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2022 (9) TMI 963 - Income Tax
Reopening of assessment u/s 147 - unexplained property purchased - Reopening on the basis of investigation carried out by the Investigation Wing concluding that there was no transfer of property within the meaning of section 2(47) (v) nor was there any transfer of property within the meaning of section 53A of the Transfer of Property Act - proper registration has not been taken place before the relevant authorities of the State Government - HELD THAT:- In this case, it is an undisputed fact that assessee purchased a flat in residential colony and in assessment order, learned AO himself has mentioned that assessee is having business of Financing services and is a Private Limited Company. In this case, AO received an information from the Investigation Wing that a so called purchase of property by the assessee was purely sham transaction and the loss claimed by the assessee on the sake of the said property on a later date was an artificial loss created by the assessee in its books of account to take the advantage of set off of loss against the income earned by the assessee. But nowhere AO has applied his own mind before issuing notice and to arrive at conclusion that assessee has escaped an income and on the basis of report submitted by the Investigation Wing, AO issued notice purely on borrowed satisfaction. In our considered opinion, in such case addition cannot be made. Appeal filed by the Assessee is partly allowed.
Disallowance u/s 14A - Assessee has not submitted any evidence regarding sources and applications in support of its contention that there is a direct nexus between utilization of interest free funds and investigation made by it. In our considered opinion, disallowance under S. 14A r.w. Rule 8D was correctly worked out. The assessee has not disallowed any expenditure for earning exempt income in P&L account, which does not form part of total income. Further, the assessee has paid interest of Rs.2,36,887/- and assessee has made average investment of Rs.63,85,900/- and having average assets of Rs.2,00,64,030/-. In our considered opinion, learned AO has rightly made disallowance under S.14A r.w. Rule 8D. In view of the above, we concur the decision of the lower authorities and dismiss this ground of appeal.