JUDGMENT :

K.R. SHRIRAM, J.

1. Petitioner is engaged in the business of manufacturing and trading of agrochemicals and pharmaceutical intermediates. With effect from 6th November 2015 petitioner was acquired by Godrej Group. The matter pertains to Assessment Year 2013-2014.

2. Petitioner is challenging the notice dated 23rd March 2021 issued by respondent no.1 under Section 148 of the Income Tax Act, 1961 (the Act) for reopening the assessment for Assessment Year 2013-2014 and the order dated 18th January 2022 disposing petitioner’s objections.

3. Petitioner had filed its return of income on 30th September 2013 declaring “nil” income under regular provisions of the Act on account of losses. Petitioner paid tax on book profit under Section 115JB of the Act. In the computation of income filed alongwith return of income, petitioner claimed deduction under Section 35 of the Act amounting to Rs.2,26,96,494/-. In the ITR Form 6 (the said form), petitioner, in Part A-P & L, Item 38 “Other expenses (specify nature and amount)” disclosed R&D expenses of Rs.47,11,129/- and loss on sale of asset Rs.8,73,445/- and in Item 40 disclosed provision for bad and doubtful debts for Rs.15,64,902/-. In Part B, Schedule BP, in Item 26 of the said Form, petitioner claimed a sum of Rs.2,26,96,494/- being deduction under Section 35 of the Act in excess of the amount debited to P&L account. In Schedule ESR, relating to deduction under Section 35 of the Act, petitioner disclosed its claim of deduction under Section 35 of the Act amounting to Rs.2,74,07,623/- and disclosed that out of the said expenses, expenses amounting to Rs.47,11,129/- were debited to the P&L account. In Schedule MAT, petitioner disclosed computation of Minimum Alternate Tax payable under Section 115JB of the Act.

4. Petitioner’s income was selected for scrutiny and notice dated 4th September 2014 under Section 143(2) of the Act was issued. On 1st December 2015, respondent no.1 issued another notice under Section 142(1) of the Act calling upon petitioner to produce various details mentioned in Annexure ‘A’ thereto. One of the items mentioned therein was details of deduction claimed under Section 35 of the Act and allowability thereof and also details of expenses above Rs.10 lakhs with ledger account. By its Chartered Accountant’s letter dated 17th December 2015, petitioner complied with the notice and filed various details called for. Petitioner, inter alia, filed computation of total income, address of the R&D centre and details of deduction claimed under Section 35 of the Act and also the details of expenses above Rs.10 lakhs. In the details of expenses above Rs.10 lakhs, petitioner filed and disclosed R&D and laboratory expenses Rs.47,11,129/- and provision for bad and doubtful debts Rs.15,64,902/-.

5. Respondent no.1 issued another notice dated 28th December 2015 under Section 142(1) of the Act calling for further details relating to deduction amounting to Rs.226.96 lakhs under Section 35 of the Act. The said notice further called upon petitioner to give details of other expenses mentioned in Note 24 of the P&L account. On 11th February 2016, under cover of a letter petitioner once again filed the details of deduction claimed under Section 35 of the Act in respect of the R&D expenditure and also filed ledger account of R&D expenses, salary details of employees engaged in R&D and a statement giving details of R&D capital expenditure. During the course of the assessment proceedings, petitioner also filed annual accounts with respondent no.1. In the said accounts in Note 24 under the head “Other Expenses” loss on sale of asset of Rs.8,73,445/-, R&D and laboratory expenses Rs.47,11,129/- and provision for bad and doubtful debts amounting to Rs.15,64,902/- were disclosed. In Note No.14, under the head “Trade Receivables”, petitioner disclosed that sum of Rs.15,64,902/- being allowance for bad and doubtful debts is reduced from the trade receivables. In the statement of P&L account under the