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2015 (5) TMI 845 - AT - Income TaxReopening of assessment - Held that - We find that notice u/s 148 had been issued primarily on the basis of information received from Investigation Wing of department regarding accommodation entries received from M/s Garg Finvest (P) Ltd. amounting to ₹ 3,00,315/-. Therefore, it is not correct to say that no addition had been made in respect of the amounts on which notice u/s 148 had been issued. - Decided against assesse. Commission paid for obtaining the said accommodation entry - Held that - Nothing has been brought on record to controvert the findings of ld. CIT(A) that assessee has not been able to establish the genuineness of the transactions and keeping in view the contrary stand taken by the assessee during assessment proceedings and after the details of the inquires were confronted to assessee, we find no reason to interfere with the order of lower revenue authorities on this count. - Decided against assesse. Disallowance u/s 14A by applying Rule 8D - Held that - CIT(A) correctly did not apply Rule 8D by observing that the said Rule was applicable w.e.f. assessment year 2008-09, as laid down by the Hon ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT and applying formula for computing disallowance u/s 14A in cases prior to AY 2008-09 where the provisions of Rule 8D of IT rules are not applicable - Decided in favour of assesse.
Issues Involved:
1. Reopening of assessment u/s 147 beyond the period of limitation. 2. Addition of income received from M/s Garg Finvest (P) Ltd. 3. Disallowance u/s 14A of the Income Tax Act, 1961. 4. Jurisdiction to enhance disallowance u/s 14A Act. 5. Disallowance u/s 14A of the Act in AY 2007-08. Reopening of Assessment u/s 147 Beyond the Period of Limitation: The case involved the reopening of assessment u/s 147 based on information from the Investigation Wing. The appellant argued that the notice u/s 148 was issued beyond the period of limitation. The CIT(A) upheld the reopening, stating that the original assessment was u/s 143(1) and the case was reopened due to new information. The Tribunal dismissed the appellant's contention, stating that the notice was issued based on information received, justifying the reopening. Addition of Income Received from M/s Garg Finvest (P) Ltd.: The Assessing Officer (AO) made an addition of Rs. 3 lakhs as income received from M/s Garg Finvest (P) Ltd. The AO doubted the genuineness of the transaction and the creditworthiness of the parties involved. The appellant failed to provide details and evidence to support the transaction's authenticity. The Tribunal upheld the lower authorities' decision, stating that the appellant's inconsistent stance and lack of evidence warranted the addition of income. Disallowance u/s 14A of the Income Tax Act, 1961: The AO disallowed Rs. 1,64,38,217 u/s 14A by applying Rule 8D. However, the CIT(A) did not apply Rule 8D, citing its applicability from AY 2008-09 onwards. Instead, the CIT(A) used a formula suggested by the Kerala High Court for pre-2008 cases, resulting in a disallowance of Rs. 33,16,436. The Tribunal agreed with the CIT(A)'s approach and upheld the disallowance amount. Jurisdiction to Enhance Disallowance u/s 14A Act: The appellant challenged the CIT(A)'s jurisdiction to enhance the disallowance originally made by the AO u/s 14A. The Tribunal noted that the CIT(A) based the disallowance on a court-approved formula for pre-2008 cases. As the facts were similar to a previous year where the same methodology was upheld, the Tribunal found no reason to interfere with the CIT(A)'s decision. Disallowance u/s 14A of the Act in AY 2007-08: In the assessment year 2007-08, both the assessee and the Revenue challenged the CIT(A)'s working for disallowance u/s 14A. The Tribunal observed that the CIT(A)'s approach was consistent with a previous year's decision based on a court ruling. As the facts were identical, the Tribunal upheld the CIT(A)'s decision on disallowance. In conclusion, the Tribunal dismissed all appeals filed by the assessee and the revenue, maintaining the decisions made regarding the issues of reopening assessments, addition of income, and disallowance u/s 14A for the respective assessment years.
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