No Section 263 revision permissible if AO had conducted detailed enquiry during assessment
Dena Bank –
[2020] 114 taxmann.com 639 (Mumbai – Trib.)
– Where revision was invoked against assessee to question deduction allowed towards bad debts written off in respect of non-rural advances under section 36(1)(vii), payment made towards contribution to gratuity fund, penalty payment to RBI for violation of KYC norms and provision for wage arrears, since Assessing Officer had conducted detailed enquiry in respect of all these issues during assessment proceedings and assessee had also furnished a detailed reply and relief was allowed only after making required enquiries, impugned revision was unjustified
section 37(1), read with sections 36(1)(vii), 43B and 263, of the Income-tax Act, 1961 – Business expenditure
– Allowability of (Penalties)
– Assessment year 2014-15
– Assessment in case of assessee was completed under section 143(3)
– Subsequently, Pr. Commissioner invoked revision jurisdiction under section 263 on four grounds; firstly, as per proviso provided to section 36(1) (viia) and 36(1)(vii) deductions towards bad debt written off was allowed over and above amount of provision for bad debts in books of account, as on first date of financial year;
secondly, since assesee was maintaining its account on mercantile basis, advance payment towards contribution to gratuity fund which did not pertain to relevant assessment year, was not allowable in view of matching principles; thirdly, penalty payment made by assessee for violation of KYC norms to RBI would not be allowed under section 37(1) and;
lastly, exact liability as regards provision for wage arrears made by assessee, was not ascertainable, thus, same was not allowable
– It was noted that all four issues questioned by Principal Commissioner were thoroughly examined by Assessing Officer during assessment proceedings
– Assessee had also furnished a detailed reply to questions raised by Assessing Officer regarding all four issues
– After considering relevant facts and explanations furnished by assessee Assessing Officer had chosen to accept claim of assessee
– Thus, it could not be said that Assessing Officer had failed to carry out required enquiries which ought to be carried out in accordance with law
– Whether, therefore, impugned invocation of provisions of section 263 was unjustified
– Held, yes
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