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2023 (12) TMI 548 - AT - Income TaxUnexplained cash credit - share application money received from the group companies - Addition made as summons u/s 131 were not complied with - AR submitted that the it’s is not open to the AO to make addition simply on the basis of non-compliances of summons issued u/s 131 of the Act when the assessee has filed all the evidences in respect of money raised and AO has failed to carry out any further verification or point out any defects or deficiencies in those evidences - HELD THAT:- As decided in case of Crystal Networks Pvt. Ltd. [2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Also see CIT Vs Orchid Industries (P) Ltd [2017 (7) TMI 613 - BOMBAY HIGH COURT] by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . In the instant case before us assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions. Thus we are inclined to set aside the order of Ld. CIT(A) by allowing the appeal of the assessee. Disallowance u/s 14A r..w.r. 8D - expenditure incurred on earning income - Whether exempt income was earned or not? - Scope of explanation to Section 14A by Finance Act, 2022 w.e.f 01.04.2022 as added- HELD THAT:- This is a settled position that no disallowance is to be made u/s 14A read with Rule 8D where there is no exempt income as has been decided in the case of PCIT Vs State Bank of Patiala [2018 (11) TMI 1565 - SC ORDER] and CIT Vs Joint Investment Pvt Ltd [2015 (3) TMI 155 - DELHI HIGH COURT]. No disallowance is made u/s 14A prior to AY 2022-23 as the explanation to Section 14A vide Finance Act, 2022 w.e.f 01.04.2022 is prospective and not retrospective. Accordingly we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. This ground of assessee is allowed.
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