TMI Blog2018 (2) TMI 1629X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly is not based on any material or evidence found during the course of search but merely on the perusal of the records/ balance sheet already considered by the AO. Thus, the disallowance of ₹ 5 lacs made in the assessment year 2005-06 is directed to be deleted. For the assessment year 2011-12, it is an admitted fact that the assessee has earned dividend income of ₹ 14,028/- only and as against this the Ld. AO has proceeded to make the disallowance at ₹ 3,69,090/- after applying rule 8D mechanically disallowance of expenditure u/s 14A cannot exceed the exempt income. Accordingly, we direct the AO to delete the disallowance made over and above what has been offered by the assessee for the purpose of disallowance u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of search; and therefore, without their being any incriminating material found during the course of search, no addition could have been made. For the assessment year 2005-06, he pointed out that the original return of income was filed on 31.10.2005. Such return of income was also subjected to scrutiny and assessment order u/s 143(3) was made vide order dated 28.12.2007. Thereafter, a search and seizure action u/s 132(1) was conducted on 22.3.2011 and at the time of search the assessment for assessment year 2005-06 had attained finality and remained unabated in terms of section proviso to section 153A. Similarly for the assessment year 2007-08, he submitted that the regular return of income was filed on 1.11.2007 which was duly pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was claimed as exempt and for the purpose of disallowance u/s 14A, the assessee itself has suo-moto offered the disallowance of ₹ 1 lac which is far more than the exempt income earned. The AO mechanically applied Rule 8D had proceeded to disallow ₹ 3,69,090/-. He submitted that now in wake of the judgment of Hon ble Delhi High Court in the case of Joint investment Pvt. Ltd. (2015) 372 ITR 694, disallowance cannot exceed the exempt income. Thus, the disallowance already offered by the assessee is already far more than the dividend income and therefore, no addition/disallowance should be made over and above the disallowance offered by the assessee. 4. On the other hand Ld. CIT (DR) strongly relied upon the order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll settled by catena of judgments including those of Hon ble Jurisdictional High Court in the case of Kabul Chawala (supra) and Meeta Gutgutia (supra). The AO has mainly resorted to make adhoc estimate of ₹ 5 lacs which admittedly is not based on any material or evidence found during the course of search but merely on the perusal of the records/ balance sheet already considered by the AO. Thus, the disallowance of ₹ 5 lacs made in the assessment year 2005-06 is directed to be deleted. 6. Similarly for the assessment year 2007-08, the regular return of income filed on 1.11.2007 had attained finality on the date of search and the said assessment in terms of second proviso to section 153A remained unabated. In this year also the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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