TaxTMI 
TaxTMI 
2024 (12) TMI 811
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....ncome Tax Act, 1961, passed by the Learned ACIT, Central Circle - 1, Raipur on 27th December, 2019 determining the total income of the Appellant assessee at Rs. 10,22,540/- was without giving proper and meaningful opportunity of being heard to the appellant is in gross violation of the principles of Natural Justice and hence Illegal, arbitrary and bad in law. 2. That the impugned assessment order passed by the Learned ACIT, Central Circle - 1, Raipur is liable to be quashed, since it has been passed in haste without application of mind in violation of the principles of natural justice. 3. The Learned ACIT, Central Circle 1, Raipur erred in arbitrarily making an addition of Rs 10,22,540/- in the total income of the assessee for the year under consideration on account of disallowance of Rs. 10,22,540/- made u/s. 14A in the relevant assessment year during the regular scrutiny proceedings u/s. 143(3) is included in the book profit u/s. 115JB for tax calculation. 4. That the ld. ACIT, Central Circle - 1, Raipur erred in facts in stating in Assessment Order that several/sufficient opportunities were given to the assessee for making compliances, whereas no prope....
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....r this common order. 4. ITA No. 414/RPR/2024 for AY 2012-13 has been taken up as the lead case, our observation and decision therein, therefore, shall be apply mutatis mutandis to the other ITA No. 415/RPR/2024 for AY 2013-14. 5. At the outset, Shri R. B. Doshi, Authorized Representative on behalf of the assessee (in short "Ld. AR") reiterated the facts drawing our attention to para 6 & 7 of the Assessment Order, wherein Ld. AO had observed and made an addition u/s 14A r.w.r. 8D of the Act. The observations of Ld. AO qua AY 2012-13 and 2013-14 are extracted as under: 6. During further examination of record, it is found that in the A.Y.-2012-13 the AO has made addition worth Rs. 10,22,543/-- (922473+100070) on account of expenditure incurred in relation to income which does not form part of the total income under section 14A r.w.r. 8D. The said amount however not considered for increasing book profit u/s 115JB resulted in understatement of book profit by Rs. 10,22,543/- as below:- Addition as above in book profit Rs. 10,22,543/- (rounded to nearest ten ) Rs. 10,22,540/- Further, sub section 4 Of section 115JB provide that every company to which MAT is a....
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....ntion of the assessee could not find favour by the Ld. CIT(A) and the appeal of the assessee under this ground has been dismissed with the following observations: During the course of appeal proceedings, I have perused the facts of the assessment order and also studied the reply of the assessee and find that the assessee has not submitted the relevant form 29B on its part which was required during the assessment proceedings as well as appeal. Sub section 4 of section 115JB provide that Every company to which this section applies, shall furnish a report in the prescribed form from an accountant as defined in the Explanation below sub-section (2) of section 288, certifying that the book profit has been computed in accordance with the provisions of this section [before the specified date referred to in section 44ABJ or along with the return of income furnished in response to a notice under clause (i) of sub-section (1) of section 142. The assessee has submitted vide its reply dt.23.12.2021 that form 29B was submitted during the assessment proceedings but as per assessment order it is apparent that the assessee never submitted form 29B. During the course of appeal proceedings ....
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....n the basis of the aforesaid judgment, it was the submission that disallowance u/s 14A read with Rule 8D could not be added while computing book profit as per Section 115JB has explanation to this Section do not specifically mentioning Section 14A of the Income Tax Act, 1961. 11. Ld. AR also placed his reliance on the order of ITAT, Mumbai in the case of KJMC Corporate Advisors (India) Pvt. Ltd. Vs. ITO in ITA No. 1512/MUM/2019 vide order dated 28.02.2020, wherein similar findings of Coordinate Bench of ITAT, Mumbai, the same are extracted as under: 7. We shall now advert to the claim of the ld. A.R that the A.O had erred in making an addition of the disallowance worked out under Sec. 14A r.w. Rule 8D for the purpose of computing the 'book profit' under Sec.115JB of the Act. On a perusal of the assessment order, we find that the A.O for the purpose of computing the 'book profit' under Sec. 115JB had made an addition of the disallowance of Rs. 10,94,782/- that was worked out by him under Sec. 14A r.w Rule 8D. We are unable to persuade ourselves to subscribe to the computing of the 'book profit' under Sec. 115JB by the A.O. As per the order of the ....
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....sume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147....
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.... (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subjec....
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..... The question before the High Court was, whether the Income-tax Appellate Tribunal was justified in upholding the addition made on the basis of the incriminating material during the course of search. 16.1 In view of the aforesaid discussion and the reasoning, all these appeals filed by the assessee - Dayawanti through legal heir fail and the same deserve to be dismissed and are accordingly dismissed. No costs. 13. The Third contention raised by the Ld. AR was that the addition is proposed under 14A r.w. Rule 8D and there were no exempt income earned by the assessee and during the year under consideration neither there was any expenditure directly incurred in connection with the exempt income, therefore, the addition u/s 14A is not called for and the adjustment u/s 115JB is out of question. 14. Backed by aforesaid submission, it was the prayer that the addition made by the Ld. AO are unjustified, illegal, arbitrary and bad in law. 15. On the other hand, contradicting the aforesaid submissions of the Ld. AR, Ld. CIT DR, Shri S. L. Anuragi submitted that addition which was made by the Ld. AO in the original assessment u/s 143(3), but missed to be added while making ....
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....by Ld. AO u/s 14A r.w. Rule 8D was without authority of law, on this count itself the assessment has to be quashed. 18. Ld. CIT-DR on this issue, have submitted that as per the impugned assessment order and material on record, it is not transpiring that whether the year under consideration is an unabated year and also whether there was any incriminating material available with the Ld. AO, therefore, it was the request that matter may be set aside to the files of Ld. AO for fresh adjudication. 19. On a thoughtful consideration of the facts and circumstances of the case, after hearing the contention of both the parties and on perusal of the judicial pronouncements relied upon by the assessee. We find it appropriate to restore this matter back to the files of the Ld. AO with the following directions. (i) If there is no expenditure incurred for earning of the exempted income described u/s 10 of the Act, then no addition on the basis of computation in terms of provisions of section 14A r.w. Rule 8D can be made, following the mandate of law as per judgment in the case of Vireet (supra). (ii) If the year under consideration is an unabated assessment year and no inc....