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Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH
Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR
PER BENCH:
Both the above appeals have been filed by the assessee against the separate order of the Ld. CIT(A)-4, Ludhiana.
Assessee has raised following grounds in ITA No. 1427/Chd/2017 for A.Y. 2010-11:
That the Ld. CIT(A)-4, Ludhiana has erred in passing the order u/s 250(6) of the Income tax Act, 1961. 2. That the Ld. CIT(A)-4, Ludhiana has also erred in confirming the addition of Rs. 9,30,000/- under the head “Payment made in contravention” made u/s 40A(3) of the Income Tax Act, 1961 without any base and reasons thereof.
2.1 That the Ld. CIT(A) erred in law and facts in refusing to admit additional evidence u/s 46A of the Income Tax Rules, 1962 which goes to the grass root level of the matter, without any base and reason thereof. 2.1 Assessee has raised following grounds in ITA No. 1428/Chd/2017 for A.Y. 2011-12:
That The Ld. C.I.T.(A)-IV, Ludhiana has wrongly passed the order u/s 250(6) of the Income Tax Act, 1961 against law and facts of the case.
That The Ld. C.I.T.(A)-IV, Ludhiana has erred in confirming the addition of Rs.3,04,500/- u / s 40A(3) of the Income Tax Act, 1961 without any base and reasons thereof. 2.1 That the Ld. C.I.T(A) erred in law & facts in refusing to admit additional evidence u/s 46A of the Income Tax Rules, 1962 which goes to the grass root level of the matter, without any base and reason thereof.
That the Ld. C.I.T (A) has erred in confirming an addition of Rs. 2,26,398/- on account of disallowance u/s 14A of the Income Tax Act ,1961 read with Rule 8-D of the Income Tax Rules , 1962 without any base & reasons thereof.
3.1 That the C.I.T(A) has erred in law & facts in failing to adjudicate that no disallowance u/s 14A can be made where 'satisfaction' is not recorded by the A.O .
3.2 That the C.I.T(A) has erred in law & fact that disallowance u/s 14A cannot exceed the exempt Income.
3.3 Without prejudice to above disallowance u/r 8D(2)(iii) i.e. 5% of Average Investment can also be exercised only w.r.t to Investment in relation to which exempt income is earned.
The assessee has filed the appeal which is barred by limitation by two days. The assessee explained that the two day delay was due to calculation of dates for the months of July and August both of which are 31 days. He relied on the judgment in the case of Collector Land Acquisition Vs. MST Katiji 1987 AIR 1353 wherein it was held that if the appellant satisfies the Court that he had sufficient cause for not preferring the appeal within the due date the same can be condoned. Respectfully following the ratio of the judgment we hereby condone the delay.
Ground No. 1 and 2 of ITA NO. 1427 and 2 & 2.1 of ITA No. 1428/CHD/2017
Addition under section 40A(3) and Application for admission of additional evidence :
The assessee has filed additional evidence before the Ld. CIT(A) which have been refused to be admitted. On perusal we find that the additional
evidences consists of certificate regarding the existence of bank branch and sworn affidavit from the Seller of the property. These two evidences will go to the root of the matter involving addition under section 40A(3). Hence the same are hereby admitted and being the evidences not taken into consideration by the Ld. CIT(A) for adjudicating the issue, the same is hereby remanded back to the file of the Ld. CIT(A) to admit the additional evidence and pass a speaking order after taking into consideration the material facts available in accordance with the law.
Ground No. 3 and 2 of ITA NO. 1427 and 2 & 2.1 of ITA No. 1428/CHD/2017
Addition under section 14A
6.1 The Assessing Officer has disallowed an amount of Rs. 2,26,398/- on account of disallowance under section 14A as the assessee has invested Rs. 80,35,624/- in securities with the stock broker. On perusal of the record (Para 4.3 of A.O) we find that the Assessing Officer has not fulfilled the requirements of Section 14(2) pertaining to non satisfaction. The AO has not given any reason to re-compute the disallowance except relying on the Circular No. 5 of CBDT 2014 wherein it was directed to the field officers to disallow amount under section 14A even if the assessee has derived no exempt income. The applicability of Circular has been nullified by the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Lakhani Marketing (P&H High Court). Hence keeping in view the judgment of the Hon’ble High Court we hereby delete the addition made under section 14A.
As a result the appeals of the assessee is hereby allowed for statistical purposes.
Order pronounced in the open Court. Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 25/05/2018 AG Copy to: 1.The Appellant, 2. The Respondent, 3. The CIT(A), 4. The CIT, 5. The DR