TaxTMI 
TaxTMI 
2022 (1) TMI 634
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....ii) by the appellant even when the appellant has been able to furnish evidences during the assessment proceedings u/s. 143(3) and the proceedings u/s. 263 of the Act. 3. Appellant craves to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Briefly stated, the relevant material facts are as follows. The assessee, (Smt. Neetuben Pradeep Dhingra), had filed her return of income for assessment year (A.Y.) 2014-15 on 25.02.2015 declaring income at Rs. Nil. The assessee was engaged in textile business under proprietary concern, M/s. Siddhant Fabrics. During the year under consideration, the assessee had derived income from House Property and Embroidery job work. The Scrutiny assessment under section 143(3) of the Act was finalized on 23.11.2016 at assessed income of Rs. 2,92,880/- by way of making additions of Rs. 2,92,880/- on account of disallowance of expenditure under section 14A of the Act. 3. Later on, Learned Principal Commissioner of Income Tax-1, [in short "the ld. PCIT"], has exercised his jurisdiction under section 263 of the Income Tax Act 1961. On perusal of Scrutiny records, Ld. PCIT noticed that assessee has show....
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....ment proceedings, it is noticed that assessee had utilized the said funds as under: Land & Factory Building for purpose of rent: Rs. 77,68,223/- Shop at WTC (including furniture) for purpose of rent: Rs. 7,75,830/- Siddhant Fabrics (proprietary concern) for business : Rs. 25,13,612/- Shop at Millennium Market (incl furniture) for business: Rs. 15,35,700/- Sidhant Creation Pvt. Ltd for interest income : Rs. 2,23,42,201/- From the above analysis, ld PCIT noted that assessee had not utilized whole of the interest bearing funds to earn interest income during the year under consideration and in earlier years. Hence the amount of expenses of Rs. 37,04,113/- claimed under the heading income from other sources was not justified as the same was not incurred/utilized for earning the income under the head 'income from other sources' and therefore while finalizing the assessment, same was required to be disallowed u/s. 57(iii) of the Act which reads as under: Deductions 57. The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely:-- iii) any....
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....the order passed by the assessing officer. The ld DR has reiterated the findings of ld PCIT, which we have already noted in our earlier para and therefore not being repeated for the sake of brevity. 10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT and other materials brought on record. We note that solitary grievance of ld Counsel is that order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue, as the assessing officer has conducted necessary enquiry therefore, jurisdiction exercised by ld PCIT under section 263 of the Act is bad in law. Therefore, first of all, let us examine whether Assessing Officer has examined the issue, in his assessment order, which was raised by the ld. PCIT under section 263 of the Act. The relevant para of assessment order is reproduced below: "The assessee has filed her return of income on 25.02.2015 declaring therein total income of NIL. The return of income was processed u/s. 143(1) of the Inco....
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....incurred. If no expenditure is incurred for earning income exempt from tax, then section 14A is not applicable. c) If the assessing officer is not satisfied with the correctness for the claim of the tax payer in respect of the aforesaid expenditure which is incurred in relation to income exempt from tax then the assessing officer shall determine the quantum of such expenditure in accordance with Rule 8D. In the case of assessee, no exempt income was earned by the assessee, and also no expenditure was incurred to earn the exempt income and therefore, sec. 14A is not applicable. The investment made by the assessee is Rs. 6,900 in quoted share and unquoted shares of Rs. 32,00,000/- and the capital of the assessee as on 31.03.2013 is Rs. 45,86,072/-. This shows that all the investment made in shares is out of owned capital of the assessee. Reliance is placed on judgment of the Honourable Gujarat High Court in the case of CIT-1 vs. UTI Bank Ltd. (2014) 45 taxman.com 365 (Gujarat) Held that "Where assessee had sufficient income free funds to meet it tax free investment yielding exempt income, it could be presumed that such investment were made from int....
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....142(1) of the Act, dated 04.04.2015 and 25.05.2016. Before us, Learned Counsel produced notice under section 142(1) of the Act dated 14.06.2016, (vide paper book page No. 1 and 2), wherein we observe that Assessing Officer has not called the details of other income to the tune of Rs. 29,90,030/-. Moreover, Assessing Officer did not ask the assessee to submit details of expenses of Rs. 37,04,113/-, which were incurred by assessee to earn other income Rs. 29,90,030/-. 13. However, Assessing Officer has issued further notice under section 142(1) dated 22.07.2016, wherein Assessing Officer asked details about deduction under section 57 of the Act and details of interest received (vide at page 5 of PB). In response to the notice, the assessee replied by letter dated 29.07.2016. However, we note that it is a general reply of interest received and paid. The Ld. Counsel did not submit the details of interest with reference to under the head 'income from other sources' nor expenses details which were mentioned with reference to section 57 of the Act. That is, there is no any working submitted by the assessee in respect of general expenses of Rs. 37,04,113/-, that against which in....