2021 (5) TMI 727 - AT - Income Tax

Disallowance u/s.14A - HELD THAT - DR is fair enough not to controvert this undisputed fact that the issue is covered in favour of the assessee. With the assistance of ld. representatives, we have gone through the decision of ITAT in the case of assessee itself on the issue of disallowance made u/s. 14A adjudicated 2019 (9) TMI 910 - ITAT AHMEDABAD . Addition on account of interest u/s. 244A - AO has made addition on account of interest received u/s. 244A of the Act for the assessment year 2010-11 and 2012-13 on the basis of detail shown in ITS - HELD THAT - The claim of the assessee that it had not received interest, was not verified at the level of lower authorities. Therefore, we are of the view that that it will be appropriate to restore this case to the file of Assessing Officer for deciding afresh after verification and examination of the claim of the assessee that it has neither received any refund for assessment year 2009-10 and 2012-13 nor received any intimation regarding the same. Therefore, this ground of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance u/s. 14A of ?57,07,020/-
2. Addition on account of interest u/s. 244A of ?30,00,964/-
3. Initiation of penalty proceedings u/s. 271(c)

Issue 1: Disallowance u/s. 14A of ?57,07,020/-

The assessee, a government company, received dividend income and disallowed an amount for earning exempt income. The Assessing Officer disallowed a larger sum under section 14A. The CIT(A) restricted the disallowance to ?58,07,020/- based on the decision of the predecessor. The assessee contended no new investments were made during the year. The ITAT, Ahmedabad, referred to a Co-ordinate Bench decision in favor of the assessee on a similar issue. Relying on the precedent, the ITAT allowed the appeal in favor of the assessee.

Issue 2: Addition on account of interest u/s. 244A of ?30,00,964/-

The Assessing Officer added the interest amount received u/s. 244A for specific assessment years to the total income of the assessee. The CIT(A) upheld the addition. The assessee argued they did not receive any refund or intimation for the relevant years. The ITAT observed that the claim of non-receipt of interest was not verified by the lower authorities. Therefore, the case was remanded to the Assessing Officer for fresh examination and verification, allowing the ground of the assessee for statistical purposes.

Issue 3: Initiation of penalty proceedings u/s. 271(c)

The appeal on the initiation of penalty proceedings u/s. 271(c) was deemed premature at that stage and was dismissed. The overall appeal of the assessee was partly allowed for statistical purposes. The ITAT pronounced the order on 04-05-2021, providing relief to the assessee on specific issues while maintaining the dismissal of the penalty proceedings at that stage.