M/s. Rajesh Exports Ltd. Vs ACIT (ITAT Bangalore)
Conclusion: Due to amendment made in section 132 by the Finance Act, 2017 w.r.e.f. 1-4-1962 the reason to believe or reason to suspect, as the case may be, shall not be disclosed to any person or authority or appellate Tribunal as recorded, by IT authority under section 132 or 132A, therefore, assessment order passed was not bad in law on account of not furnishing any valid reason for conducting the search.
Held: Assessee submitted that there was no valid reason for search which was conducted by department pursuant to which assessment for seven years was done under section 153A r.w.s 143 (3). The mandatory condition for initiating a search as contemplated under the provisions of section 132(1)(a), (b) & (c) did not exist. Department had not furnished any valid reason for conducting the search. Also, department had not provided the satisfaction note and reasons recorded for issue of notice u/ s 153A and consequently an adverse inference might be drawn that the material did not exist and assessment order passed was bad in law on the facts and circumstances of the case. It was held in the case of N. K. Jewellers vs. CIT as reported in 85 com361 that in view of the amendments made in section 132 by Finance Act, 2017, the reason to believe or reason to suspect as the case may be, shall not be disclosed to any person or authority or Appellate Tribunal as recorded by the Income Tax Authority u/s 132. Tribunal therefore, cannot go into that question at all. The writ petitions were dismissed and held that even the law has been amended by insertion of the Explanation by Parliament in section 132 by the Finance Act, 2017 with retrospective effect from 1-4-1962. The Court held that the Explanation also prohibits the appellate authorities to go into the reasons recorded by the concerned IT Authority for directing search against the assessee or tax payer.
FULL TEXT OF THE ITAT JUDGEMENT
Theseseven appeals are filed by the assessee and these are directed against separate orders of CIT (A) – 11, Bangalore dated 28.02.2017 for A. Ys. up to 2011 – 12 and dated 20.11.2017 for A. Ys. 2012 – 13 to 2014 – 15. These appeals were heard together and are being disposed of through this consolidated order.
2. In all these appeals, various technical issues as well as various issues on merit are raised by the assessee. Technical issues raised in all years except A.Y. 2014 – 15 are three. First technical issue raised by the assessee is this that the search conducted in the present case on 17.12.2013 is not a valid search. Second technical issue raised by the assessee is this that the Notice issued by the AO u/s 153A is bad in law. Third technical issue raised by the assessee is this that the additions made in these assessment orders passed u/s 153A are not arising from the seized material and therefore, these additions are outside the scope of section 153A of the I. T. Act. There is no technical issue raised in A. Y. 2014 – 15.
3. First, we reproduce the grounds raised by the assessee in each year. These are as under:-
a) A. Y. 2008 – 09, ITA 931/Bang/2017:-
“1. The order of the learned Commissioner of Income Tax in so far it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant’s case.
2. The Appellant denies itself liable to be assessed on a total income arrived at by making the additions as confirmed by the CIT (A) as against the returned income of NIL under the facts and circumstances of the case.
3. Granting of correct amount of deduction under Section 1OAA of the Act.
a) The authorities below erred in not granting correct deduction under section 10 AA of the Act.
b) The CIT (A) ought to have specifically adjudicated the relevant ground in respect of granting of the correct amount of deduction under Section 10 AA of the Act.
c) Without Prejudice to grounds regarding the other additions sustained, the authorities below ought to have granted deduction under section 10 AA if eligible in respect of the additions made and sustained on the facts and circumstance of the case.
d) The learned CIT(A) erred in not directing for reworking, of the eligible amount of deduction under Section 10AA of the Act in respect of the additions deleted by him on the facts and circumstance of the case.
4. On validity of Search:
a) The appellant denies itself liable to be assessed under section 153A r.w.s. 143 [3] of the Act as there was no valid search on the appellant on the facts and circumstance of the case.
b) The learned authorities below have not demonstrated that the search initiated in the case of the appellant is valid and legal and consequently the order of assessment is ex facie bad in law as the mandatory conditions for initiating a search as contemplated under the provisions of section 132(1)(a), (b) 8s (c) of the Act did not exist and hence the order is required to be annulled on the facts and circumstance of the case.
c) The learned authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act and hence the assumption of jurisdiction under Section 153 A of the Act is bad in law and consequently the entire assessment requires to be cancelled.
5. Notice issued u/s 153A was bad in law:
a) The authorities below failed to appreciate that the notice issued u/s 153A of the Act is bad in law on the ground that the notice does not indicate as to whether it is proposed to assess or reassess and is thus vague, consequently the assessment order passed on an invalid notice is bad in law on the facts and circumstances of the case.
b) The learned authorities below have not dealt in the respective order on the objection filed by the appellant in respect of assumption of jurisdiction u/s 153A and have also not provided the satisfaction note and reasons recorded for issue of notice u/s 153A of the Act and consequently an adverse inference may be drawn that the material does not exist and assessment order passed is bad in law on the facts and circumstances of the case.
6. Scope of assessment pursuant to notice issued under Section 153 A of the Act.
The learned authorities below failed to appreciate that the scope of assessment in the proceedings under section 153A r.w.s 143(3) of the Act is restricted to the seized material if any and the present assessment order passed is contrary to the scheme of the Act and consequently the assessment order is liable to be annulled/ cancelled on the facts and circumstances of the case.
7. The assessing officer ought not to have made any changes to the return of income and the CIT(A) ought not to have sustained any part of the change made by the assessing officer on the facts and circumstance of the case.
8. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234A, 234B and 234C of the Income Tax Act under the facts and circumstances of the case.
9. Without prejudice the levy of interest under section 234 A, 234B and 234C are bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case.
10. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal.
11. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.”
b) A. Y. 2009 – 10, ITA 928/Bang/2017:-
“1. The order of the learned Commissioner of Income Tax in so far it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant’s case.
2. The Appellant denies itself liable to be assessed on a total income arrived at by making the additions as confirmed by the CIT (A) as against the returned income of Rs. 4,67,237/- under the facts and circumstances of the case.
3. On addition of interest on Inter corporate Deposits (ICDs):
a) The learned CIT (A) is not justified in confirming the order of the Assessing officer of an amount of Rs.14,72,595/- as accrued interest on ICDs on the facts and circumstances of the case.
b) The learned authorities below failed to appreciate that the non receivable interest on ICDs were shown as income in the books of accounts of the appellant and subsequently claimed as bad debt in the books of the appellant.
c) The learned authorities below failed to appreciate that the accounting procedure of the appellant and the entries passed by the appellant in its books of accounts satisfy the conditions for claiming bad debts on the facts and circumstances of the case.
d) The learned authorities below erred in observing that the procedure to claim bad debt is by disclosure in the profit and loss account by way of writing off a debt as an expenditure corresponding to an amount which has been already offered as an income in the same or earlier previous year and such observations are contrary to the plain language of the Income Tax Act which only contemplates writing off in the accounts and hence the addition requires to be deleted on the facts and circumstance of the case.
e) Without prejudice, the said amount of Rs.14,72,595/- is not taxable as it is not real income of the appellant and consequently the addition made is liable to be deleted on the facts and circumstances of the case.
4. On validity of Search:
a) The appellant denies itself liable to be assessed under section 153A r.w.s. 143 [3] of the Act as there was no valid search on the appellant on the facts and circumstance of the case.
b) The learned authorities below have not demonstrated that the search initiated in the case of the appellant is valid and legal and consequently the order of assessment is exifacie bad in law as the mandatory conditions for initiating a search as contemplated under the provisions of section 132(1)(a), (b) & (c) of the Act did not exist and hence the order is required to be annulled on the facts and circumstance of the case.
c) The learned authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act and hence the assumption of jurisdiction under Section 153 A of the Act is bad in law and consequently the entire assessment requires to be cancelled.
5. Notice issued u/s 153A was bad in law:
a) The authorities below failed to appreciate that the notice issued u/s 153A of the Act is bad in law on the ground that the notice does not indicate as to whether it is proposed to assess or reassess and is thus vague, consequently the assessment order passed on an invalid notice is bad in law on the facts and circumstances of the case.
b) The learned authorities below have not dealt in the respective order on the objection filed by the appellant in respect of assumption of jurisdiction u/ s 153A and have also not provided the satisfaction note and reasons recorded for issue of notice u/ s 153A of the Act and consequently an adverse inference may be drawn that the material does not exist and assessment order passed is bad in law on the facts and circumstances of the case.
6. Scope of assessment pursuant to notice issued under Section 153 A of the Act.
The learned authorities below failed to appreciate that the scope of assessment in the proceedings under section 153A r.w.s 143(3) of the Act is restricted to the seized material if any and the present assessment order passed is contrary to the scheme of the Act and consequently the assessment order is liable to be annulled/ cancelled on the facts and circumstances of the case.
7. The assessing officer ought not to have made any changes to the return of income and the CIT(A) ought not to have sustained any part of the change made by the assessing officer on the facts and circumstance of the case.
8. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234A, 234B and 234C of the Income Tax Act under the facts and circumstances of the case.
9. Without prejudice the levy of interest under section 234 A, 234B and 234C are bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case.
10. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal.
11. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.”
c) A. Y. 2010 – 11, ITA 929/Bang/2017:-
“1. The order of the learned Commissioner of Income Tax in so far it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant’s case.
2. The Appellant denies itself liable to be assessed on a total income arrived at by making the additions as confirmed by the CIT (A) as against the returned income of Rs. NIL under the facts and circumstances of the case.
3. On addition of interest on Inter corporate Deposits (ICDs):
a) The learned CIT (A) is not justified in confirming the order of the Assessing officer of an amount of Rs.28,79,68,656/- as accrued interest on ICDs on the facts and circumstances of the case.
b) The learned authorities below failed to appreciate that the non receivable interest on ICDs were shown as income in the books of accounts of the appellant and subsequently claimed as bad debt in the books of the appellant.
c) The learned authorities below failed to appreciate that the accounting procedure of the appellant and the entries passed by the appellant in its books of accounts satisfy the conditions for claiming bad debts on the facts and circumstances of the case.
d) The learned authorities below erred in observing that the procedure to claim bad debt is by disclosure in the profit and loss account by way of writing off a debt as an expenditure corresponding to an amount which has been already offered as an income in the same or earlier previous year and such observations are contrary to the plain language of the Income Tax Act which only contemplates writing off in the accounts and hence the addition requires to be deleted on the facts and circumstance of the case.
e) Without prejudice, the said amount of Rs.28,79,68,656/-is not taxable as it is not real income of the appellant and consequently the addition made is liable to be deleted on the facts and circumstances of the case.
4. Granting of correct amount of deduction under Section 1OAA of the Act.
a) The authorities below erred in not granting correct deduction under section 10 AA of the Act.
b) The CIT (A) ought to have specifically adjudicated the relevant ground in respect of granting of the correct amount of deduction under Section 10 AA of the Act.
c) Without Prejudice to grounds regarding the other additions sustained, the authorities below ought to have granted deduction under section 10 AA if eligible in respect of the additions made and sustained on the facts and circumstance of the case.
d) The learned CIT(A) erred in not directing for reworking, of the eligible amount of deduction under Section 10AA of the Act in respect of the additions deleted by him on the facts and circumstance of the case.
5. On validity of Search:
a) The appellant denies itself liable to be assessed under section 153A r.w.s. 143 [3] of the Act as there was no valid search on the appellant on the facts and circumstance of the case.
b) The learned authorities below have not demonstrated that the search initiated in the case of the appellant is valid and legal and consequently the order of assessment is exifacie bad in law as the mandatory conditions for initiating a search as contemplated under the provisions of section 132(1)(a), (b) 86 (c) of the Act did not exist and hence the order is required to be annulled on the facts and circumstance of the case.
c) The learned authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act and hence the assumption of jurisdiction under Section 153 A of the Act is bad in law and consequently the entire assessment requires to be cancelled.
6. Notice issued u/s 153A was bad in law:
a) The authorities below failed to appreciate that the notice issued u/s 153A of the Act is bad in law on the ground that the notice does not indicate as to whether it is proposed to assess or reassess and is thus vague, consequently the assessment order passed on an invalid notice is bad in law on the facts and circumstances of the case.
b) The learned authorities below have not dealt in the respective order on the objection filed by the appellant in respect of assumption of jurisdiction u/s 153A and have also not provided the satisfaction note and reasons recorded for issue of notice u/s 153A of the Act and consequently an adverse inference may be drawn that the material does not exist and assessment order passed is bad in law on the facts and circumstances of the case.
7. Scope of assessment pursuant to notice issued under Section 153 A of the Act.
The learned authorities below failed to appreciate that the scope of assessment in the proceedings under section 153A r.w.s 143(3) of the Act is restricted to the seized material if any and the present assessment order passed is contrary to the scheme of the Act and consequently the assessment order is liable to be annulled/ cancelled on the facts and circumstances of the case.
8. The assessing officer ought not to have made any changes to the return of income and the CIT(A) ought not to have sustained any part of the change made by the assessing officer on the facts and circumstance of the case.
9. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234A and 234 B of the Income Tax Act under the facts and circumstances of the case.
10. Without prejudice the levy of interest under section 234 A and 234B are bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case.
11. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal.
12. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.”
d) A. Y. 2011 – 12, ITA 930/Bang/2017:-
“1. The order of the learned Commissioner of Income Tax in so far it is against the appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant’s case.
2. The Appellant denies itself liable to be assessed on a total income arrived at by making the additions as confirmed by the CIT (A) as against the returned income of Rs. NIL under the facts and circumstances of the case.
3. On addition of interest on Inter corporate Deposits (ICDs):
a) The learned CIT (A) is not justified in confirming the order of the Assessing officer of an amount of Rs.29,73,46,928/ – as accrued interest on ICDs on the facts and circumstances of the case.
b) The learned authorities below failed to appreciate that the non receivable interest on ICDs were shown as income in the books of accounts of the appellant and subsequently claimed as bad debt in the books of the appellant.
c) The learned authorities below failed to appreciate that the accounting procedure of the appellant and the entries passed by the appellant in its books of accounts satisfy the conditions for claiming bad debts on the facts and circumstances of the case.
d) The learned authorities below erred in observing that the procedure to claim bad debt is by disclosure in the profit and loss account by way of writing off a debt as an expenditure corresponding to an amount which has been already offered as an income in the same or earlier previous year and such observations are contrary to the plain language of the Income Tax Act which only contemplates writing off in the accounts and hence the addition requires to be deleted on the facts and circumstance of the case.
e) Without prejudice, the said amount of Rs.29,73,46,928/ – is not taxable as it is not real income of the appellant and consequently the addition made is liable to be deleted on the facts and circumstances of the case.
4. On Addition of Rs.19,39,23,044/-:
a) The learned authorities below failed to appreciate that it is normal in the gold business to incur loss of gold while dealing with various activities like Manufacturing, Inventory Management, Marketing, Import and Export.
b) The learned authorities below erred in not accepting the explanation of the assessee without any reason.
c) The learned authorities below failed to appreciate that the assessee had provided all the details as asked for by the assessing officer, as there were no further details asked by the assessing officer, the assessee had not provided further details, the assessing officer has erred in stating that the assessee had not offered any explanation.
d) The authorities below have failed to appreciate that it is obvious and natural that whenever there is any loss of gold the stock will consequently get reduced and as a result the profit is bound to reduce to that extent, the assessing officer has erred in not accepting the explanation for making the addition.
e) The authorities below have failed to appreciate that a loss of 0.047% as a total of manufacturing loss, Inventory Loss, Marketing Loss, Import Loss, Export Loss is a reasonable loss in the business of gold and gold products.
5. Granting of correct amount of deduction under Section 1OAA of the Act.
a) The authorities below erred in not granting correct deduction under section 10 AA of the Act.
b) The CIT(A) ought to have specifically adjudicated the relevant ground in respect of granting of the correct amount of deduction under Section 10 AA of the Act.
c) Without Prejudice to grounds regarding the other additions sustained, the authorities below ought to have granted deduction under section 10 AA if eligible in respect of the additions made and sustained on the facts and circumstance of the case.
d) The learned CIT(A) erred in not directing for reworking, of the eligible amount of deduction under Section 10AA of the Act in respect of the additions deleted by him on the facts and circumstance of the case.
6. On validity of Search:
a) The appellant denies itself liable to be assessed under section 153A r.w.s. 143 [3] of the Act as there was no valid search on the appellant on the facts and circumstance of the case.
b) The learned authorities below have not demonstrated that the search initiated in the case of the appellant is valid and legal and consequently the order of assessment is exifacie bad in law as the mandatory conditions for initiating a search as contemplated under the provisions of section 132(1)(a), (b) 86 (c) of the Act did not exist and hence the order is required to be annulled on the facts and circumstance of the case.
c) The learned authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act and hence the assumption of jurisdiction under Section 153 A of the Act is bad in law and consequently the entire assessment requires to be cancelled.
7. Notice issued u/s 153A was bad in law:
a) The authorities below failed to appreciate that the notice issued u/s 153A of the Act is bad in law on the ground that the notice does not indicate as to whether it is proposed to assess or reassess and is thus vague, consequently the assessment order passed on an invalid notice is bad in law on the facts and circumstances of the case.
b) The learned authorities below have not dealt in the respective order on the objection filed by the appellant in respect of assumption of jurisdiction u/s 153A and have also not provided the satisfaction note and reasons recorded for issue of notice u/s 153A of the Act and consequently an adverse inference may be drawn that the material does not exist and assessment order passed is bad in law on the facts and circumstances of the case.
8. Scope of assessment pursuant to notice issued under Section 153 A of the Act.
The learned authorities below failed to appreciate that the scope of assessment in the proceedings under section 153A r.w.s 143(3) of the Act is restricted to the seized material if any and the present assessment order passed is contrary to the scheme of the Act and consequently the assessment order is liable to be annulled/ cancelled on the facts and circumstances of the case.
9. The assessing officer ought not to have made any changes to the return of income and the CIT(A) ought not to have sustained any part of the change made by the assessing officer on the facts and circumstance of the case.
10. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon’ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234A and 234 B of the Income Tax Act under the facts and circumstances of the case.
11. Without prejudice the levy of interest under section 234 A and 234B are bad in law as the period, rate, quantum and method of calculation adopted on which interest is levied are all not discernable and are wrong on the facts of the case.
12. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal.
13. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered.”
e) A. Y. 2012 – 13, ITA 174/Bang/2018:-
“1) The learned CIT (A) erred in upholding the assessment under Section 153A of the Act without appreciating that there were no incriminating materials found in the course of search to justify the impugned addition in block assessment proceedings.
2) The learned CIT (A) erred in upholding the book profit as determined by the AO for the purpose of Section 115JB of the Act.
3) The learned CIT (A) ought to have appreciated that the deduction under Section 10AA/ 10B of the Act cannot be included while computing the book profit and accordingly the computation of book profit as made by the AO is unsustainable.
4) The learned CIT (A) ought to have appreciated that the Writ Appeal filed by the Appellant challenging the validity of amendment is pending and consequently the impugned addition as made for the relevant year is unsustainable and accordingly liable to be deleted.
5) For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”
f) A. Y. 2013 – 14, ITA 175/Bang/2018:-
“1) The learned CIT (A) erred in upholding the assessment under Section 153A of the Act without appreciating that there were no incriminating materials found in the course of search to justify the impugned addition in block assessment proceedings.
2) The learned CIT (A) ought to have followed the jurisdictional High Court judgments and refrained from upholding the impugned addition.
3) The learned CIT (A) ought to have appreciated that the later judgment of the Karnataka High Court would prevail over the earlier judgment and consequently he ought to have followed the later judgment in preference to the earlier judgment to justify the upholding of validity of the assessment.
4) The learned CIT (A) erred in upholding the book profit as determined by the AO for the purpose of Section 115JB of the Act.
5) The learned CIT (A) ought to have appreciated that the deduction under Section 10AA/ 10B of the Act cannot be included while computing the book profit for the purpose of Section 115JB of the Act and accordingly the computation of book profit as made by the AO is unsustainable.
6) The learned CIT (A) ought to have appreciated that the Writ Appeal filed by the Appellant challenging the validity of amendment is pending and consequently the impugned addition as made for the relevant year is unsustainable and accordingly liable to be deleted.
7) The learned CIT (A) is not justified in confirming the order of the AO of an amount of Rs.43,72,04,622/- as accrued interest on ICD’s on the facts and circumstances of the case.
8) The learned authorities below failed to appreciate that the non-receivable interest on ICD’s were shown as income in the books of accounts of the Appellant and subsequently claimed as bad debt in the books of the Appellant.
9) The learned authorities below failed to appreciate that the accounting procedure of the Appellant and the entries passed by the Appellant in its books of accounts satisfy the conditions for claiming bad debts on the facts and circumstances of the case.
10) The learned authorities below erred in observing that the procedure to claim bad debt is by disclosure in the profit and loss account by way of writing off a debt as an expenditure corresponding to an amount which has been already offered as an income in the same or earlier previous year and such observations are contrary to the plain language of the Income Tax Act which only contemplates writing off in the accounts and hence the addition requires to be deleted on the facts and circumstances of the case.
11) Without prejudice, the said amount of Rs.43,72,04.622/- is not taxable as it is not the real income of the Appellant and consequently the addition made is liable to be deleted on the facts and circumstances of the case.
12) For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”
g) A. Y. 2014 – 15, ITA 176/Bang/2018:-
“1) The learned CIT (A) erred in upholding the assessment under Section 153A of the Act without appreciating that there were no incriminating materials found in the course of search to justify the impugned addition in block assessment proceedings.
2) The learned CIT (A) ought to have followed the jurisdictional High Court judgments and refrained from upholding the impugned addition.
3) The learned CIT (A) ought to have appreciated that the later judgment of the Karnataka High Court would prevail over the earlier judgment and consequently he ought to have followed the later judgment in preference to the earlier judgment to justify the upholding of validity of the assessment.
4) The learned CIT (A) erred in upholding the book profit as determined by the AO for the purpose of Section 115JB of the Act.
5) The learned CIT (A) ought to have appreciated that the deduction under Section 10AA/ 10B of the Act cannot be included while computing the book profit for the purpose of Section 115JB of the Act and accordingly the computation of book profit as made by the AO is unsustainable.
6) The learned CIT (A) ought to have appreciated that the Writ Appeal filed by the Appellant challenging the validity of amendment is pending and consequently the impugned addition as made for the relevant year is unsustainable and accordingly liable to be deleted.
7) The learned CIT (A) is not justified in confirming the order of the AO of an amount of Rs.45,02.26.725/- as accrued interest on ICD’s on the facts and circumstances of the case.
8) The learned authorities below failed to appreciate that the non-receivable interest on ICD’s were shown as income in the books of accounts of the Appellant and subsequently claimed as bad debt in the books of the Appellant.
9) The learned authorities below failed to appreciate that the accounting procedure of the Appellant and the entries passed by the Appellant in its books of accounts satisfy the conditions for claiming bad debts on the facts and circumstances of the case.
10) The learned authorities below erred in observing that the procedure to claim bad debt is by disclosure in the profit and loss account by way of writing off a debt as an expenditure corresponding to an amount which has been already offered as an income in the same or earlier previous year and such observations are contrary to the plain language of the Income Tax Act which only contemplates writing off in the accounts and hence the addition requires to be deleted on the facts and circumstances of the case.
11) Without prejudice, the said amount of Rs.45,02,26,725/- is not taxable as it is not the real income of the Appellant and consequently the addition made is liable to be deleted on the facts and circumstances of the case.
12) For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”
4. Now, we take note of all the technical issues and the issues on merit in these seven years. Both sides have filed written submissions on both aspects i.e. technical aspects as well as on merit. We reproduce these submissions. The submissions of the assessee are as under as per the written submissions filed by the assessee on 04.10.2018:-
“We would like to humbly submit that there are totally 7 Appeals for which we are filing this consolidated written statement. There are several common issues in all these 7 Appeals. We are herewith furnishing a table of the issues along with the Assessment Year during which the issue exists.
