Case Law Details
R.N. Khemka Enterprises Private Ltd. Vs PCIT (ITAT Delhi)
ITAT Delhi held that a solitary opportunity of one day to respond to show cause notice is in negation of overriding principles of natural justice accordingly revisionary order passed u/s 263 is liable to be quashed and set aside.
Facts-
The assessee filed its ROI claiming bad debt of Rs.2,28,12,685/- as deduction u/s. 36(2) of the Act. The ROI filed by the assessee was selected under scrutiny and specific queries towards claim of deduction were raised by AO vide notices issued u/s. 142(1) of the Act. AO was eventually satisfied with the compliance of the conditions stipulated u/s. 36(1)(vii) r.w. Section 36(2) of the Act and thus assessed the income of the assessee without any adjustment on this score.
Thereafter, the Pr.CIT in exercise of its revisionary powers issued show cause notice dated 23.03.2022 u/s. 263 of the Act requiring the assessee to show cause as to why the impugned assessment order so framed u/s. 143(3) of the Act should not be modified/set aside on the ground that such order is erroneous insofar as prejudicial to the interest of the revenue. It was essentially alleged that assessee is not eligible for deduction towards bad debts u/s. 36(1)(vii) r.w. Section 36(2) of the Act where the debts written off do not arise from business transactions and were not part of the business transaction. The debts were alleged to be loans and advances in the balance sheet unconnected to the business of the assessee.
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