Prithvi Information Solutions Limited, Hyderabad. PAN:AACCP5281F Vs. Asst. Commissioner of Income Tax, Circle 16(2), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri P. Murali MohanRao, C.A. रधजस् व द्वधरध/Revenue by: Shri Narender Kumar Naik, CIT-DR सुिवधई की तधरीख/Date of hearing: 14/07/2025 घोर्णध की तधरीख/Pronouncement: 20/08/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by M/s. Prithvi Information Solutions Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Assessing Officer (“Ld. AO”) u/s. 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) of the Income Tax Act, 1961 (“the Act”) dated 26.02.2015 for the A.Y. 2010-11. Printed from counselvise.com ITA No.47/Hyd/2017 2 2. At the outset, it was noticed that there is a delay of 623 days in filing of the appeal before this Tribunal. The assessee has filed a condonation petition along with a copy of affidavit explaining the reasons for the delay. The Learned Authorised Representative (“Ld. AR”) submitted that one creditor, Mr. Andaluri Srinivas, had filed a petition for liquidation against the assessee-company on 03.04.2014. Based on the said petition, the Hon’ble High Court passed an order for liquidation of the company on 27.01.2015 (page nos.110 to 112 of the paper book). The final assessment order was thereafter passed by the Ld. AO on 26.02.2015, i.e., after the order of the Hon’ble High Court for liquidation. In accordance with the Hon’ble High Court’s order, the assessee was required to hand over the assets and books of accounts of the company to the Official Liquidator, which was done on 14.05.2015 ( page nos. 22 to 25 of the paper book). Subsequently, the assessee made efforts to regain control of the company. The Ministry of Corporate Affairs, vide order dated 02.01.2017 (page no.106 of the paper book), directed delivery of possession of the company back to the Printed from counselvise.com ITA No.47/Hyd/2017 3 assessee, and the physical possession was obtained on 10.01.2017. It was contended that during the liquidation period, only the Official Liquidator was entitled to file an appeal and the company was not competent to do so. Further, during this period, the company was facing severe financial and operational constraints. Hence, the delay in filing the appeal was neither intentional nor deliberate. The Ld. AR, therefore, prayed that the delay may be condoned considering the exceptional circumstances. 3. Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the condonation of delay. It was submitted that the information regarding liquidation and appointment of Official Liquidator was never brought to the notice of the Revenue by the assessee. Even after the order of liquidation dated 27.01.2015, the representative of the assessee received the assessment order on 26.02.2015. Therefore, it was within the knowledge of the assessee that the order of the Ld. AO had been passed, and yet, no steps were taken to bring the Official Liquidator on record or to initiate appellate proceedings in time. Accordingly, the Ld. DR Printed from counselvise.com ITA No.47/Hyd/2017 4 submitted that there was no reasonable cause for such an inordinate delay and the petition for condonation should be rejected. 4. We have considered the rival submissions and gone through the material placed on record, including the condonation petition and the affidavit filed by the assessee. It is undisputed that the assessee-company was under liquidation as per the order of the Hon’ble High Court dated 27.01.2015 (page nos.110 to 112 of the paper book), and the control and custody of its assets and records were with the Official Liquidator till the Ministry of Corporate Affairs issued an order dated 02.01.2017 (page no.106 of the paper book) for restoration of possession to the assessee. The physical possession was obtained on 10.01.2017, and the appeal was filed by the assessee on 09.01.2017 i.e. shortly after the assesse got the order of the Ministry of Corporate Affairs dated 02.01.2017. In our considered view, the circumstances demonstrate that the assessee was prevented by reasonable cause from filing the appeal in time. During the liquidation period, it was the Official Liquidator who was vested Printed from counselvise.com ITA No.47/Hyd/2017 5 with the authority to initiate legal proceedings, and the assessee had no control over its affairs. Further, we find that the Hon’ble Supreme Court, in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025, has held that a justice-oriented and liberal approach should be taken while dealing with the application filed by an appellant seeking condonation of the delay in filing of the appeal. Accordingly, taking a judicial and liberal approach, we condone the delay of 623 days in filing the appeal and admit the same for adjudication on merits. 5. The assessee has raised the following grounds of appeal : “ 1. Erred in making the addition of Rs. 24,88,54,488/- as adjustment towards arms length price in respect of the international truncations entered into with associated enterprises. 2. Erred in rejecting the objection raised, without considering the facts submitted by appellant. 3. Erred in applying TNMM Method as the most appropriate method in determining the arms length price in respect of transaction relating to provision of software Consultancy Services. 4. Ought to have appreciated that CUP is the appropriate method for calculating arms length price instead of TNMM method. 5. Ought to have followed the procedure laid down under the provisions of section 92C of the Act in the Computation of arms length price for analysing the said transaction. Addition of Rs. 4,30,29,173/- towards bad debts written off :- Printed from counselvise.com ITA No.47/Hyd/2017 6 6. Erred in disallowing the expenditure of bad debts written off of Rs. 4,30,29,173/- without following the ratio laid down by the Supreme Court in case of TRF ltd. VS CIT (2010) 323 ITR 397 (SC). 7. Ought to have appreciated the fact that assessee has complied with all the conditions laid down for allowing the bad debts written off. 8. The assessee may add, alter or modify or substantiate any other point to the Grounds of appeal at any time before or at the time of hearing of the appeal.” 5.1 The assessee has also raised additional grounds as under : “ 9. The Hon. ITAT is requested to kindly admit the grounds which are taken for the first time before them, as per the ratio laid down by the Hon. Supreme court or India in the case of National Thermal Power Corporation Limited vs. CIT [1998] 229 ITR 383 (SC). 10. The Ld. AO ought to have appreciated that as per section 144C of the Act, upon receipt of the directions u/s 144C(5) of the act the assessing officer should pass the relevant final assessment order within one month from the end of the month in which such directions is received. 11. The Ld. AO ought to have appreciated that directions u/s 144C(5) was passed on 08.12.2014 and time limit to pass the final assessment order should be within one month from the end of the month in which direction u/s 144C(5) of the Act is received i.e. on or before 31.01.2015. 12. The Ld. AO erred in passing the Final assessment order u/s 143(3) r.w.s 92CA(3) r.w.s 144C(5) of the Act after the expiry of time limit i.e. passed on 26.02.2015 which is invalid and bad-in-law. 13. Without prejudice to the above grounds, as per section 144C of the Act DRP shall pass the directions u/s 144C(5) of the Act within 9 months Printed from counselvise.com ITA No.47/Hyd/2017 7 from the end of the month in which the draft assessment order has passed. 14. Without prejudice to the above grounds, in the present case draft assessment order was passed on 28.03.2014 and the time limit to pass the directions u/s 144C(5) of the Act by DRP was 31.12.2014. 15. Without prejudice to the above grounds, the Ld. AO in the final assessment order passed mentioned that the DRP directions are received on 06.01.2015, if the same has been considered the DRP directions passed on 06.01.2015 is invalid as the same has been passed after the time limit of 9 months from the end of the month in which draft assessment order was passed i.e. draft assessment order was passed on 28.03.2014. 16. The Appellant may add or alter or amend or modify ort substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of appeal.” 5.2 In this context the Ld. AR submitted that, the additional grounds so raised are admissible in view of judgment rendered by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC). The prayer for admission of additional grounds noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the ITAT Rules owing to the fact that objections raised in additional grounds are legal in nature for Printed from counselvise.com ITA No.47/Hyd/2017 8 which relevant facts are stated to be emanating from the existing records. 6. The brief facts of the case are that, the assessee is a company engaged in the business of Software Development Services (“SDS”). It filed its return of income for the assessment year 2010–11 on 27.09.2010 declaring total income of Rs.5,21,55,160/- under normal provisions and book profits of Rs.8,09,10,977/- under section 115JB of the Income Tax Act, 1961 (“the Act”). The case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued on 19.09.2011. In view of involvement of international transactions, the matter was referred to the Learned Transfer Pricing Officer (“Ld. TPO”) under section 92CA of the Act for determining the arm’s length price. The Ld. TPO, vide order dated 21.01.2014, proposed an adjustment of Rs.17,56,28,648/- on account of SDS and Rs.7,32,25,840/- on account of interest on interest‑free loan. In addition to above, the Ld. AO made a non‑TP addition of Rs.4,30,29,173/- on account of bad debts written off. Accordingly, the Ld. AO passed the draft assessment Printed from counselvise.com ITA No.47/Hyd/2017 9 order under section 143(3) r.w.s. 92CA(3) of the Act on 28.03.2014. 7. Aggrieved with the draft assessment order of Ld. AO, the assessee preferred objections before the Ld. DRP, which issued directions under section 144C(5) of the Act on 08.12.2014. In accordance with the directions of Ld. DRP, the Ld. TPO revised the proposed adjustment to Rs.15,71,57,265/- for SDS and retaining the adjustment of Rs.1,99,65,250/- for interest on interest‑free loan. In conformity with the directions, the Ld. AO passed the final assessment order on 26.02.2015 under section 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) of the Act, making total TP additions of Rs.17,71,22,515/- and non‑TP addition of Rs.4,30,29,173/- on account of bad debts written off. 8. Aggrieved with the final assessment order of Ld. AO, the assessee is in appeal before this Tribunal. At the outset, the Ld. AR submitted that, the following issues are only involved out of the grounds of the appeal : Printed from counselvise.com ITA No.47/Hyd/2017 10 a) The final assessment order passed by Ld. AO is barred by limitation. b) Total TP additions of Rs.17,71,22,515/- made by Ld. AO. c) Non‑TP addition of Rs.4,30,29,173/- made by Ld. AO on account of bad debts written off. 9. As far as the first issue is concerned, the Ld. AR submitted that the final assessment order passed by Ld. AO is barred by limitation. It was contended that the directions of the Ld. DRP were issued on 08.12.2014 and, since the offices of the Ld. DRP and the Ld. AO are in the same building in Hyderabad, the Ld. AO must have received the directions of Ld. DRP at the latest within one to two weeks from the date of order of Ld. DRP, i.e in December, 2014. On that basis, according to section 144C(13) of the Act, the last date to pass the final order Ld. AO would have been 31.01.2015; however, the Ld. AO had passed the order on 26.02.2015, which is beyond the prescribed limitation period. Further, in support of this contention, the Ld. AR placed reliance on the decision of the Hon’ble Telangana High Court in Rapiscan Systems Private Limited Vs. ADIT (IT), 170 taxmann.com 753 (Telangana) dated 09.01.2025, submitting that the Hon’ble High Printed from counselvise.com ITA No.47/Hyd/2017 11 Court has held that the date of upload of Ld. DRP’s directions on the portal must be treated as the date of receipt by the Ld. AO. 10. Per contra, the Ld. DR invited our attention to para no. 5 at page no. 5 of the final assessment order of the Ld. AO, where the Ld. AO has categorically recorded that the directions of the Ld. DRP were received by him on 06.01.2015. The assessee has not produced any documentary evidence to rebut this factual recording. The Ld. DR further submitted that the reliance of assessee on Rapiscan Systems Private Limited Vs. ADIT (IT) (supra) is misplaced on facts because, in the present case, there is no material to show that the Ld. DRP’s directions were uploaded on the portal; rather, the directions were received physically, as reflected in the assessment record. Accordingly, reckoning the date of receipt as 06.01.2015, the last date under section 144C(13) of the Act to pass the order was 28.02.2015. However, the final assessment order has been passed by the Ld. AO on 26.02.2015,which is within the prescribed limitation period. Printed from counselvise.com ITA No.47/Hyd/2017 12 11. We have considered the rival submissions and perused the material available on record, including the case law cited. The limited question before us is whether the final assessment order dated 26.02.2015 passed by Ld. AO is barred by limitation in terms of section 144C(13) of the Act. As regards the date of receipt of the Ld. DRP directions, we have gone through the para no. 5 at page no. 5 of the final assessment order of the Ld. AO, which is to the following effect : “5. Accordingly, a draft assessment order dated 28.03.2014 is prepared and duly served on the assessee company. Based on the draft assessment order, the assessee company has preferred an appeal before Hon’ble DRP and same is disposed vide order dated 08.12.2014, which is received in this office on 06.01.2015 given the following directions.” 11.1 On perusal of above, we found that the final assessment order of Ld. AO specifically records the receipt of directions of Ld. DRP on 06.01.2015. Further, the assessee has not placed on record any cogent documentary evidence to demonstrate receipt prior to 06.01.2015. Mere presumptions based on office location or proximity cannot dislodge a clear factual recording in the assessment order. It is a settled principle that factual statements Printed from counselvise.com ITA No.47/Hyd/2017 13 in official records carry a presumption of correctness unless rebutted by credible evidence; suspicion, however strong, cannot substitute proof. 11.2 We have also gone through the judgment of the Hon’ble Telangana High Court in Rapiscan Systems Private Limited (supra) as cited before us. On perusal, we find that the ratio proceeds on a specific factual premise that the Ld. DRP directions were uploaded on the portal, and therefore the date of upload was to be treated as the date of receipt by the Ld. AO. In the present case, no material has been produced to show that the Ld. DRP uploaded the directions on the portal. On the contrary, the record indicates physical receipt by the Ld. AO on 06.01.2015. Consequently, the factual foundation that triggered the rule in Rapiscan Systems Pvt. Ltd. (supra) is absent here. We therefore hold that the reliance placed by the assessee on Rapiscan Systems Pvt. Ltd. (supra) is misplaced and distinguishable on facts. 11.3 Therefore, reckoning the date of receipt as 06.01.2015, the time limit under section 144C(13) of the Act expires on Printed from counselvise.com ITA No.47/Hyd/2017 14 28.02.2015. Accordingly, we are of the considered view that the final assessment order dated 26.02.2015 has been passed within the prescribed period. The objection on limitation accordingly fails and is rejected. 12. The second issue of the assessee relates to Transfer Pricing Adjustment of Rs.15,71,57,265/- on account of SDS and Rs.1,99,65,250/- on account of interest on interest free loans. With regards to Adjustment of Rs.15,71,57,265/- on account of SDS, the Ld. AR submitted that the assessee had adopted the Cost Plus Method (“CPM”) as the Most Appropriate Method (“MAM”) for benchmarking of its international transaction relating to SDS. However, the Ld. TPO rejected the CPM and applied the Transactional Net Margin Method (“TNMM”) as MAM. Inviting our attention to page no.11 of the Ld. TPO’s order, the Ld. AR pointed out that the Ld. TPO rejected the CPM stating that no supporting documentary evidence or explanation was furnished by the assessee. It was argued that the Ld. TPO did not afford proper and adequate opportunity to the assessee to substantiate its position. Further, the Ld. AR invited our attention to para no. Printed from counselvise.com ITA No.47/Hyd/2017 15 8.1 at page no.24 of the order of Ld. DRP, where the Ld. DRP merely stated in a general manner that the objections of the assessee did not merit consideration, concurring with the findings of the Ld. TPO without addressing the specific objection regarding the rejection of CPM. It was thus submitted that there is a violation of the principles of natural justice and prayed that the matter be set aside to the file of the Ld. AO/TPO for fresh adjudication, with a direction to provide due opportunity of being heard to the assessee, along with liberty to file additional evidence. 13. Per contra, the Ld. DR supported the orders of the Ld. AO/TPO/DRP and objected to the remand of the issue, contending that the Ld. TPO had given adequate reasoning and opportunity, and that the adjustment made is justified. 14. We have considered the rival contentions and perused the material available on record. On a perusal of the Ld. TPO’s order (page no.11 of the order), we find that the Ld. TPO rejected the CPM mainly on the ground that the assessee did not produce necessary supporting documents and explanations. We further Printed from counselvise.com ITA No.47/Hyd/2017 16 note that in para no. 8.1 at page no.24 of the Ld. DRP’s order, the Ld. DRP has not specifically dealt with the assessee’s objection regarding rejection of CPM, and has merely concurred with the Ld. TPO’s findings. This, in our view, does not meet the requirement of an effective and reasoned adjudication. 14.1 Considering the above, and in the interest of natural justice, we deem it fit to set aside the issue relating to TP adjustment of Rs.15,71,57,265/- on account of SDS to the file of the Ld. AO/TPO for de novo adjudication. The Ld. AO/TPO is directed to grant adequate opportunity of being heard to the assessee and to permit filing of additional evidence or explanation, if any, and thereafter pass a speaking order. 15. With regard to the TP adjustment of Rs.1,99,65,250/- on account of Interest on Interest-free Loan, the Ld. AR submitted that the adjustment has been wrongly made by the Ld. AO. It was pointed out that the amount relates to investments made by the assessee in its group entities i.e. (a) Rs.59,05,37,783/- in Prithvi Information Inc., USA and (b) Rs.72,24,179/- in Prithvi Middle East WLL. It was argued that these are capital investments Printed from counselvise.com ITA No.47/Hyd/2017 17 in subsidiaries, and not loans or advances, hence outside the scope of section 92B of the Act. The Ld. AR invited our attention to the Related Party Transactions forming part of the Annual Report (page no. 44 of the paper book), where these amounts have been disclosed under the column “Investments.” It was further submitted that the investments were made out of interest- free funds, and hence no benchmarking is required. As regards Prithvi Information Inc., USA, it was contended that although the amount was shown as loans and advances in the year under consideration, it was subsequently converted into equity. Accordingly, the Ld. AR prayed before the bench to delete the addition made by the Ld. AO. 16. Per contra, the Ld. DR relied on the orders of the Ld. AO/TPO/DRP and opposed the plea of the assessee, submitting that the assessee has not provided sufficient documentary evidence to establish its claim, and therefore the adjustment made is proper. 17. We have considered the rival submissions and perused the material available on record. We have gone through the Printed from counselvise.com ITA No.47/Hyd/2017 18 assessee’s annual report, Schedule No. 7 on Investments (page no. 24 of the paper book), which is to the following effect : 17.1 On perusal of above, we found that there are investments in subsidiary companies of Rs.40.42. We have also gone through the disclosure at page no. 44 of the paper book, under “Related Party Transactions,” which is to the following effect : Printed from counselvise.com ITA No.47/Hyd/2017 19 Printed from counselvise.com ITA No.47/Hyd/2017 20 17.2 On perusal of above, we found that the assessee has disclosed investment in Prithvi Solutions Inc., USA of Rs.48,80,31,500/- under “subsidiary companies” and investment in Prithvi Middle East WLL of Rs.87,48,215/- under “joint ventures”. As far as investment in subsidiary companies are concerned, the amount as per Schedule No. 7 on Investments (page no. 24 of the paper book) is Rs.40.42 with Prithvi Information Inc., however the amount as per disclosure at page no. 44 of the paper book, under “Related Party Transactions” is Rs.48,80,31,500/- with Prithvi Solutions Inc. Hence, there is a clear contradiction within the same annual report regarding the quantum of investments as well as the name of the company. Further, while the assessee has contended that investment in Prithvi Middle East WLL is in the nature of investment in subsidiary companies, the disclosure at page nos. 24 & 44 of the paper book categorises it as an investment in a joint venture. However, there is no difference in quantum of investment in this respect, as found in the case of investment in subsidiary company. Printed from counselvise.com ITA No.47/Hyd/2017 21 17.3 We also find that the Ld. AO/TPO has not specifically linked or reconciled the impugned amounts with the audited financials, nor provided a clear break-up as to whether the same forms part of “investments” or “loans and advances.” Similarly, the contention of the assessee that the investment in Prithvi Information Inc., USA was later converted into equity has not been supported by any evidence on record. In view of these contradictions and lack of clarity, we consider it appropriate to set aside the adjustment of Rs.1,99,65,250/- on account of interest on interest-free loan to the file of the Ld. AO/TPO. The Ld. AO/TPO is directed to re-verify the nature of the impugned amounts by linking them with the audited financials of the assessee, obtain necessary break-up, and give a clear finding as to whether the same is in the nature of investments or loans/advances. The assessee shall be afforded adequate opportunity of being heard and liberty to furnish necessary evidence in support of its contentions. 18. The third issue of the assessee relates to addition of Rs.4,30,29,173/- on account of Bad Debts Written Off. In this Printed from counselvise.com ITA No.47/Hyd/2017 22 regard, the Ld. AR submitted that the assessee had written off an amount of Rs.4,30,29,173/- in its books of account as irrecoverable, and accordingly claimed the same as deduction under section 36(1)(vii) of the Act. It was submitted that once the bad debts are written off in the books, the assessee is entitled to deduction and no further condition is required to be fulfilled. The Ld. AR invited our attention to para no. 11.1 at page no. 28 of the Ld. DRP’s order, where the Ld. DRP directed the Ld. AO to verify whether the assessee fulfilled certain conditions and, if so, to allow the claim. However, according to the Ld. AR, the Ld. AO did not provide sufficient and proper opportunity to the assessee to substantiate its claim, despite the Ld. DRP’s directions. It was contended that, in the interest of justice, the assessee should be given one more opportunity to prosecute its claim and place necessary evidence on record. 19. Per contra, the Ld. DR relied on para no. 5.2 of page no. 5 of the assessment order, pointing out that the Ld. AO had already issued a notice under section 142(1) dated 06.01.2015 calling for details in support of the claim of bad debts. However, the Printed from counselvise.com ITA No.47/Hyd/2017 23 assessee did not furnish the required information. It was therefore submitted that there is no infirmity in the action of the Ld. AO in disallowing the claim, and the matter should not be remanded back as it would give the assessee a second innings. 20. We have heard the rival submissions and perused the material available on record. The assessee has claimed deduction for bad debts written off to the extent of Rs.4,30,29,173/-. We notice that the Ld. DRP, in para no. 11.1 of its order, specifically directed the Ld. AO to verify whether the assessee fulfilled the necessary conditions, and to allow the deduction if so found. However, from the assessment order, it is evident that the Ld. AO merely issued a notice under section 142(1) on 06.01.2015, and upon non-compliance by the assessee, proceeded to disallow the claim without making any further inquiry or verification. We find merit in the contention of the assessee that, in view of the clear directions of the Ld. DRP, a more effective opportunity ought to have been provided. In our view, denial of the claim without such verification would not be in accordance with the mandate of the Ld. DRP’s order, nor with the principle of natural justice. Printed from counselvise.com ITA No.47/Hyd/2017 24 Accordingly, in the facts and circumstances of the case, we set aside the addition of Rs.4,30,29,173/- on account of bad debts written off, and remit the matter back to the file of the Ld. AO for fresh adjudication in line with the Ld. DRP’s directions. The Ld. AO is directed to provide adequate opportunity of being heard to the assessee and to permit production of necessary evidence or explanation. The assessee, in turn, shall cooperate fully and furnish the required details. 21. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 20th August, 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 20.08.2025. * Reddy gp Printed from counselvise.com ITA No.47/Hyd/2017 25 Copy of the Order forwarded to : 1. M/s. Prithvi Information Solutions Limited, P. Murali & Co., CAs, 6-3- 655/2/3; 1st Floor, Somajiguda, Hyderabad-500 082 2. ACIT, Circle 16(2), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "