2021 (9) TMI 1575 - AT - Income Tax

Rectification of mistake - Disallowance u/s 14A - Tribunal has accepted that in absence of exempt income earned during the year no disallowance u/s 14A can be made however no specific direction/order has been passed in respect of the ground raised seeking deletion of suo motu disallowance made by the assessee u/s 14A - HELD THAT - Tribunal has not decided sub ground 3 of additional/modified ground II filed on 06-07-2018 which reads as under - 3. The Appellant humbly prays that in absence of any exempt income earned by the Appellant no disallowance under section. 14A of the Act (irrespective of whether made by the Appellant suo moto or by the Assessing Officer) be made. There is a mistake apparent on the face of record due to non disposal of the aforesaid ground raised by the assessee. In view of the aforesaid we recall the order 2019 (9) TMI 1198 - ITAT MUMBAI for the limited purpose of deciding sub ground 3 of additional/modified ground II as reproduced above.

Summary

The Appellate Tribunal (ITAT Mumbai) addressed an application by the assessee seeking rectification of its order dated 23-09-2019 in ITA No.779/Mum/2014. The issue concerned a specific sub-ground in modified ground II, wherein the assessee contended that "in absence of any exempt income earned by the assessee, no disallowance under section 14A, including suo motu disallowance made by the assessee can be made." Although the Tribunal had accepted in principle that no disallowance under section 14A is warranted without exempt income, it failed to decide this particular sub-ground.The Tribunal found this omission to be a "mistake apparent on the face of record" and accordingly recalled its earlier order for the limited purpose of deciding this sub-ground. The order was set aside only to the extent necessary to address the issue of suo motu disallowance under section 14A in absence of exempt income. The appeal in ITA No.779/Mum/2014 was directed to be listed afresh for hearing on this point.In sum, the Tribunal held that non-disposal of the sub-ground regarding section 14A disallowance without exempt income constituted a procedural error, justifying rectification. The miscellaneous application was allowed, and the matter was restored for consideration of that specific issue.