Assistant Commissioner Of Income Tax vs Ifci Limited

“6.1.2

The appellant explained that the disallowance u/s 14A has been deleted by the Hon. ITAT vide order no ITA No.2982/Del./2015 in the appellant’s own case in A.Y. 2010-11 asunder:-

6.5

We find that the Assessing Officer is under the impression that no expenses have been incurred for earning the dividend income, whereas the assessee has made suo moto disallowance Rs.10 lakh. The Assessing Officer has not pointed out how the said claim of Rs.10 lakh, is not correct. The Assessing Officer has jumped to the conclusion without examining the claim of the assessee. In our opinion, the facts and circumstances of the year under consideration being identical to the facts and circumstances of assessment year 2008-09, respectfully following the finding of the Tribunal (supra), we hold that no disallowance u/s 14A can be made without recording proper satisfaction as required under the law. Accordingly, the disallowance in dispute is deleted. The ground of appeal is allowed.

6.1.3

It would be apposite here to refer to judicial pronouncements on this issue.The Hon’ble ITAT, Chandigarh Bench in ITA [2023] 152 taxmann.com 90 (Chandigarh – Trib.) 103 held that where penalty under section 271(1)(c) was imposed upon assessee for reason that disallowance under section 14Aread with rule 8D made by Assessing Officer was sustained by Tribunal, since no any independent and specific as to how disallowance so made by Assessing Officer which were upheld by Tribunal would lead to charge of furnishing of inaccurate particulars of income by assessee, impugned penalty imposed upon assessee was unjustified.

6.1.4

The issue of disallowance u/s 14A is purely legal issue especially when the appellant itself disallowed Rs. 10 lakhs in the computation of income. Whether the disallowance should Rs. 10 lakhs or higher amount is matter of interpretation of law and does not amount to either concealment or furnishing inaccurate particular of income. In view of the above, I hold that the appellant is not liable for penalty u/s 271(1)(c) of the I.T. Act 1961 and the same is deleted.”

“The revenue contended that since the assessee had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of the two forms: (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing op inaccurate particulars of income. Such contention could not be accepted as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. [Para 10] Therefore, the appeal filed by the revenue had no merits and was to be dismissed.”