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2019 (12) TMI 155 - HC - Income TaxNon-taxability of income on account of waiver of loan payable by the appellant to Canara Bank, without going into the merits of such claim - HELD THAT - It is clear to us that the remand made by the Tribunal to the AO vide order dated 10.03.2011 was a complete and wholesale remand for framing a fresh assessment. The remand was not limited in its scope and was occasioned upon the Tribunal finding the approach of the AO and the CIT (A) to be excessive, harsh and arbitrary. The earlier assessment had been framed on the basis of Best Judgment without examining the books of accounts of the assessee, which the assessee has claimed were available. That being the position, the AO ought to have evaluated the claim made by the assessee for write-off of liability by Canara Bank in its favour amounting to ₹ 1,36,45,525/-, and should not have rejected the same merely on the ground of it being raised for the first time. The reliance placed by the Tribunal SAHELI SYNTHETSICS P. LTD. VERSUS COMMISSIONER OF INCOME-TAX 2008 (2) TMI 182 - GUJARAT HIGH COURT is misplaced in the light of the scope and nature of remand in the present case. The finding returned by the Tribunal in paragraphs 8, 9 and 12 of the impugned order are erroneous since the Tribunal has not appreciated the scope and nature of the remand ordered by it by its earlier order dated 10.03.2011. Answer the questions framed aforesaid in favour of the assessee and set aside the impugned order. Since the Assessing Officer has not evaluated the appellant s claim regarding non-taxability of income arising from write-off of liability by Canara Bank in its favour on merits, we remand the matter back to the Assessing Officer for evaluation of the said claim on its own merits.
Issues:
1. Whether the ITAT erred in upholding the action of the CIT(A) in refusing to adjudicate on the issue of non-taxability of income on account of waiver of loan payable? 2. Whether the ITAT erred in not appreciating the nature of the remand order and the ability of the appellant to raise a fresh claim before the AO in the set-aside proceedings? Issue 1: The case involved the ITAT upholding the CIT(A)'s decision regarding the non-taxability of income arising from the waiver of a loan payable by the appellant to Canara Bank. The Assessing Officer initially passed an assessment order under the Income Tax Act, which was set aside twice by the ITAT for fresh assessment. The appellant claimed the non-taxability of income from the loan waiver, but the Assessing Officer rejected the claim during the remand proceedings. The CIT(A) also dismissed the appeal. The ITAT, in its decision, noted that the Assessing Officer had not examined the merits of the fresh claim made by the appellant. The High Court found that the remand order was a complete one, and the Assessing Officer should have evaluated the claim on its merits instead of rejecting it solely for being raised for the first time. The Court set aside the ITAT's decision and remanded the matter back to the Assessing Officer for evaluation of the claim. Issue 2: The second issue revolved around the nature of the remand order and the appellant's ability to raise a fresh claim before the Assessing Officer in the set-aside proceedings. The appellant argued that the remand order was complete and allowed for a fresh assessment. The Assessing Officer had made fresh additions during the assessment, indicating a new assessment was being framed. The appellant contended that the Assessing Officer should have considered the fresh claim regarding non-taxability of income arising from the loan waiver. The High Court agreed with the appellant, emphasizing that the remand was not limited in scope and the Assessing Officer should have evaluated the claim on its merits. The Court found the ITAT's reliance on a previous decision to be misplaced and set aside the ITAT's decision, remanding the matter for proper evaluation of the claim. In conclusion, the High Court ruled in favor of the appellant on both issues, setting aside the ITAT's decision and remanding the matter back to the Assessing Officer for a thorough evaluation of the claim regarding the non-taxability of income arising from the loan waiver. The Court clarified that it had not made any observations on the merits of the claim itself.
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