ORDER

PER BENCH:

The cross appeals by the assessee and the Revenue have been filed against the separate impugned orders of even date 13.11.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment years 2022-23 and 2023-24.

2. Since all the appeals pertained to the same assessee, involving similar issues arising out of a similar factual matrix, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. With the consent of the parties, the cross appeal for the assessment year 2022-23 is considered as a lead case, and the decision rendered therein shall apply mutatis mutandis to the cross appeal for the assessment year 2023-24.

ITA No.781/Mum/2026

Revenue’s Appeal – A.Y. 2022-23

3. In this appeal, the Revenue has raised the following grounds: -

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs.85,27,45,662/ - made by the Assessing Officer under section 36(1)(viia)(c) of the Income tax Act, 1961, without proper appreciation of the statutory conditions prescribed under the proviso to section 36(1)(vii)"

2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in placing reliance on earlier decisions of the Hon'ble ITAT in assessee's own case without independently verifying the factual correctness of the provision for bad and doubtful debts account, including the availability of credit balance required for application of the proviso to section 36(1)(vii)."

3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that allowing deduction of bad debts written off, where deduction for provision had already been granted in earlier years under section 36(1)(viia)(c) results in a double deduction, contrary to the intent of the statute."

4. The solitary grievance of the Revenue is against the deletion of the disallowance made under section 36(1)(viia) of the Act.

5. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is a public financial institution, engaged in the business of functioning as a Principal Financial Institution for promotion, financing and development of MSME and to coordinate the functions of Institutions engaged in similar activities. For the year under consideration, the assessee filed its return of income on 17.10.2022, declaring a total income of Rs.1582,93,83,960/- and had revised the return of income on 27.12.2022, declaring a total income of Rs.1572,06,03,390/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) were issued and served on the assessee. Vide order dated 29.03.2024 passed under section 143(3) read with section 144B of the Act, the Assessing Officer (“AO”) disallowed the deduction of bad debts written off by the assessee under section 36(1)(vii) of the Act to an extent of Rs.85,27,45,662/- being the provision of bad and doubtful debts allowed as a deduction under section 36(1)(viia) for the previous assessment year, i.e., assessment year 2021-22. In this regard, the AO invoked the provisions of the proviso to section 36(1)(vii) of the Act. The learned CIT(A), vide impugned order, following the decision of the Tribunal in assessee’s own case in preceding year, deleted the disallowance of Rs.85,27,45,662/- made by the AO and held that the whole of the bad debts written off would be deductible under section 36(1)(viia) of the Act. Being aggrieved, the Revenue is in appeal before us.

6. During the hearing, the learned Authorised Representative (“learned AR”), at the outset, submitted that this issue is recurring in nature and has been decided in favour of the assessee by the Tribunal in preceding years.

7. On the othe