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TMI Blog2019 (11) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... er disallowance made by the Assessing Officer lacked statutory credentials under section 14A(2) of Income Tax Act. - ITA No:- 6679/Del/2015 - - - Dated:- 15-11-2019 - Shri Amit Shukla, Judicial Member And Shri Anadee Nath Misshra, Accountant Member For the Appellant : Ms. Kanika Jain, Adv For the Respondent : Sh. S.S. Rana, CIT (DR) ORDER PER ANADEE NATH MISSHRA, AM [A] This appeal has been filed by the assessee against impugned appellate order dated 21.10.2015 of learned Commissioner of Income Tax (Appeals)-22, New Delhi. The grounds of appeal are as under:- 1. That order made u/s 250 of the Income Tax Act dated 21.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14A of the Income Tax Act read with Rule 8D of I.T. Act. The assessee had suo moto made a disallowance of an amount of ₹ 1,59,205/- under section 14A of the I.T. Act. The Assessing Officer, however, computed a further disallowance amounting to ₹ 7,10,476/-. The total expenditure debited in the profit and loss account was ₹ 8,69,681/- out of which the appellant had made a suo moto disallowance of ₹ 1,59,205/- which left a balance as of ₹ 7,10,476/-. After the further aforesaid disallowance of ₹ 7,10,476/-, the total amount of all the expenses claimed by the assessee as per Profit Loss Account (₹ 8,69,681) stood disallowed by the Assessing Officer. The assessee filed appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Bombay High Court in the case of M/s Godrej and Boyce Mgf. Co. Ltd. vs. DCIT reported in 328 ITR 81. 13. Maxopp Investment Ltd. vs. CIT in ITA No. 687/2009 dated 18.11.2011. [B.1] However, the learned CIT(A) held that the entire disallowance made by the Assessing Officer under section 14A of I.T. Act read with Rule 8D of Income Tax Rules (I.T. Rules for short) was in accordance with provisions of law; and upheld the disallowance amounting to aforesaid ₹ 7,10,476/-made by the Assessing Officer. Aggrieved, the assessee has filed this present appeal in Income Tax Appellate Tribunal (ITAT for short) against the order of learned CIT(A). [C] At the time of hearing before us, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Services Ltd. vs. DICT [2016] 76 taxmann.com 268 (Delhi) 2. Godrej Boyce Manufacturing Company Ltd. vs. DCIT [2017] 81 taxmann.com 111 (SC)/[2014] 247 Taxman 361 (SC)/[2017] 394 ITR 449(SC)/[2017] 295 CTR 121 (SC) 3. Punjab Tractors Ltd. vs. CIT [2017-TIOL-353-HC-P H-IT] 4. Avon Cycles Ltd. vs. CIT [2015] 53 taxmann.com 297 (Punjab Haryana)/[2015] 228 Taxman 368 (Punjab Harayana)(MAG.) 5. Nahar Spinning Mills Ltd. vs. CIT [2017] 82 taxmann.com 154 (Punjab Haryana). 6. Dy. CIT vs. Viraj Profiles Ltd. 156 ITD 72/46 ITR 626/177 TTJ 466 7. NYK Line India Ltd. vs. ACIT [175 TTJ 180 / 132 DTR 7]. 8. Super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a speaking order, that the amount disallowed suo moto by the assessee is not satisfactory. The Assessing Officer having failed to do this, there is justification for applying Rule 8D is completely absent. In the absence of a speaking order by the Assessing Officer on why he invoked the jurisdiction under Rule 8D of Income Tax Rules, we are of the view that further disallowance of ₹ 7,10,476/- made by the Assessing Officer lacked statutory credentials under section 14A(2) of Income Tax Act. For this view, we respectfully follow the order of Coordinate Bench of ITAT Bench Delhi in the case of Azimuth Investments Ltd. vs. ACIT (supra) in which it was held as under:- 7. We have considered the rival submissions and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould annul the assessment where the assessment proceeding is a nullity in the sense that the AO had no jurisdiction ab initio to take the proceeding. In the present case the AO could take up the issue regarding disallowance u/s 14A only after recording satisfaction. Non-recording of satisfaction results into creeping of illegality in the assessment order and not a mere irregularity. The jurisdiction of recording satisfaction for invoking section 14A lies with the assessing officer and once he has not recorded such satisfaction then the said basic function of AO which clothes him jurisdiction to make disallowance u/s 14A cannot be usurped by Ld. CIT(A). We, therefore set aside the order of Ld. CIT(A). We also take guidanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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