M S Albasta Wholesale Services Ltd New Delhi v. Ito New Delhi

In The Income Tax Appellate Tribunal Delhi Benches D New Delhi Before Shri R S Syal Vice President And Shri C M Garg Judicial Member Ita No 6041 Del 2015 Assessment Year 2012 13 Albasta Wholesale Services Ltd M 62 63 First Floor Connaught Place New Delhi Pan Aahca 0198 F Vs Ito Ward 2 2 New Delhi Assessee By Shri Abhishek Gupta Ca Deptt By Shri Amit Jain Sr Dr Date Of Hearing 11 12 2017 Date Of Pronouncement 11 12 2017 Order Per R S Syal Vp This Appeal By The Assessee Arises Out Of The Order Passed By The Cit A On 04 09 2015 In Relation To The Asse Ssment Year 2012 13 Ita No 6041 Del 2015 2 2 The Only Issue Raised In This Appeal Is Against The Confirmation Of Disallowance U S 14 A Of The Income Tax Act 1961 Hereinafter Called The Act Amounting To Rs 1 25 810 3 Briefly Stated The Facts Of The Case Are That T He Assessee Filed Return Offering Disallowance Of Rs 552 U S 14 A Of The Act Read With Rule 8 D Of The Income Tax Rules 1962 The Assessee Was Required To Give Calculation Of Disall Owance So Made And Further As To Why The Disallowance Be No T Worked Out As Per Rule 8 D The Assessee Furnished Reply W Ith Which The Assessing Officer Was Not Convinced He Took R Ecourse To The Provisions Of Rule 8 D And Computed Disallowance U S 14 A At Rs 28 59 190 After Reducing The Amount Volun Tarily Disallowed By The Assessee At Rs 552 The Assessi Ng Officer Made The Addition For A Sum Of Rs 28 58 638 The Ld Cit A Reduced The Disallowance To Rs 1 25 810 Against Which The Assessee Has Come Up In Appeal Before The Tribunal Ita No 6041 Del 2015 3 4 We Have Heard The Parties And Perused The Releva Nt Material On Record It Can Be Seen From The Assessm Ent Order That The Assessee Worked Out Disallowance U S 14 A O F The Act At Rs 552 On Being Called Upon To Explain The B Asis For Such Disallowance The Assessee Furnished Reply Dated 05 03 2015 Which Has Been Referred To In The Assessment Order The Assessing Officer Dealt With The Same By Simply Rec Ording In His Order That The Same Has Been Perused Carefull Y And Is Placed On Record However Suffice It To State Her E That The Reply Filed Is Without Merits And Is Rejected Accor Dingly Thereafter He Discussed The Provisions Of Section 14 A And Then Proceeded To Compute The Disallowance As Per R Ule 8 D By Observing That In View Of The Above Facts And Hav Ing Regard To The Accounts Of The Assessee I Am Not Satisfied With The Claim Of The Assessee That The Provisions Of Sectio N 14 A Are Not Applicable It Is Discernible From The Assessment Order That The Assessing Officer Did Not Record Any Satisfaction A S To Why The Computation Of Disallowance By The Assessee Was Not Right Ita No 6041 Del 2015 4 5 The Honble Jurisdictional High Court In Serie S Of Decisions Led By Maxopp Investments Ltd Vs Cit 2012 347 Itr 272 Del Has Held That The Recording Of Satisfaction By The Assessing Officer Having Regard To The Account S Of The Assessee That The Assessees Claim Is Not Correct Is Sine Qua Non For Computing Disallowance U S 14 A The Honble De Lhi High Court In Cit Vs Hero Management Services Ltd 2014 360 Itr 68 Del Has Held That No Disallowance Can Be Made U S 14 A Of The Act If No Satisfaction Has Been Reco Rded By The Assessing Officer In View Of The Foregoing Discus Sion It Is Clear That Unless The Assessing Officer Records Pro Per Satisfaction In Terms Of Section 14 A 2 Of The Act He Cannot Reject The Assessees Claim In This Regard 6 Adverting To The Facts Of The Instant Case We F Ind That The Assessing Officer Failed To Record Any Satisfaction In Tune With The Stipulation Contained In Section 14 A Which Is Crucial For Disallowance As Such We Hold That No Disallowanc E U S 14 A Ita No 6041 Del 2015 5 Can Be Sustained We Therefore Order To Delete T He Addition Made By The Assessing Officer In Entirety 7 In The Result The Appeal Is Allowed Order Pronounced In The Open Court On 11 12 2017 Sd Sd C M Garg R S Syal Judicial Member Vice President Dated 11 Th December 2017 Dk Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit A 5 Dr Itat Ar Itat New Delhi