TaxTMI 
TaxTMI 
2026 (6) TMI 145
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.... of the Income-tax Act, 1961 ('the Act) for AY 2016-17 on 31.01.2025. 2. The Appellant had received the order u/s 250 of the Act on 31.01.2025. Accordingly, an appeal against the said order of the Ld. CIT(A) should have been filed before this Hon'ble Tribunal on or before 31.03.2025. 3. That the filing of appeal got delayed by approximately 214 days and therefore your appellant is filing the petition for condonation of delay along with the appeal. The reason for delay in filing the petition is discussed in subsequent paragraphs. 4. However, on 11.09.2025, the Ld. AO passed a penalty order under section 271(1) of the Act, wherein he has levied a penalty of Rs. 5,24,586/- for furnishing inaccurate particulars of income. It is submitted that the CIT(A) in quantum proceeding has disallowed the interest expenditure u/s 14A of the Act. of the Act. Therefore, the Appellant consulted counsel in relation to the penalty matter. The Counsel after going through the entire matter has advised to file an appeal against the quantum order passed by the CIT(A) with respect to disallowance of interest expenses as there will be adverse consequences on penalty and oth....
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....additional ground on 10.02.2026 on jurisdictional / legal issue that the disallowance of Rs. 16,97,698/- made u/s 14A of the Act was beyond the scope 'limited scrutiny' of the assessment and thus the disallowance of Rs. 16,97,698/- was not tenable as the assessment order framed was bad in law. The relevant extract of the submission for filing the additional ground of appeal and the grounds of appeal are reproduced as under: "That the orders passed by the Ld. Assessing Officer (AO) and subsequently confirmed by the Ld. CIT(A) are bad in law, void ab initio, and passed without jurisdiction. The assessment was specifically selected for Limited Scrutiny under Section 143(2) of the Income Tax Act, 1961. However, the Ld. AO exceeded the defined jurisdiction by making additions on issues outside the scope of such limited scrutiny, thereby violating the mandatory directions contained in CBDT Instruction No. 5/2016 dated 14th July 2016, and CBDT Instruction No. 20/2015 dated 29th December 2015. That the Lul. AO erred in law and on facts in making a disallowance under Section 14A read with Rule 8D without fulfilling the statutory condition precedent of recording satisfactio....
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.... AO invoked Rule BD without recording a mandatory satisfaction u/s 14A sub-section (2), suffering from jurisdictional infirmity and hence entire Rule 8D is unsustainable in law." 5.1 The Sr. AR relied upon the above submission and relied upon the order of the Co-ordinate Bench of ITAT, Delhi in the case of Uday Punj (HUF) vs. ITO, Ward 32(2), New Delhi, ITA No. 643/Del/2020 order dated August 26, 2020, in support of the additional ground no. 1 of the appeal. 6. The AO filed a report vide letter dated Nil on the additional ground of appeal and the appeal filed by the assessee relevant extracts of the said submission for deciding the appeal is reproduced as under: "GROUND-WISE REPLY The Respondent is giving the Ground-wise reply to the aforesaid additional grounds of appeal-below: Additional ground. I In this ground the assessee contended that the action of Ld. CTT(A) in confirming the action of the Assessing Officer in making addition in respect of issues not mentioned in limited scrutiny were beyond jurisdiction of the Assessing Officer as the scrutiny assessment was selected for limited scrutiny u/s 143(2) and not complete scrutiny. ....
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.... of the case are that assessee is an individual who filed his return of income on 13.09.2016 declaring total income of Rs. 10,18,970/-. Assessee has also shown Short Term Capital Loss of Rs. 88,18,782/- which was carried forward for set off. The case was selected for limited scrutiny under CASS for verification of following items:- i) Whether sales turnover / receipts has been correctly offered for tax ii) Whether the investment and income relating to securities (derivative) transactions are duly disclosed. 04. Subsequently, notice u/s. 143(2) of the I.T. Act was issued on 24.07.2017. 05. During the course of assessment proceedings, the AO observed that assessee has earned dividend income of Rs. 14,04,831/- and assessee was asked that why disallowance u/s. 14A of the Act should not be made. The assessee explained vide letter dated 18.12.2018 that assessee has debited total expenditure in Profit & Loss Account of only Rs. 9,20,749/- out of which a sum of Rs. 8,17,707/- is income tax, service tax, stamp duty and Security Transaction Tax (STT). Therefore, the assessee has incurred and claimed the expenditure of Rs. 1,03,042/- only. Out of this expen....