TaxTMI 
TaxTMI 
2019 (2) TMI 1825
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....referred to as Ld. CIT (A)] erred in confirming the action of Ld Assessing Officer (hereinafter referred to as Ld. AO) of disallowance of Rs. 2,13,382/- under section 14A r.w.s. as per Rule 8D(2)(iii) being 0.5% of the value of average investments earning exempt income. 2. Without Prejudice to the above Ground of Appeal, Ld CIT (A) erred in confirming the action of Ld AO of not considering the claim of the appellant & straightway embarked upon computing disallowance under rule 8 D. 3. Without Prejudice to the above Ground of Appeal, Ld CIT (A) erred in confirming the action of Ld AO of not considering the disallowance made by the Appellant amounting to Rs. 43,131/- towards Portfolio Management Fees and that the Ld. A.O. has failed to record a finding as contemplated by Section 14-A(2) having regard to the accounts and other facts and failed to establish any nexus whatsoever with any of the items of expenditure and exempt income. 4. That the order of Ld CIT (A) is bad in law and on facts. 5. The Appellant craves leave to add or amend the foregoing grounds of appeal." 2. Briefly stated, the assessee company which is engaged ....
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....parties, perused the orders of the lower authorities and the material available on record. In our considered view the very process of determination of the amount of expenditure incurred in relation to exempt income would be triggered only if the A.O. returns a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. In fact, the A.O before discarding the claim of the assessee as regards the amount of expenditure incurred in relation to the exempt income remains under a statutory obligation to record cogent reasons as regards his dissatisfaction in respect of the said claim, before embarking upon the determination of the amount of expenditure in accordance with the method prescribed in Section 14A r.w. Rule 8D. We find that our aforesaid view stands fortified by the judgment of the Hon'ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Limited (supra), wherein the Hon'ble Apex Court had held as under:- "Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requireme....
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....vide and also access to material evidence/documents /statement on oath for cross examination during the course of assessment proceeding. 4. Without Prejudice to the above Ground of Appeal, Ld. CIT (A) was not justified and erred in treating the case adversely against the Appellant just for the reasons of absence of the parties at the stated address which was beyond the control of the Appellant. 5.a. The Ld.CIT (A) failed to give due weight to the positive evidence such as payment by A/C payee cheques and furnishing of PAN No. AAJHM 4684 H and Mobile No. 9821220199 of the party and erred in sustaining the addition purely on the basis of suspicion surmises and conjectures. b. The Ld. CIT (A) further erred in not providing the Appellants an opportunity to clarify and make their submissions in respect of the observations and doubts raised by the Ld. CIT (A) in respect of the purchase bills as per his order. The Appellants had proper explanation to justify the genuineness of the said purchases and expenses. 6. That the order of Ld. CIT (A) is bad in law and on facts. 7. The Appellant craves leave to ad....
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....e case was however not persuaded to accept the same. Observing, that the assessee had failed to substantiate the authenticity of the purchases claimed to have been made from the aforementioned parties, the CIT(A) upheld the disallowance of Rs. 1,85,321/- made by the A.O and dismissed the appeal. 13. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative (for short "A.R‟) for the assessee submitted that though the assessee had furnished with the A.O sufficient evidence to substantiate the genuineness of the purchases made from the aforementioned parties, however, the latter had whimsically declined to accept the same and had characterised the purchases as bogus. 14. Per contra, the ld. Departmental Representative (for short "D.R‟) relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the assessee could not substantiate the veracity of the purchases claimed to have been made from the aforementioned parties, therefore, the A.O had rightly disallowed the same to the extent the same was claimed as an expense by the assessee during ....