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2023 (7) TMI 843 - AT - Income TaxDisallowance u/s 14A - AO has disallowed an amount since the assessee has made investment and has claimed as interest - Appellant has contested that the AO has not established that the investment were made out of loan funds and had sufficient own capital to make investment - HELD THAT:- As noted that assessee had sufficient owned fund, as at the start and end of relevant previous year, for making investment for earning exempt income. Assessee, during the year under consideration, received dividend income only to the extent of Rs. 60,134 and CIT(A), NFAC restricted disallowance to the extent of dividend income as earned by the assessee. CIT(A), NFAC has relied on number of decisions for the proposition that no disallowed u/s 14A can be made if the own fund of assessee are more than the investment made to earn exempt income. Disallowance u/s 14A cannot be more than the exempt income earned by assessee. We feel that ld. CIT(A), NFAC has correctly restricted disallowance to the extent of exempt income earned by assessee. Ground of appeal taken by department is dismissed. Bogus LTCG - information as received that racket of generating bogus entries in LTCG in penny stocks had been unearthed - HELD THAT:- In the present case, the entire addition has been made by the AO on the basis of report of investigation wing and report of certain persons. No opportunity of cross verification was provided to the assessee. Under such circumstances, no addition can be made to the income of assessee, specifically when entire basis of addition is investigation report, which was never confronted to assessee, and statement of persons, who were neither examined by the AO nor opportunity of cross examination provided to assessee. Taking into consideration various documentary evidences produced by the assessee in support of his claim and further relying upon various decisions of this Tribunal as well as the decision of Pooja Agarwal [2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] as well as in case of PCIT vs. Pramod Jain & Others [2018 (7) TMI 2161 - RAJASTHAN HIGH COURT] we allow the claim of exemption under section 10(38) of the Act and accordingly delete the addition made by the AO. Hence, the order of ld. CIT (A) is upheld. Commission paid for the accommodation entries - HELD THAT:- When we have given a finding that the transaction of purchase and sale of shares and consequential Long Term Capital Gain cannot be treated as bogus then the addition made by the AO on account of notional commission paid treating the same as undisclosed expenditure u/s 69C will not be sustainable being consequential. Appeal of the Department is dismissed.
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