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2017 (8) TMI 324 - AT - Income TaxDisallowance u/s 14A - reopening of assessment - recording of satisfaction - AO observed that, assessee is maintaining composite account and therefore the common faculties and resources have been used, it cannot be said that the assessee has not incurred any expenditure for earning exempt income. - Held that:- On perusal of the order of the AY 2008-09 which is at page No. 163 of paper book submitted by the assessee shows that no assessment was made in case of the assessee for AY 2008-09 u/s 143(3) of the Act. The assessee’s return of income was accepted u/s 143(1) of the Act and further it was reopened u/s 147 and ld Assessing Officer made disallowance in that order only with respect to reasons for which the reopening was initiated. In view of this it is correct for ld CIT(A) to hold that as no disallowance has been made in AY 2008-09 no disallowance can be made in this year too. With respect to the finding of the ld CIT(A) regarding consistency to be followed relying upon the decision of Hon'ble Supreme Court in case of Radha Swami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME Court] we are reminded of the decision of the Hon'ble Supreme Court in case of Distributors of (Baroda) Pvt Ltd. Vs. Union of India (1985 (7) TMI 1 - SUPREME Court) wherein it has been held that to perpetuate an error is heroism to rectify it is the compulsion of judicial conscience. However, as on the issue of improper satisfaction recorded by the Assessing Officer we direct the ld Assessing Officer to delete the disallowance u/s 14A Valuation of closing stock of inventory - Held that:- As not controverted that in the next year the assessee has shown higher income because of the valuation and the tax rate in both the years are not same. The revenue also could not dispute with cogent evidence/ finding that value of the material was not nil but higher than that. In view of this we confirm the finding of the ld CIT(A) in deleting the disallowance on account of valuation of closing stock of inventory as at 31.03.2009.
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