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2013 (8) TMI 597 - AT - Income TaxDisallowance u/s 14 A of the Income Tax Act – Held that:- Initial onus to make a claim in respect of the expenditure incurred in relation to the income that does not form part of the total income, is on the assessee - Once the assessee makes such a claim with reference to its accounts, the A.O. is bound to examine the same for the purpose of satisfying himself with regard to its correctness or otherwise, and where not satisfied, determine the same in - Though there is no specific requirement of recording dissatisfaction, it is incumbent on A.O. to do so, as in its absence it cannot be ascertained if he had actually examined the assessee's claim or proceeded mechanically – In the present case, assessee's claim is without reference to the expenses incurred and claimed, much less as to which expenditure is included and to what extent - No indication of interest, if any, included therein, and which could be both in the form of direct and/or indirect expenditure. In the instant case, the said initial onus having been clearly not discharged by the assessee, which finding has been endorsed by revenue, the disallowance cannot be impugned for want of non-compliance of the procedure laid down u/s.14A(2). Again, however, none of the parties or their representatives have even as much as cared to look at the facts, which prima facie reflect an apparent case of bank borrowings having been availed for and utilized for specified purposes, so that the interest thereon could not be subject to apportionment on the basis of general pool of funds hypothesis, which would otherwise prevail. The matter, therefore, travelled back to the file of the A.O. Penalty u/s 271(1)(c) under Income Tax Act - The assessee, per its return, made an estimated disallowance at 10% of the dividend income received for the year, as accepted in the past, i.e., the two immediately preceding years. In fact, for the years prior thereto, a lower percentage by half, i.e., @ 5%, was found acceptable, with the matter having travelled upto the tribunal – Held that:- In this view of the matter, so that there was a suo motu disallowance u/s.14A as found acceptable for the preceding years, coupled with complete disclosure of facts, it would take the case away from the ambit of levy of penalty for concealment and/or furnishing inaccurate particulars of income – Reliance is place upon the decision in the case of CIT vs. Reliance Petroproducts (P.) Ltd.[2010 (3) TMI 80 - SUPREME COURT ].
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