IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.330/Del/2025 (ASSESSMENT YEAR 2020-21)

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Sicpa India Private Limited, Asst. CIT, 308-312, Mercantile House, Circle -22(2), 15 K.G. Marg, Vs. Delhi.

Delhi-110001.

PAN-AADCS6121L (Appellant) (Respondent)

Assessee by Shri Akash Singhal, CA Department by Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 22/07/2025 Date of Pronouncement 17/10/2025

O R D E R

PER MANISH AGARWAL, AM:

This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi [CIT(A), in short] dated 28.11.2024 in Appeal No. NFAC/2019-20/10183865 arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) dated 30.09.2022 for Assessment Year 2020-21.

2. Brief facts of the case are that assessee is a company engaged in the business of manufacturing and distribution of security inks. The return of income for the year under appeal was e-filed on 15.02.2021 declaring total income at Rs.6,74,74,000/-. The case of the assessee was taken up for scrutiny and the order was passed u/s 143(3) on 30.09.2022 wherein disallowance of Rs.23,09,391/- was made on account of Dividend Distributions Tax and Educational Cess claimed by the assessee as expenses and further disallowance u/s 14A of Rs.25,56,078/- was made and the total income of the assessee was assessed at Rs.7,71,05,940/-.

3. Against the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein it is stated that the issue with respect to the disallowance u/s 14A is covered by the decision of the Co-ordinate Benches in preceding assessment years in assessee’s own case in its favour, however, the Ld. CIT(A) has not accepted the contentions of the assessee and confirmed the additions made by the AO u/s 14A of the Act.

4. Aggrieved the said order, the assessee is in appeal before the Tribunal by taking the following grounds of appeal:

1(a) That on the facts and in the circumstances of the case, the Ld. Assessing Officer (here-in-after referred to as 'AO') /Hon'ble Commissioner of Income-tax Appeals (here-in-after referred as 'CIT(A)'), has grossly erred in carrying out confirming disallowance of INR 25,06,578/- by invoking the provisions of section 14A of the Income-tax Act, 1961 (Act') read with Rule 8D of the Income-tax Rules, 1961 ('Rules') without appreciating the fact that no expenditure was actually incurred by the Appellant to earn the exempt Income.

1(b). Without prejudice to Ground No 1(a) above, Ld. AD/Hon'ble CIT(A) has grossly erred and in law in mechanically applying Rule 8D(2) (iii) of the Rules in complete disregard of the facts of the case

1(c). Without prejudice to Ground No.1(a) and 1(b), the Ld. AO has grossly erred in making disallowance under section 14A of the Act without recording his satisfaction about the correctness of the claim made by the Appellant that no expenditure has actually been incurred to earn the exempt income.

2. That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in proposing to initiate proceedings under section 270A of the Act r.w.s

274 of the Act.

3. That the learned AO has further erred in levying interest u/s 234C of the Act which is not applicable on the facts of the instant case.

4. That the Appellant craves leave to add, to amend, modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal.

5. Before us, the Ld. AR submits that the Assessing Officer has not recorded any satisfaction before invoking the provisions of section 14A of the Act and simply proceeded to make the disallowance by observing that assessee is having exempt income, therefore, the expenditure related to earn such income should be disallowed u/s 14A of the Act. The Ld. AR submits that the assessee had invested the excess funds available with it in tax fre