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2014 (8) TMI 835 - AT - Income TaxDisallowance u/s 14A r.w. Rule 8D Held that:- The assessee is having net interest income as is apparent from the figures of the P & L - assessee had received a net interest income against which he has incurred an expenditure - the assessee had a net positive income of bank interest - the investment in associated companies is never made with the purpose of earning dividend but these investments are made for strategic purpose and similarly, investments in mutual funds also do not involve much cost as compared to making investment in direct equity shares relying upon Commissioner of Income Tax-II Versus M/s Hero Cycles Ltd. [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] - both the AO and CIT(A) have held that some amount must have been incurred for earning exempt income, ignoring the important fact that no new investment was made and significant part of investment was in associate companies and moreover there is no nexus between the borrowed funds and investments - the assessee has earned net interest income meaning thereby that no net interest expenditure was incurred - the disallowance u/s 14A is not sustainable Decided in favour of assessee. Unexplained cash credit u/s 68 Held that:- The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record - The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assess1e that it was receipt of an income nature - assessees received foreign gifts from one common donor - The payments were made to them by instruments issued by foreign banks and credited to the respective account of the essessees by negotiation through a bank in India assessee has been unable to explain the creditworthiness of the persons who have made this investment - As the explanation offered by the assessee about the nature and source of the sums found credited in the books was not satisfactory there was, prima facie, evidence against the assessee, viz., the receipt of money. The burden was on the assessee to rebut the same, and, it failed to rebut it, it can therefore be held against the assessee that it was a receipt of an income nature - assessee has failed to discharge its onus to produce legal acceptable evidence of creditworthiness of the persons - The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee - the appellant has offered no creditable explanation about the amounts credited in his books, the receipt of ₹ 12,00,000/- therefore, cannot be treated as explained - CIT(A) has elaborately dealt with the issue and also rightly upheld the addition there was no infirmity in the same - the AO had not lawfully reopened the assessment by not supplying the copy of reasons recorded, no specific ground has been taken by the assessee in the grounds of appeal and neither the assessee had filed any application for admission of additional ground and moreover Decided against Assessee.
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