TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 411
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....g Officer which unjustified and Arbitrary. 3. On the Facts and Circumstances of the Case, The Assessee Officer has issued Notice u/s 154 of the Income Tax Act 1961, without Closing Rectification u/s 154 the Assessing Officer has without Authority issued Notice u/s 148. 4. The Appellant craves to Leave, Add, Amend, Alter any of The above Grounds of Appeal at the time of hearing." 2. Briefly stated, the assessee had filed his return of income for A.Y 2009-10 on 24.09.2009, declaring a total income of Rs. 9,13,910/-. Original assessment was framed by the A.O vide his order passed u/s 143(3), dated 26.02.2011 and the income of the assessee was determined at Rs. 9,63,910/-. Subsequently, the case of the assessee was reopened u/s 147 of the Act, for the reason, that though the assessee had earned an exempt income of Rs. 42,81,534/- however, no disallowance was made u/s 14A r.w Rule 8D while framing the original assessment u/s 143(3), dated 26.02.2011. 3. Assessment was thereafter framed by the A.O vide his order passed u/s 143(3) r.w.s 147, dated 31.10.2014, wherein after making a disallowance u/s 14A r.w Rule 8D of Rs. 1,26,048/- the income of the assessee was determined at Rs. 10....
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.... u/s 14A was called for in its case, therefore, the same was liable to be vacated on the count of invalid assumption of jurisdiction by the A.O for making the said disallowance. 6. Per contra, the ld. Departmental Representative (for short "D.R‟) relied on the orders passed by the lower authorities. It was submitted by the ld. D.R that the A.O had rightly assumed jurisdiction in the case of the asesssee u/s 147 of the Act. Rebutting the claim of the assessee‟s counsel that the A.O had wrongly assumed jurisdiction and without recording any satisfaction made the disallowance u/s 14A of the Act, it was submitted by the ld. D.R that the same was factually incorrect. It was submitted by the ld. D.R that the A.O remaining well within the realm of his jurisdiction had as per the mandate of law worked out the disallowance u/s 14A r.w Rule 8D. 7. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. We shall first take up the claim of the ld. A....
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....esent case, it is a matter of fact borne from the record that the notice issued u/s 154 by the A.O had neither been dropped nor culminated in an order till date. Accordingly, the support drawn by the ld. A.R from the aforesaid proposition that having issued a notice u/s 154 which thereafter had been dropped/vacated by the A.O, the case of the assessee on the very same basis cannot be reopened u/s 147 of the Act would be of no avail in the backdrop of the facts involved in the case before us. Insofar the reliance placed by the ld. A.R on the aforesaid judicial pronouncements, viz. Berger Paints India Ld. (supra) and M/s Nawany Corp (I) Ltd. (supra) is concerned, the same being distinguishable on facts would thus not assist its case. Unlike the case of the assessee before us in the case of Berger Paints India Ltd. (supra) the rectification proceedings that were initiated by the A.O had thereafter been dropped. On a similar footing, in the case of M/s Nawany Corp (I) Ltd. the proceedings u/s 154 are stated to have been concluded after the assessee had submitted its reply. Backed by the aforesaid facts, not being able to persuade ourselves to subscribe to the contention of the ld. A.R ....
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....ts relied upon by the ld. A.R. As is discernible from the records, the assessee by not having suo motto disallowed any expenditure u/s 14A had thus impliedly claimed that no part of the expenditure was attributable to earning of the exempt income. However, we find that the aforesaid claim of the assessee was rejected by the A.O. As is discernible from the assessment order, we find that the A.O without recording his satisfaction that having regard to the accounts of the assessee as placed before him, it was not possible to generate the reasonable satisfaction with regard to the correctness of the aforesaid claim of the assessee had summarily rejected the same, for the reason, that as per him the disallowance under Sec. 14A r.w Rule 8D was mandatory. On appeal, the CIT(A) had upheld the disallowance u/s 14A r.w Rule 8D(2)(iii) backed by a conviction that it was not necessary that satisfaction should be recorded in black & white. Further, it was inter alia observed by the CIT(A) that once the assessee makes a disallowance suo motto, that establishes the correctness of applicability of Sec. 14A. At this stage, we may herein observe that as the assessee on a suo motto basis had not offe....
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....2) and (3) r.w. Rule 8D could be invoked. It was observed by the Hon‟ble Apex Court, as under: "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule SD of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. 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 requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." The aforesaid view was once again re....