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Income Tax Appellate Tribunal, BANGALORE BENCHES “A” BENCH: BANGALORE
Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE
ORDER
PER PAVAN KUMAR GADALE, JM.
The assessee has filed an appeal against the order of the CIT (A)-6, Bangalore, dated 31/01/2018 passed u/s 143(3) and u/s 250 of the IT Act, 1961 for the assessment year 2013-14.
At the outset, we notice that there is a delay of 65 days in filing the appeal before the Tribunal. Ld AR drawn our attention to the affidavit filed by the assessee, explaining the reasons for not filing the appeal before the Tribunal within the prescribed time limit and seeking condonation of delay, and read out the relevant paras from the affidavit dated 30/07/2018. For the sake of convenience and ready reference, the relevant paras are extracted as under:
“5. The appeal documents are filed by the assessee company on 01/08/2018.
In this regard, the appellant wishes to submit that the Senior Manager-Finance who was in-charge of tax matters of the company was travelling to France for business purposes. Further, in light of the ongoing audit process, the filing of the present appeal was inadvertently lost sight of and there was an inadvertent delay in filing of the appeal in time. Later on it was realized that an appeal challenging the order of the CIT (A) had not been filed. Immediately, necessary steps were taken to get the instant appeal filed.
The appellant wishes to submit that the delay in filing the appeal is neither deliberate nor intentional but due to bona-fide and reasonable cause. It was due to genuine hardship that the necessary appeal could not be submitted in time. I submit that all possible efforts have been made to arrest the delay and that there are good and sufficient reasons to condone the delay in filing the accompanying appeal.”
On perusal of the contents of the affidavit, we find there is a reasonable and sufficient cause for the assessee in not filing the appeal before Tribunal within the stipulated time limit and the Ld DR has no serious objection and hence, we condone the delay of 65 days and admit the appeal of the assessee.
At the time of hearing, Ld AR has not pressed the Grounds of Appeal “
B” in respect of income corresponding to TDS appearing in Form 26AS and made endorsement in the appeal memo. Accordingly, the said Ground “B” is treated as not pressed and dismissed and the effective Grounds of Appeal “A” and “C” read as under: “A. Disallowance under section 14A of the Act – Rs. 6,56,293/-
1. The Learned AO and Hon’ble CIT (A) has erred in law and facts by disallowing an amount of Rs. 6,56,293/- u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962.
2. The Ld AO failed to appreciate that the appellant had suo motto considered a disallowance of Rs. 35,290/- and the same has been certified by the auditor in the next audit report.
3. Notwithstanding the above, the Ld AO has erred in computing the disallowance under the provisions of Rule 8D of the Income Tax Rules, 1962.
4. Notwithstanding and without prejudice the above grounds the Hon’ble CIT (A) has erred in confirming the amount of disallowance made by the Ld AO. C. Interest on refund u/s 244A
1. The Ld AO has erred in reducing the amount of interest u/s 244A from the refund amount instead of adding it to the refund amount.”
5. Ld AR filed a petition for admission of additional evidence in respect of disallowance made by the AO u/s 14A r.w. Rule 8D. Further, the Ld AR submitted that these additional evidence were not furnished in the course of assessment proceedings and explained the reasons and prayed for permission to file the additional evidence which are vital for the decision making in respect of the ground of appeal of disallowance u/s 14A. Ld DR has no specific objection and submitted that the AO be provided opportunity to verify and examine the additional evidence. Accordingly, we admit the additional evidence.
6. Brief facts of the case are that the assessee is in the business of Growing Crystals & Manufacturing of Instruments and Apparatus for measuring and detecting lonising Radiators & assemble of Arrays, filed the Return of income electronically on 29/11/2013 declaring total income of Rs. 3,99,89,350/-. The Return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued. Ld AR of the assessee appeared from time to time and submitted the details. Since the assessee-company has international transactions with its Associated Enterprises (AEs), Assessing Officer, with the prior approval of Pr. Commissioner of Income Tax (Transfer Pricing)-2(2)(2), Bangalore has referred the matter to the Transfer Pricing Officer for determining the Arm’s Length Price (ALP) whereas the TPO vide order dated 28/10/2016 has passed the order u/s 92CA read with section 92C with no adjustment to the ALP whereas in respect of the disallowances u/s 14A of the Act made by the Assessing Officer, the assessee has received dividend income of Rs. 72,10,906/- and claimed expenditure. Assessing Officer on perusal of the Balance Sheet found that the investments made by the assessee are Rs. 2,09,29,158/- and the assessee has suo motto disallowed 35,290/- for calculation of section 14A disallowance, whereas the AO overlooked these facts and made disallowance u/s 14A r.w. Rule 8D of Rs. 6,56,293/-. Similarly AO made other additions of Rs. 40,080/- and Assessed total income of Rs. 4,06,85,723/- and passed the order u/s 143(3) dated 30/11/2016.
7. Aggrieved by the order, assessee filed an appeal before the CIT (A), whereas the CIT (A) confirmed the order of the Assessing Officer and dismissed the assessee’s appeal. Aggrieved by the order, the assessee has filed an appeal before the Tribunal.
Ld AR has not pressed Ground “B” and made submissions in respect of Ground “A” relating to disallowance u/s 14A of the Act. The contention of the Ld AR that the Assessing Officer has erred in calculating the disallowance to the extent of Rs. 6,56,293/- whereas the assessee has suo motto made disallowance of Rs. 35,290/- in the computation. Ld AR filed additional evidence in respect of the suo motto disallowance which could not be filed in the course of assessment proceedings. Ld AR prayed that the assessee has a good case on merits and prayed for an opportunity to substantiate the claim.
Contra, the Ld DR supported the orders of the Lower Authorities and objected to the additional evidence and mentioned that the AO be provided an opportunity to verify and examine the claim.
We have heard the rival contentions and perused the material on record. Prima facie on perusal of the Assessment Order we find that the AO has made the calculation u/s 14A r.w. Rule 8D and worked out the disallowance to the extent of Rs. 6,91,583/- after giving set-off of disallowance by the assessee. Since the additional evidences is filed by the assessee with Reasons for basis of disallowance made by the assessee, we are of the substantive opinion that the matter has to be examined and verified. Accordingly we remit the entire issue to the file of the Assessing Officer to verify and examine the additional evidence. Further the assessee should be provided adequate opportunity of being heard and the assessee shall cooperate in submitting the details / information for early disposal of the case. Accordingly, the Ground of Appeal “A” is allowed for statistical purposes.
The assessee has raised Ground “C” that the Assessing Officer while granting interest u/s 244A, reduced the interest amount instead of adding it to the refund of tax. We perused the Assessment Order and found that the Assessing Officer while granting refund has allowed interest u/s 244A but it was reduced from the Refund amount which is not correct.. Accordingly, we direct the Assessing Officer to rectify the interest calculation and the Ground of Appeal is allowed for statistical purposes.
In the result, assessee’s appeal is partly allowed for statistical purposes.
Order pronounced in the open court on 15th day of April, 2019.