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2022 (10) TMI 454 - AT - Income TaxReopening of assessment u/s 147 - Non-filing of Return amounted to escapement of income - on the basis of information received from ITD systems regarding the non-filers of return of income - HELD THAT:- As well settled that sufficiency or correctness of the material is not a thing to be considered at the stage of recording of reasons. In the present case, it is undisputed that the assessee has not filed its return of income for the year under consideration. Since, no return was filed and no books, i.e. balance sheet, profit and loss account, computation of income, were available, the AO on the basis of information generated by ITD systems and verification of facts initiated proceedings under section 147 of the Act in the case of the assessee. As per the learned DR, the codes links to the information available with the Department and the assessee never requested during the continuation of the proceedings under section 147 of the Act to share that information. DR further submitted that extent of the information available with the Department will be clear when the issues on merits will be dealt. From the record, it is evident that even after receipt of the reasons recorded for issuing notice under section 148 of the Act, the assessee did not file any objections against same nor sought any other details. As noted above, the reasons recorded indicate the basis on which proceedings under section 147 of the Act were initiated in the case of the assessee. Therefore, we are of the considered view that AO had 'reason to believe' on the basis of tangible material for initiating proceedings under section 147 of the Act. As a result, grounds No. 1 and 2, raised in assessee's appeal, are dismissed. Addition on account of cheque and cash deposited in the bank accounts of the assessee - It is not in dispute that assessee's bank account with HDFC Bank was an overdraft account and the closing overdraft balance on this account tallied with the 'Bank OD A/c' on the liability side of the assessee's balance sheet. In the return of income filed in response to notice issued under section 148 of the Act, the assessee returned the above figures of overdraft. Therefore, insofar as the cheque transactions amounting to Rs. 8,15,000 in the aforesaid two undisclosed bank accounts, which are duly corroborated with the assessee's overdraft bank account maintained with HDFC bank, we find the same to be duly explained. Therefore, to this extent we direct the AO to delete the addition made under section 69A of the Act. As regards wife's bank account maintained with HDFC Bank, from where amount of Rs. 14,00,000 was transferred through cheque in the aforesaid two undisclosed bank accounts is not clear established, therefore, we deem it appropriate to remand this issue to the file of AO for necessary verification whether the deposits made in wife's account are genuine. We further direct the assessee to file necessary details before the AO for examination. We also direct that if source of deposits in wife's HDFC Bank account is found to be genuine then the addition to the extent of Rs. 14,00,000 be deleted. As regards the transaction in NKGSB Bank the assessee has already admitted before the lower authorities that source of same is not explainable. Thus, the findings of lower authorities, in this regard, are sustained. Addition in respect of peak cash deposit in HDFC bank account - We are of the considered view that the entries in the cash book have not been linked with the deposits in the bank account(s) maintained with HDFC. Therefore, we remand this issue to the file of AO for de novo adjudication. We further direct the assessee to furnish the necessary details before the AO for examination. We also direct that relief be granted to the assessee to the extent entries in the cash book are linked with the deposits in the HDFC bank account(s). As a result, ground raised in assessee's appeal is allowed for statistical purpose. Disallowance made under section 14A read with rule 8D(2) - As per assessee addition cannot exceed the amount of exempt income - HELD THAT:- Accepting the aforesaid contention of the assessee, which was in lines with the prevailing jurisprudence, the learned CIT(A) directed the AO to restrict the disallowance under section 14A to the quantum of exempt income earned by the assessee - We find that Hon'ble jurisdictional High Court in Nirved Traders (P.) Ltd. v/s Dy. CIT, I.T. [2019 (4) TMI 1738 - BOMBAY HIGH COURT] has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, ground raised in assessee's appeal is dismissed.
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