LALITKUMAR RATANCHAND CHADHA,MUMBAI vs. DCIT CIR 4(2) (2), MUMBAI

The only grievance of the assessee in the present appeal is against the dismissal of its appeal by the learned CIT(A) as non–maintainable.

The brief facts of the case pertaining to the issue, as emanating from the record, are: The assessee is a manufacturer of dyes and chemicals and also earns income from dealing in investments and shares. For the year under consideration, the assessee e–filed his return of income on 24/09/2013, declaring total income of Rs.2,10,08,050. The Assessing Officer, vide order dated 28/01/2016, passed under section 143(3) of the Act, inter–alia, disallowed expenditure of Rs.1,58,362, under section 14A r/w rule 8D of the Income Tax Rules, 1962 (“the Rules”) in relation to the income which does not form part of the total income.

Subsequently, the assessee vide application dated 17/02/2016 filed under section 154 of the Act sought rectification of the aforesaid assessment order in respect of computation of disallowance under section 14A of the Act. Vide letter dated 14/01/2020, assessee again requested the Assessing Officer for consideration of its rectification application filed under section 154 of the Act. The said application was rejected by the Assessing Officer by merely mentioning the following by hand:

The learned CIT(A), vide impugned order dated 23.11.2021, dismissed the appeal on the ground that the same is not in accordance with the provisions of the Act and thus is not maintainable, by observing as under:–

During the course of hearing, the learned Authorised Representative (“learned A.R.”) submitted that the Assessing Officer wrongly included ineligible assets / investments in the investments, which yield tax exempt income, while computing the disallowance under section 14A r/w rule 8D vide assessment order. Accordingly, the assessee filed rectification application requesting for re–computation and deletion of additional disallowance made under section 14A of the Act. The learned A.R. further submitted that the learned CIT(A) dismissed the appeal of the assessee as not maintainable on technical grounds.

On the other hand, the learned Departmental Representative by vehemently relying upon the impugned order submitted that the disallowance under section 14A of the Act is not covered within the ambit of section 154 of the Act.

We have considered the rival submissions and perused the material available on record. The assessee being aggrieved with the incorrect computation of disallowance under section 14A of the Act sought rectification of the assessment order. In the rectification application, the assessee submitted as under:

As is evidence from the record, the Assessing Officer rejected the rectification application filed by the assessee by treating the issue to be an appealable issue.

The learned CIT(A), vide impugned order, treated such a direction passed by the Assessing Officer to be not an order passed under section 154 of the Act and thus dismissed the appeal filed by the assessee treating the same to be not in accordance with the provisions of the Act and thus not maintainable.

We find that as the issue pointed out by the assessee in its rectification application, deals with the correct computation of disallowance under section 14A of the Act, therefore, we deem it appropriate to restore this issue to the file of jurisdictional Assessing Officer for de novo adjudication after verification of all the details as may be filed by the assessee. Needless to mention that no order shall be passed without affording opportunity of hearing to the assessee. As a

In the result, appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on 05/07/2022 Sd/- Sd/- S. RIFAUR RAHMAN SANDEEP SINGH KARHAIL JUDICIAL MEMBER ACCOUNTANT MEMBER