1.  Global Signal Cables (India) Pvt. Ltd. Vs. DCIT, W.P.(C) 747/2014, Date of Order: 17.10.2014, Delhi High Court

AO cannot made reassessment u/s 147 of the Income–tax Act, 1961 only on the ground that there is escapement of income; instead he should indicate the fact which was not disclosed by assessee during the original assessment.

Assessee filed his return of income for A.Y. 2066-07 and same was selected for scrutiny assessment u/s 143(2) of the Act. AO passed assessment order u/s 143(3) of the Act on 29/08/2008. Thereafter, on 28/03/2013 AO issued notice u/s 148 of the Act for reopening of assessment. Assessee asked for the reason recorded u/s 148 of the Act and same was provided by AO. In the recorded reasons the reopening has been proposed on the ground that assessee has granted interest free loan to parties on which no interest and financial expenses was disallowed. Assessee challenge the same on ground that  reopening is initiated on the basis of the same material and no fresh material has come in the possession of the department as also there has been no failure on the part of the assessee in disclosing fully and truly all material facts.

Hon’ble High Court held that the escapement of income by itself is not sufficient for reopening the assessment u/s 147 of the Act unless and until there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. In the present case, all relevant facts were disclosed by assessee during original assessment and AO has not been specifically indicated any material fact which was not disclosed by the assessee.
Hence, appeal of assessee is allowed.

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2.  ACIT Vs. Mr . M.Baskaran, ITA No. 1717/Mds/2013, Date of Order: 31.07.2014, ITAT - CHENNAI

No disallowance can be made u/s 14A of Income – tax Act, 1961 if there is no exempt income is earned during the year.

In the brief, facts of the case are that during assessment AO noticed that assessee hold investment and no disallowance on account of interest and financial charge was made by the assessee. Therefore AO in his assessment order, made disallowance u/s 14A of Income – tax Act, 1961 in accordance with rule 8D of Income – tax Rule, 1962. Assessee filed an appeal against such order on ground that he has not earn any exempt income during the year and also submit that investments were made out of own funds which did not suffer any interest.

Hon’ble ITAT placed reliance on decision of Punjab & Haryana High Court in case of CIT Vs. Winsome Textiles Industries Ltd. (319 ITR 204) and held that when no exempt income is earned by assessee no disallowance can be made u/s 14A of Act. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance.
In the result, appeal of the Revenue is dismissed.

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