VIKON ENGINEERS PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 21/DEL/2017Status: DisposedITAT Delhi10 March 2021AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the substantive addition made under Section 14A in the original assessment order was deleted by the Tribunal in a previous appeal, there was no basis for the AO or CIT(A) to enhance the disallowance in rectification proceedings. The impugned orders were set aside.

What were the facts?

The Assessing Officer (AO) initially disallowed Rs. 6,64,271 under Section 14A. Later, through rectification proceedings, the AO enhanced this disallowance to Rs. 20,45,835. The CIT(A) further enhanced the disallowance by Rs. 8,37,413.

What were the issues?

Whether disallowance under Section 14A can be enhanced in rectification proceedings when the original disallowance has already been deleted by the Tribunal. The validity of enhancing a disallowance in Section 154 proceedings.

Which sections of the Income-tax Act were involved?

Section 14A,Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI

Before: SHRI BHAVNESH SAINI & SHRI B.R.R. KUMAR

Hearing: 10.03.2021

आदेश /O R D E R PER BHAVNESH SAINI, J.M.

1.

This appeal by assessee has been directed against the order of Ld. CIT(A)-24, New Delhi dated 27.10.2016 for AY 2010-11, challenging the enhancement u/s 14A of the I.T. Act in proceedings u/s 154 of the Act by AO as well as further by the Ld. CIT(A).

2.

We have heard the Ld. Representatives of both the parties.

3.

In this case, AO passed the assessment order u/s 143(3) of the I.T. Act dated 31.03.2013 for assessment year under appeal and made a I.T.A.No.21/Del/2017 disallowance of Rs. 6,64,271/- u/s 14A of the I.T. Act read with Rule 8D of the I.T. Rules. The AO later on passed the order u/s 154/143(3) of the I.T. Act dated 5.05.2014, whereby came to the finding that disallowance u/s 14A shall come to Rs. 20,45,835/- instead of Rs. 6,64,271/-. The mistake in the assessment order was rectified and disallowance was enhanced u/s 14A of the I.T. Act. The Ld. CIT(A) not only confirm the order of the AO in enhancing the addition u/s 14A of the I.T. Act in rectification proceedings u/s 154 of the I.T. Act, but also further enhanced the disallowance u/s 14A of the I.T. Act in a sum of Rs. 8,37,413/- and appeal of assessee was dismissed with the above enhancement.

4.

Ld. Counsel for assessee submitted that the assessee preferred appeal before ITAT against the original order in for assessment year under appeal i.e. 2010-11, challenging the disallowance u/s 14A of the I.T. Act of Rs. 6,64,271/-. The appeal of assessee has been decided by the Tribunal vide order dated 31.12.2019 and addition has been deleted because no exempt income was claimed by assessee in assessment year under appeal. This ground of appeal of assessee was allowed. Order of the Tribunal is placed on record.

5. In view of the above facts, it is clear that when substantive addition made by the AO in the original assessment order u/s 14A of the I.T. Act has been deleted by the Tribunal, there is no reason for the AO or the Ld. CIT(A) to enhance the same disallowance u/s 14A of the I.T. Act in the rectification proceedings u/s 154 of the I.T. Act. The order of the authorities below on the face of the order of the Tribunal dated 31.12.2019 (supra) clearly nullify the impugned orders.

6. In view of the above, we set aside the orders of the authorities below and cancel the enhancement made by the AO and the Ld. CIT(A) u/s 14A of the I.T. Act.

I.T.A.No.21/Del/2017

7.

In the result, the appeal of assessee is allowed.

Order pronounced in the open court on 10/03/2021

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