TMI Blog2018 (4) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer to exclude the disallowance voluntarily made by the assessee also u/s 14A of the Act. - Decided in favour of assessee - I.T.A. No. 5327/Mum/2015 And C.O. No. 272/Mum/2017 - - - Dated:- 20-4-2018 - Shri B.R. Baskaran (AM) And Shri Pawan Singh (JM) For The Assessee : Shri Vijay Mehta For The Department : Shri Suman Kumar ORDER Per B. Baskaran (AM) :- The appeal filed by the Revenue and the cross objection filed by the assessee are directed against the order dated 6.8.2015 passed by the learned CIT(A)-22, Mumbai and they relate to A. 2012-13. The issue urged by both parties relates to disallowance made u/s. 14A of the I. Act. 2. The assessee is engaged in the business of manufacture of exercise books, paper and stationery items. During the year under consideration, the assessee declared dividend income of ₹ 7,500/- and offered the same for taxation. The assessee was showing investment of ₹ 490.50 lakhs and Rs.. 1500.50 lakhs as at the beginning and end of the year respectively. The assessee disallowed a sum of ₹ 4,97,500/-u/s. 14A of the Act. The Assessing Officer noticed that the assessee has offered dividend inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is barred by limitation by 186 days. The Learned AR submitted that the assessee had made suo moto disallowance u/s. 14A of the Act. The assessee has, in fact, received dividend income of ₹ 7,500/- from a cooperative bank and the same is not exempt. However, the Assessing Officer treated the same as exempt income and accordingly completed the assessment. Subsequently, the Assessing Officer has passed a rectification order on 29.4.2015, wherein he has brought the above said amount of ₹ 7,500/- to tax. Accordingly, learned AR submitted that the assessee did not receive any exempt income during the year under consideration. 9. The Learned AR further submitted that the law relating to the disallowance u/s. 14A of the Act was not clear when the assessee filed its return of income. The law is being made clear over the period by the decisions rendered by various Courts. When the appeal filed by the Revenue was discussed with the Counsel, it was explained to the assessee that there was no requirement to make any disallowance u/s. 14A of the Act as the assessee has not received any dividend income and the law in this regard has been explained in various decisions rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid principles laid down by the Hon'ble Apex Court (supra) and the facts of the case on hand we find that there has been no malafide or intentional failure on the part of the assessee, who on realization and appropriate advice by the Counsel has proceeded to file the CO. In these circumstances, we are of the considered view that if the delay of 285 days is condoned there will be no loss to Revenue as legitimate taxes payable in accordance with law alone would be collected. Further, if the delay in filing the CO is not condoned, then the assessee could be put to great hardship. 2.2.4 In view of the discussion of the facts and circumstances of the case (supra), we are of the view that in the interest of equity and justice this is a fit case for condonation of delay of 285 days in filing the CO for A. 1995-96 and condone the said delay and admit the CO for hearing and adjudication. 12. Accordingly, following the above said order of the Tribunal and also in order to render substantial justice to the assessee, we condone the delay and admit the cross objection. 13. The Learned AR submitted that the plea of the assessee in cross objection is that no disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard rival contention on this issue and perused the record. Various decisions relied upon by the assessee bring out the proposition that no disallowance u/s 14A is required to be made if there was no exempt income. Admittedly, the assessee did not receive any exempt income during the year under consideration and hence the provisions of sec. 14A shall not be applicable as per various decisions relied upon by the assessee. Accordingly, there is merit in the plea of the assessee that the voluntary disallowance made by the assessee under misconception of law cannot be used against the assessee in order to sustain a disallowance, which is not permissible in law. 17. The voluntary disallowance made by the assessee u/s 14A of the Act, if deleted, then the assessed income may go below the returned income. The question as to whether such course of action is permissible or not, was examined by the co-ordinate bench in the case of Tata Industries Ltd (supra). The relevant observations made by the Tribunal on this issue are extracted below for the sake of convenience:- 30. So far as the contention that the assessee itself has offered disallowance in the return of income more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court in the cases of Ahmedabad Electricity Company Ltd. vs. CIT and Godavari Sugar Mills Ltd. vs. CIT by way of a common order dated 30.04.1992 (1993) 199 ITR 351 has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words 'could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. In view of our above observations, it is held that the assessee is not liable to pay Capital Gains Tax, though originally he had subjected himself to the said tax as per his return of income. The AO is directe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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