Appellate Tribunal grants appeal, remands for fresh assessment. Assessee to be given reasonable opportunity.

The Appellate Tribunal allowed the appeal of the assessee for statistical purposes, setting aside the order of the Commissioner of Income Tax (Appeals) and remanding the issue back to the Assessing Officer for a fresh assessment. The Tribunal emphasized the importance of providing a reasonable opportunity for the assessee to present its case and directed the AO to frame the assessment de novo after hearing the assessee in accordance with the law. The assessee was instructed to be diligent during the assessment proceedings.

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Issues:
Appeal against order of Commissioner of Income Tax (Appeals) for assessment year 2012-13 - Proper opportunity not given to assessee by First Appellate Authority (NFAC) and Assessing Officer (AO) - Disallowance of interest under section 36(1)(iii) of the Income Tax Act, 1961 - Request for remand back to AO for fresh assessment.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2012-13, alleging that the First Appellate Authority (NFAC) passed the order without providing a proper opportunity to the assessee. The assessee contended that all required documents were submitted to the Commissioner of Income Tax (Appeals) and additional evidence was also filed, but the appeal was decided without considering any of the documents. The Assessing Officer (AO) disallowed interest under section 36(1)(iii) of the Income Tax Act, 1961, stating that the loans were for capital purposes. The assessee argued that the disallowance was unwarranted as the total interest-free funds exceeded the loan amount granted, and the AO did not correctly calculate the finance charges. The assessee requested a remand back to the AO for a fresh assessment on this issue.

The Departmental Representative (DR) acknowledged the facts presented by the assessee and suggested that the issue be remitted back to the AO for a de novo assessment, considering the reasonable cause for not presenting certain evidence before the AO and the alleged mistakes pointed out by the assessee.

After hearing both parties and examining the records, the Appellate Tribunal noted that the AO had disallowed a significant amount under section 36(1)(iii) without appreciating relevant facts that were not provided due to the lack of proper opportunity for the assessee. The Tribunal, relying on a decision of the Hon'ble Supreme Court in a similar matter, emphasized the importance of providing a reasonable opportunity for the assessee to present its case before the assessing authority. Consequently, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remanded the issue back to the AO for a fresh assessment, directing the AO to frame the assessment de novo after hearing the assessee in accordance with the law. The assessee was instructed to be diligent during the assessment proceedings.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced in open court on 31/05/2022.

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