THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), AHMEDABAD vs. RIDDHI SIDDHI GLUCO BIOLS LIMITED, AHMEDABAD

PDF · subscribers
ITSSA 42/AHD/2022Status: DisposedITAT Ahmedabad13 September 2023AY 2016-173 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the proceedings under Section 153A were initiated in respect of a survey action where cash was found. However, regarding the disallowance under Section 14A computed as per Rule 8D, the assessee had suo motu disallowed Rs. 1,29,69,838/-. The Tribunal found that this issue was not related to any incriminating material found during the survey. The Revenue's reliance on the survey material for the Section 14A disallowance was not considered by the Tribunal as incriminating in this context. Therefore, the CIT(A) was justified in deleting the disallowance under Section 14A. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the Revenue's appeal.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A)-11, Ahmedabad for Assessment Year 2016-17. The assessee, Riddhi Siddhi Gluco Biols Limited, had filed its original return of income on October 1, 2016, and a revised return on January 3, 2017, declaring income at Rs. 2,80,57,730/-. A survey under Section 133A was conducted on February 1, 2019, where cash of Rs. 4,51,02,330/- was found, exceeding the cash book balance by Rs. 4,44,96,000/-. Proceedings under Section 153A were initiated, and the Assessing Officer (AO) made a disallowance of Rs. 2,27,42,782/- under Section 14A. The CIT(A) partly allowed the assessee's appeal, deleting the disallowance made by the AO.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in deleting the disallowance of Rs. 2,27,42,782/- made under Section 14A of the Income Tax Act, 1961, by holding that no incriminating materials were found regarding the issue on which the addition was made. Assessee's Contention: The assessee relied on the order of the CIT(A). Revenue's Contention: The Revenue argued that the CIT(A) was incorrect in deleting the disallowance under Section 14A and relied on the Assessment Order. The Revenue contended that the CIT(A) ought to have upheld the AO's order.

Which sections of the Income-tax Act were involved?

Section 14A,Section 133A,Section 153A,Section 143(1),Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED

For Appellant: Shri P.D. Shah, AR
For Respondent: Shri A.P. Yadav, CIT (D.R.)
Hearing: 16.08.2023Pronounced: 13.09.2023

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

This appeal is filed by the Revenue against the order dated 21.09.2022 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2016-17.

2.

The Revenue has raised the following grounds of appeal :-

“1) On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in deleting the disallowance u/s.14A of Rs.2,27,42,782/- and giving relief to the assessee by holding that no incriminating materials were found with regard to the issue on which addition was made in the assessment order.

2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.

3) It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.”

3.

The original return of income was filed on 01.10.2016 declaring total income at Rs.2,80,57,730/-. Further the return of income was revised on 03.01.2017 and

IT(SS)A No.42Ahd/2022 A.Y. 2016-17 Page 2 of 3 income was declared at Rs.2,80,57,730/-. The assessment was processed under Section 143(1) of the Income Tax Act, 1961 on 18.08.2017. Initially a survey action under Section 133A of the Act was conducted on 01.02.2019 in which the business premises of the assessee were also part of the said action. During the survey proceedings, cash of Rs.4,51,02,330/- was found and the Assessing Officer observed that the cash balance as per the cash books of the concerns running from the said premises as on the date of survey was Rs.6,06,330/- and thus there was a discrepancy of Rs.4,44,96,000/- in the cash found and cash balance as per books as on the date of survey. Statement under Section 131 of the Act was recorded that of CFO, Vice President as well as one of the Directors of the assessee company. The assessee is engaged in Power Generation and trading of commodities. The assessee filed its reply in response to the notice under Section 153A of the Act and also field return of income on 06.12.2019 thereby declaring total income of Rs.2,80,57,730/-. The Assessing Officer made disallowance under Section 14A of the Act amounting to Rs.2,27,42,782/-.

4.

Being aggrieved by the Assessment Order, the assessee filed appeals before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

The Ld. DR submitted that the CIT(A) was not right in deleting the disallowance under Section 14A of the Act thereby holding that no incriminating material was found with regard to the issue on which addition was made by the Assessing Officer. The Ld. DR relied upon the Assessment Order.

6.

The Ld. AR relied upon the order of the CIT(A)

7.

We have heard both the parties and perused all the material available on record. It is pertinent to note that the proceedings under Section 153A of the Act was in respect of survey action where cash has been found and in respect of amount disallowable under Section 14A computed as per Rule 8D the assessee has categorically mentioned that the assessee suo moto disallowed Rs.1,29,69,838/- under Section 14A of the Act as the assessee has rightly taken cognisance of the Section 14A read with Rule 8D. In fact, this issue is not related to the incriminating material as alleged by the Revenue and in fact the material relied by the Revenue was

IT(SS)A No.42Ahd/2022 A.Y. 2016-17 Page 3 of 3 not at all considered as incriminating and, therefore, the CIT(A) has rightly deleted the disallowance under Section 14A of the Act. There is no need to interfere with the findings of the CIT(A). Hence, appeal of the Revenue is dismissed.

8.

In the result, appeal filed by the Revenue is dismissed.

Order pronounced in the open Court on this 13th September, 2023.

Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 13th day of September, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

By order TRUE COPY

Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →