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2020 (12) TMI 735 - HC - Income TaxAddition of bid loss - disallowance on the ground that the aforesaid claim pertains to beyond the relevant Previous Year and assessee is following hybrid system of accounting - also held that despite several opportunities being afforded to the assessee, the assessee failed to produce the books of accounts to substantiate the aforesaid loss - HELD THAT - In the instant case, the Assessing Officer has recorded a finding that the assessee has failed to substantiate its claim by producing evidence. However, the aforesaid aspect of the matter has neither been considered by the Commissioner of Income Tax (Appeals) nor the tribunal. The impugned order insofar as it pertains to allowing the claim of the assessee for bid loss is quashed. The matter is remitted to the Assessing Officer and the assessee is granted an opportunity to substantiate its claim for deduction of bid loss by adducing cogent material. Needless to state that the Assessing Officer shall decide the aforesaid issue in the light of decision of the Supreme Court in case of Taparia Tools vs. JCIT, 2015 (3) TMI 853 - SUPREME COURT
Issues:
1. Disallowance of bad debts written off 2. Disallowance of bid loss claimed by the assessee Issue 1: Disallowance of bad debts written off: The appeal under Section 260A of the Income Tax Act, 1961 was filed by the revenue regarding the Assessment Year 2005-06. The tribunal dismissed the Revenue's appeal on disallowance of bad debts written off, despite the issue being remitted to the Assessing Officer in a previous assessment year. The tribunal justified its decision based on the provisions of section 145(1)/(2) of the Act. The Commissioner of Income Tax (Appeals) and the tribunal relied on the Supreme Court's decision in TRF LTD. VS. CIT, 323 ITR 396 (SC) to allow the deduction for bad debts. The tribunal directed the Assessing Officer to verify the claim of the assessee. However, the matter was remitted to the Assessing Officer for fresh decision in accordance with law as the assessee failed to substantiate its claim for bid loss by producing relevant material. Issue 2: Disallowance of bid loss claimed by the assessee: The assessee, engaged in the chit business, filed a return of income for the Assessment Year 2005-06 declaring a business loss. The Assessing Officer disallowed the claim of bid loss on the grounds of being beyond the relevant Previous Year and the assessee following a hybrid system of accounting. The Commissioner of Income Tax (Appeals) and the tribunal allowed the deduction for bid loss based on previous decisions and the Supreme Court's judgment. However, the High Court set aside the tribunal's order as the foundation of the decision had disappeared due to subsequent events. The matter was remitted to the Assessing Officer for the assessee to substantiate its claim for deduction of bid loss with proper evidence, following the Supreme Court's decision in Taparia Tools vs. JCIT, 372 ITR 605 (SC). In conclusion, the High Court disposed of the appeal without answering the substantial questions of law, as the matter was remitted to the Assessing Officer for fresh consideration based on the evidence provided by the assessee.
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