2022 (4) TMI 157

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....ithout recording satisfaction envisaged u/s. 14A of the Act. 3. Heard both the parties and perused the material available on record. During the course of assessment proceedings, the AO found that the assessee was holding shares and claimed income thereon is exempt from tax. The AO asked the assessee to give a working of the disallowance u/s. 14A of the Act. The assessee in his reply stated that it earned dividend income from listed shares of public limited companies but has not incurred any expenditure, supporting the same the assessee also given details of investments as standing on the date of Balance sheet and year prior to, which is reproduced by the AO in Para No. 4 of the assessment order. Having stating so, the assessee also submitt....

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....at the satisfaction of AO about the correctness of the expenditure offered for disallowance by the assessee is a pre-condition and without rejecting the explanation offered by the assessee by merely proceeding to make disallowance by invoking section 14A and Rule 8D is not correct. The ld. DR stated that the facts in the present case as be that of Hon'ble High Court of Bombay are different and it cannot be followed. The ld. AR further placed reliance on the order of this Tribunal in the case of Deven Supercriticals Pvt. Ltd. Vs. DCIT in ITA No. 176/PUN/2016 for A.Y. 2009-10 and argued that the Co-ordinate Bench of this Tribunal held the assessment is bad when there is no recording of satisfaction before invoking the provisions of sectio....