TMI Blog2018 (11) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income and in the absence of any formal revised return - Held that:- Mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. The Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed in correctly owing to its own mistake. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee company has not given rise to any exempt income concerning the assessment year. Notwithstanding such fact, the assessee voluntarily disallowed ₹ 98.03 Lakhs against the non existent tax free income. The AO however re-worked the disallowance at ₹ 1,67,32,314/- and after reducing the disallowance suo moto made by the assessee amounting to ₹ 98,03,322/- computed the additional disallowance under s.14A of the Act at ₹ 69,28,992/-. The learned AR thereafter submitted that the assessee preferred appeal before the CIT(A) and withdrawn the suo moto disallowance of ₹ 98,03,322/- being wrongly offered in its return of income under erroneous impression of law. The learned AR submitted that in the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year and (ii) whether the CIT(A) was justified in going beyond the return of income and remove the disallowance which the assessee itself has made while filing the return of income. In other words, whether the action of the CIT(A) in bringing down the income returned by the assessee and granting relief on the issues not raised at the time of filing original return of income or by way of revised return at a subsequent stage is justified in law or not. 7. The first issue framed above appears quite simple as we see. While adjudicating the issue, we take note of CBDT Circular No. 5/2014 dated 11/02/2014 which seeks to emphasize that all expenses pertaining to an exempt income is required to be disallowed notwithstanding the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, we find substantial merit in the conclusion drawn by the CIT(A) which essentially holds that Section 14A of the Act can be triggered only if assessee seeks to square off expenditure against the income which does not form part of total income under the Act and Section 14A of the Act cannot be invoked where no exempt income was earned in the relevant assessment years. In consonance with the judicial precedents, we do not see any infirmity in the conclusion drawn by the CIT(A) for non-applicability of Section 14A of the Act in the facts of the case. 8. We shall now turn to the second issue raised on behalf of the Revenue regarding propriety of the action of the CIT(A) in granting relief on the disallowance (suo moto made by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. The Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed in correctly owing to its own mistake. 10. So viewed, we do not see any potency in the argument laid on behalf of the Revenue that the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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