TMI Blog2010 (12) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... stment in mutual funds - held that:- As per the certificate issued by the mutual funds, the name of assessee appears as second holder - held that:- Assessing Officer has already informed the Assessing Officer having jurisdiction of the above two persons (first holder) as per his letter dated 17.11.2009 to take necessary action at their end. Therefore, in our considered opinion, the addition is uncalled for on this account in the hands of the assessee. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs.75 lacs. - Decided in favor of assessee. Disallowance u/s 14A / Rule 8D - expenses related to exempted income - Dividend income of Rs.6.39 crores - the expenditure disallowed by the Assessing Officer at Rs.50,000/- appears to be very reasonable considering the volume of dividend income. In this view of the matter, we do not find any infirmity in the order of the CIT(A) sustaining the disallowance of Rs.50,000/- made by the Assessing Officer. - ITA No. 527/Mum/2010 - - - Dated:- 8-12-2010 - D.K. Agarwal, R.K. Panda, JJ. S. Ganesh for the Appellant D. Sangate for the Respondent ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year and also could not reconcile with the AIR information, except by giving vague reply stating that the professional receipts disclosed by him are much more than the professional receipts shown in the AIR information and in the absence of any satisfactory explanation, the Assessing Officer made an addition of Rs.47,37,000/- being professional fee not disclosed by the assessee as per AIR information. 2.3 The Assessing Officer further noted that the assessee has disclosed dividend income of Rs.6.39 crores as exempt from tax. The Assessing Officer asked the assessee to compute the disallowance u/s 14A as per Rule 8D. It was submitted by the assessee that the expenditure claimed by him as deduction relates purely to professional activities and no part of the expenditure relates to his dividend income which is not taxable and therefore, provisions of sec. 14A and Rules 8D have no application. However, the Assessing Officer was not satisfied with the explanations given by the assessee. Following the decision of the Hon'ble Supreme Court in the case of Distributors Baroda Pvt Ltd reported in 155 ITR 120 and the decision of the Tribunal in the case of Gherzi Eastern Ltd in ITA No.65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer accepted Rs.4 crores as explained and submitted that the following two amounts i.e. investment in DSP Black Rock on 30.5.2005 for Rs.50 lacs and SBI Mutual fund on 14.2.2006 for Rs.25 lacs remained unexplained. 3.4 As regards non reconciliation of professional fee with Annual Information Report (AIR), the Assessing Officer, on verification of TDS and AIR information observed that the assessee has not disclosed the income of Rs.47,37,000/-. Since this could not be reconciled even during the remand proceedings, he stated in the remand report that the addition needs to be confirmed. 4. Rejecting the various arguments advanced by the assessee and on the basis of the remand report of the Assessing Officer, the CIT(A) sustained the addition of Rs.47,37,000/- made by the Assessing Officer on account of non reconciliation of professional fee with AIR information and Rs.50,000/- disallowed u/s 14A. He, however, sustained the addition of Rs.75 lacs out of Rs.4,75,00,000 made by the Assessing Officer as undisclosed investment in mutual funds. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal here before us. 6. In the grounds of appeal nos.1 to 7, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR information. We find the CIT(A) sustained the addition made by the Assessing Officer since the assessee failed to reconcile each and every entry of the accounts with the assessee's return and records. According to the CIT(A), it is immaterial that the income returned by the assessee is higher than the figure as per AIR information. 8.1 It is the submission of the assessee that since he has deposited all his professional receipts in one bank account only and since all the fees are received by cheques which came from the clients directly or from the Instructing advocates or CAs, if they have collected the amounts from the clients and since no other bank account is maintained by him wherein professional fees are deposited and since the amount returned in the audited accounts is more than the fees as per the AIR information; therefore, no addition is called for. 8.2 We find sufficient force in the above submissions of the assessee. Admittedly, the revenue has not controverted the submissions of the assessee before the Assessing Officer during the assessment proceedings as well as remand proceedings that all professional fees received are by way of cheques and all such cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said letter also informed them that the assessee was only a second joint holder 10.1. Referring to para 4.3.2 he submitted that although the CIT(A) has sustained the addition, at the same time he has mentioned that this addition is subject to the decisions taken in respect of these investments by the concerned Income Tax Authorities in the case of Shri K R Srinivasan and Smt S. Rajalakshmi. He submitted that since Shri K R Srinivasan and Smt S. Rajalakshmi are separately assessed to income tax and since the money has gone through their bank account and since the investments are made by them and their names appears as 1st holder and he is only the 2nd holder, therefore, no addition should have been made. 10.2 On the other hand, the ld DR relied on the order of the CIT(A) and submitted that since the assessee failed to explain the source of the investments, therefore, the addition sustained by the CIT(A) is justified. 11. We have considered the rival submissions made by both the parties, perused the orders of the authorities below and the paper book filed on behalf of the assessee. From the copy of the certificate of DSP Black Rock Mutual fund, we find an amount of Rs.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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