9911796707
TMI Blog2021 (11) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment is reopened. In our opinion, the balance-sheet which is the tangible material and supposed to have been considered by the Assessing Officer while passing the Assessment Order u/s.143(3) of the Act had totally ignored the balance-sheet. If at all he has considered, he has not even passed the assessment order by ignoring the provisions of law, i.e. Section 14A r.w.R.8D of the Income Tax Rules, 1962 - As in this case, tangible material is clearly available to the Assessing Officer and therefore the Assessing Officer validly reopened the assessment. In view of the above, we upheld the reopening made by the Assessing Officer u/s.147. - Decided against assessee. Addition u/s 14A r.w.r.8D - In the assessment order, the Assessing Officer has not discussed details of the own and borrowed funds. In the order of the Commissioner of Income Tax (Appeals), CIT(A) has categorically given a finding that the Assessee has not maintained separate books of account, year-wise to prove that only interest-free source has been utilized for investments. By considering the above findings Commissioner of Income Tax (Appeals) and by keeping in view the facts and circumstances of the case, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Scrutiny Selection [CASS], and a notice u/s.143(2) was issued to the Assessee. The assessment was completed u/s.143(3) on 30.03.2015. Subsequently, a notice u/s.148 was issued on 31.03.2017 on the ground that there is a reason to believe that the income chargeable to tax has escaped assessment. The reasons for reopening by the Assessing Officer vide order dated 07.09.2017 recorded by the Assessing Officer is as under: "On verification of records, it is found that the Assessee Bank made a disallowance of ₹ 24,93,305/- u/s.14A. It is observed that the disallowance u/s.14A is to be calculated as per the methodology prescribed in the Rule 8D of the Income Tax Act, 1961. The Assessee Bank did not follow the methodology prescribed by the Section 14A red with Rule 8D. The disallowance u/s.14A read with Rule 8D is calculated as follows: 1) Amount of expenditure directly relating to income which does not form part of total income NIL 2) Expenditure by way of interest A*B/C Where A is 12,32,01,89,000 Amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year Where B is The average of value of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee, to support the above argument placed reliance upon the decision of the Jurisdictional High Court reported in Tax Case Appeal No.702 of 2009 dated 11.07.2019 in the case of the M/s. Tenzing Match Works, Sivakasi Vs. The Deputy Commissioner of Income Tax, Virudhunagar and submitted that the reopening is not valid. Further, the learned Counsel for the Assessee has submitted that as per the decision of the Hon'ble Supreme Court in the case of M/s. Maxopp Investment Limited Vs. Commissioner of Income Tax, New Delhi reported in [2018] 402 ITR 640 held as "once the Assessee himself suo motu made a disallowance u/s.14A of the Income Tax Act, 1961, the Assessing Officer has to record proper satisfaction as to why the quantum of suo-motu disallowance is not correct. No satisfaction recorded by the Assessing Officer, invoked Section 14A r.w.rule 8D which is not valid. 7. The learned Departmental Representative has submitted that the Assessing Officer while passing the assessment order u/s.143(3) of the Act has not considered Section 14A r.w.Rule 8D of the Income Tax Rules, 1962. Subsequently, it came to the notice of the Assessing Officer and the Assessing Officer by consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of opinion does not arise. Thus, the Assessing Officer had rightly reopened the assessment. So far as tangible material is concerned, we find that the Assessing Officer after examining the entire file, has come to a conclusion that the suo-muto disallowance made by the Assessee is not correct and that the Assessee has not followed the formula prescribed in the Act to calculate the dividend income u/s.14A r.w.R.8D of the Income Tax Rules, 1962. Therefore, the reopening is based on the material available on record which is sufficient to reopen the assessment. The tangible material available to the Assessing Officer in this case is the balance-sheet on the basis of which the assessment is reopened. 13. In our opinion, the balance-sheet which is the tangible material and supposed to have been considered by the Assessing Officer while passing the Assessment Order u/s.143(3) of the Act had totally ignored the balance-sheet. If at all he has considered, he has not even passed the assessment order by ignoring the provisions of law, i.e. Section 14A r.w.R.8D of the Income Tax Rules, 1962. 14. So far as the case-law relied by the learned Counsel for the Assessee in the case of the M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate his case before the Assessing Officer. In so far as the application of Section 14A of the Income Tax Act, 1961 r.w.R.8(2)(iii) of the Income Tax Rules, 1962 is concerned, this argument is neither placed before the Assessing Officer nor before the learned Commissioner of Income Tax (Appeals). This argument is placed for the first-time before us. 20. In our opinion, this issue is also to be examined by considering the relevant facts and materials. In view of the above, we set aside the order passed by the learned Commissioner of Income Tax (Appeals) and we remit back this issue to the Assessing Officer with a direction to re-compute the disallowance u/s.14A r.w.R.8D of the Income-Tax Rules, 1961, in the light of the decision of the Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities and Power Limited 313 ITR 340, wherein the Bombay High Court has held in respect of the interest disallowance that "if there are funds available both, interest-free and overdraft and/or loans are taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds are su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
