MAPAEX REMEDIES LLP,PLOT NO 6A, INDUSTRIAL AREA vs. CIRCLE 4(1)(1), AHMEDABAD

ITA 1074/AHD/2026Status: DisposedITAT Chandigarh06 October 2026AY 2020-215 pages
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What did the Tribunal hold?

The Tribunal held that the legal ground concerning the reopening of assessment under Section 147 was without merit. The notice under Section 147 was issued within three years from the end of the relevant assessment year. Furthermore, as per the amended provisions of Section 147 effective from April 1, 2021, the AO is empowered to initiate reassessment proceedings if escapement of income comes to his notice. The Tribunal distinguished the cases relied upon by the assessee, stating their facts were different as the reopening in those cases was done beyond four years, requiring fulfillment of specific conditions. Therefore, the legal ground on reopening was dismissed. Regarding the merits of the addition, the Tribunal respectfully followed the Gujarat High Court's decision in Gujarat Flurochemicals Ltd. (supra), which held that disallowance under Section 14A read with Rule 8D cannot exceed the exempt income. Accordingly, the Assessing Officer was directed to restrict the disallowance to the extent of the exempt income of Rs. 1,66,349/- earned by the assessee during the year. The ground on merits was partly allowed.

What were the facts?

The assessee, Mapaex Remedies LLP, filed its return of income for Assessment Year 2020-21 on February 13, 2021, declaring a total income of Rs. 10,84,96,790/-. The original assessment was completed under Section 143(3) accepting the returned income. Subsequently, reassessment proceedings under Section 147 were initiated on the grounds that a disallowance under Section 14A read with Rule 8D was not made concerning the assessee's exempt dividend income of Rs. 1,66,349/-. The reassessment was completed under Section 147 read with Section 144B on February 28, 2025, resulting in a total income of Rs. 11,12,35,119/- and an addition of Rs. 27,38,329/-. The assessee's appeal to the CIT(A) was dismissed. The assessee is now in appeal before the ITAT.

What were the issues?

1. Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961, was legal and in accordance with the law, considering the issue of disallowance under Section 14A was already examined during the original assessment? (Mixed question of law and fact). Assessee's contention: The reopening was incorrect as the AO had already examined the issue of disallowance under Section 14A during the original assessment and the assessee had provided a specific reply stating no expenditure was incurred for exempt income. Reliance was placed on Gujarat High Court decisions in P.C. Snehal Engineers (P.) Ltd. v. ACIT and Lambda Therapeutic Research Ltd. Vs DICT. Revenue's contention: The amended provisions of Section 147, effective from April 1, 2021, empower the AO to reopen the case if income has escaped assessment and such an issue comes to the AO's notice subsequently. The revenue supported the lower authorities' orders. 2. Whether the addition of Rs. 27,38,329/- by disallowing expenditure under Section 14A read with Rule 8D was justified, and if so, whether it could exceed the exempt income earned? (Question of law). Assessee's contention: No disallowance under Section 14A should have been made as no expenditure was directly or indirectly incurred for earning dividend income. Furthermore, the disallowance could not exceed the exempt income of Rs. 1,66,349/-. Reliance was placed on Gujarat High Court decision in PCIT Vs. Gujarat Flurochemicals Ltd. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 14A,Section 147,Section 144B,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Gagan Tiwari, AR
For Respondent: Shri Amit Pratap Singh, SR-DR
Hearing: 10.09.2026Pronounced: 06.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal filed by the Assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 25.02.2026 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s 147 r.w.s. 144B of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed its return of income on 13.02.2021 declaring total income of Rs.10,84,96,790/-. The original assessment was completed u/s. 143(3) of the Act on 21.09.2022 accepting the return of the income. Thereafter, re-assessment proceeding u/s. 147 of the Act was initiated on the ground that di

The order continues below.

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