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2022 (7) TMI 221 - AT - Income TaxRectification of mistake u/s 154 - disallowance u/s 14A - AO made disallowance under section 14A of the Act in the absence of any evidence to prove one to one nexus of funds received and utilized - assessee submitted that details were submitted during the course of assessment proceedings, however, the Assessing Officer failed to take note of the same while passing the assessment order - HELD THAT - During the hearing before us, the learned A.R. filed copies of follow up letter filed before the Assessing Officer requesting for early disposal of rectification application dated 11/06/2019, filed by the assessee. As the details filed by the assessee were not considered by the Assessing Officer while passing the assessment order and the appeal filed by the assessee before the learned CIT(A) was also dismissed only on the ground of delay, we deem it appropriate to restore this issue of disallowance under section 14A to the file of the Assessing Officer for de novo adjudication, after consideration of all the details filed by the assessee. Needless to mention that no order shall be passed without affording opportunity of being heard to the assessee. Thus, grounds raised in this appeal by the assessee are allowed for statistical purpose.
Issues:
1. Delay in filing appeal under section 250 of the Income Tax Act, 1961. 2. Disallowance under section 14A of the Act r/w rule 8D. Issue 1: Delay in filing appeal under section 250 of the Income Tax Act, 1961 The assessee filed an appeal against the ex-parte order dated 14/06/2021, passed by the Principal Commissioner of Income Tax (Appeals)-49, Mumbai, for the assessment year 2016-17. The grounds of appeal included contentions regarding the delay in filing the appeal and the failure to provide an opportunity to furnish the rectification application filed under section 154 of the Act. The Assessing Officer disallowed an amount under section 14A without appreciating the explanations provided. The CIT(A) dismissed the appeal due to delay, stating that there was no documentary evidence to substantiate the delay and that the assessee consciously chose not to file an appeal but pursue rectification under section 154. The Tribunal considered the submissions and noted that the details submitted by the assessee were not considered by the Assessing Officer while passing the assessment order. The Tribunal allowed the appeal for statistical purposes and restored the issue of disallowance under section 14A to the Assessing Officer for fresh adjudication. Issue 2: Disallowance under section 14A of the Act r/w rule 8D The Assessing Officer computed a disallowance under section 14A r/w rule 8D for tax-free income claimed to be exempt under section 10(2A) of the Act. The CIT(A) upheld the disallowance, leading to the appeal before the Tribunal. During the hearing, the assessee submitted that details provided earlier were not considered, and an application for rectification was filed under section 154. The Tribunal observed that the disallowance was made without evidence of a direct nexus between funds received and utilized. The Tribunal found that the CIT(A) dismissed the appeal solely on the ground of delay without addressing the merits raised by the assessee. Consequently, the Tribunal decided to send the issue back to the Assessing Officer for a fresh assessment, considering all details submitted by the assessee and providing an opportunity to be heard. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for due process and consideration of all relevant information before making a decision. In conclusion, the Appellate Tribunal ITAT Mumbai addressed the issues of delay in filing the appeal under section 250 of the Income Tax Act and the disallowance under section 14A of the Act r/w rule 8D. The Tribunal emphasized the importance of considering all submissions and providing a fair opportunity for the assessee to present their case. The decision highlighted the need for a thorough assessment based on complete information and adherence to due process in tax matters.
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