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2020 (8) TMI 99 - HC - Income TaxAddition u/s 14A - suo motu disallowance by assessee - as argrued absence of any cogent satisfaction for disregarding the voluntary disallowance made by the appellant - whether the disallowance made by AO was proper? - whether the assessee was right in contending that there were no cogent reasons recorded by AO with regard to his satisfaction as to the correctness of the voluntary disallowance made by the assessee? - HELD THAT:- Issuance of show cause notice calling upon the assessee to explain pre-supposes a prima facie opinion formed by the Assessing Officer with regard to the accounts of the assessee. Once a show cause notice is issued, the assessee is informed about the prima facie view of the Assessing Officer. However, the AO cannot have a closed mind while issuing a show cause notice. The assessee rightly understood the prima facie opinion formed by the Assessing Officer with regard to the expenses claimed by the assessee attributable for earning exempt income and precisely for such a reason, the assessee submitted a reply dated 18.12.2012. AO considered the explanation offered by the assessee vide letter dated 18.12.2012 and recorded his satisfaction as to how the disallowance voluntarily made by the assessee was not acceptable. Hence, we find that the Assessing Officer had rightly followed the procedure under Section 14A(2) of the Act and only thereafter, recorded his dis-satisfaction on the correctness of the claim made by the assessee and having regard to the accounts of the assessee, proceeded to follow the procedure under Rule 8D of the Rules. There is full compliance of what is required to be done by the Assessing Officer as pointed out in the case of Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] - For the above reasons, we hold that the assessee has not made out a case for interference in the order passed by the Tribunal. - Decided in favour of revenue.
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