The ITAT held that the AO, after examining the assessee's...

The ITAT held that the AO, after examining the assessee's explanation, was prima facie satisfied with the correctness of the suo motu disallowance made by the assessee u/s 14A read with Rule 8D. The revisionary authority cannot substitute the AO's satisfaction with its own without making an inquiry. The assessee consistently followed a particular methodology for suo motu disallowance u/s 14A, which was accepted in past assessment years. If the AO, being satisfied with the assessee's explanation, accepted the suo motu disallowance consistent with the past methodology, the assessment order cannot be considered erroneous. Thus, the assumption of jurisdiction u/s 263 was invalid. The decision was in favor of the assessee.

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