2018 (6) TMI 1049

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....1(1) of the Income Tax Act (hereinafter "the Act"). 3. The assessee is a manufacturer and trader in steel. The first issue related to the addition arising on account of waiver of loan. The AO noticed that the company has reduced Rs. 75 lakhs from unsecured loans and also from Plant & Machinery. When questioned, the assessee submitted that it had purchased certain Plant & Machinery by taking loan from a bank. Since the assessee incurred substantial losses it defaulted in repaying the loans. As a result of settlement, the assessee got a loan waiver of Rs. 75 lakhs resulting in reduction of loan liability. Accordingly the assessee reduced the loan liability by the amount of Rs. 75 lakhs by making corresponding reduction in Plant & Machinery ....

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....bility of Rs. 75.00 lakhs in its books of account during the financial year relevant to A.Y. 2016-17. The learned A.R. further submitted that the reply given by the UTI Bank clearly shows that there was no waiver of loan liability as presumed by the assessee and hence the question of assessing any income under Section 50 of the Act does not arise. The learned A.R. also submitted that the assessee has wrongly credited the amount of alleged waiver to the account of Plant & Machinery instead of showing the same as capital receipt. Hence, the AO was not justified in invoking provisions of Section 50 of the Act by placing reliance on the entries passed in the books of account. 6. On the contrary, the learned D.R. submitted that the assessee did....

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.... AO, this issue, being consequential in nature, is also restored to the file of the AO. Consequently the order passed by the CIT(A) on this issue is set aside. 9. Next issue relates to assessment of Rs. 4,21,855/- as remission of liability under Section 41(1) of the Act. During the course of assessment proceedings the AO noticed that the assessee was showing liability in the name of two parties namely, Rattan Chand Amrit Lal and New Modern Garments aggregating to Rs. 4,21,855/-. The AO issued notices under Section 133(6) of the Act to the above said parties in order to verify the transactions entered with them. Since the above said parties did not comply with the notices, the AO took the view that the amount of Rs. 4,21,855/- is no longer ....