Case Law Details
DCIT Vs ICICI Bank Ltd (ITAT Mumbai)
ITAT Mumbai held that no penalty leviable on account of disallowance u/s 14A of the Act when disallowance has been made on estimate basis and return of income was filed prior to insertion of section 14A of the Act.
Facts- AO in his penalty order observed that assessee has filed its return of income of ₹.85,44,80,740/- on 30.12.1999 and assessment was completed on the income of ₹.1,55,24,14,834/ after making various additions. He also observed that assessee claimed tax free interest income of ₹.23,29,28,249/-. The above said amount consists of ₹.15,67,83,562/- exempt u/s 10(15)(v)(ii) being interest on tax free income and ₹.7,61,54,687/- being dividend income exempt u/s 10(33) of the Act. Accordingly, assessing officer disallowed interest expenditure attributable to earning exempt income amounting to ₹.21,29,58,900/-. Since assessee has claimed exempt interest income and dividend income on gross basis, accordingly, he disallowed the total interest attributable to earning of exempt income u/s. 14A of the Act.
AO held that the assessee has deliberately evaded payment of taxes. Accordingly, he levied penalty of ₹.1,55,25,615/- i.e., 100% of the tax sought to be evaded.
Conclusion- We observe that the Assessing Officer has levied the penalty on disallowance of interest expenditure u/s. 14A of the Act on estimate basis. It is fact on record that the Assessing Officer has disallowed the interest expenditure and 14A disallowance on estimated basis even though assessee has filed the return of income prior to insertion of section 14A of the Act. Therefore, the findings of the Ld.CIT(A) is found to be in order. Accordingly, the grounds raised by the revenue are dismissed.
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