2012 (7) TMI 158 - HC - Income Tax

Admissibility of claim of deduction not made in the original return and not supported by a revised return - assessee s claimed deduction u/s 43B - Held that - Even assuming that the AO is not entitled to grant a deduction on the basis of a letter requesting an amendment to the return filed, the appellate authorities are entitled to consider the claim and to adjudicate the same - The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminus with that of the Income Tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power - There appears to be no good reason and none was placed to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer - The appellate authorities have the discretion whether or not to permit such additional claims to be raised. The conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible

Summary

Issues Involved:
1. Amendment of return for additional claim for deduction without filing a Revised Return.
2. Admissibility of a claim of deduction not made in the original return and not supported by a revised return.
3. Authority of the Assessing Officer to entertain a claim made after filing the original return without a revised return.

Issue-wise Analysis:

1. Amendment of return for additional claim for deduction without filing a Revised Return:
The court examined whether an assessee can amend a return filed for making an additional claim for deduction without filing a revised return. The respondent had claimed a deduction under section 43B for SEBI fees paid during the financial year 2004-05, which was relevant to the assessment year 2005-06. The claim was made inadvertently in the return for the assessment year 2004-05. The respondent later claimed an additional deduction of Rs.40,00,000/- under section 43B for the payment made on 9th May 2003, which pertained to the assessment year 2004-05. The court found that appellate authorities have the jurisdiction to consider new/additional claims even if they were not claimed in the original return, as established by several judgments.

2. Admissibility of a claim of deduction not made in the original return and not supported by a revised return:
The court considered whether the Tribunal was right in holding that a claim of deduction not made in the original return and not supported by a revised return is admissible. The respondent raised the claim before the Assessing Officer, CIT(A), and the Tribunal. The appellate authorities, including the CIT(A) and the Tribunal, held in favor of the respondent by granting the deduction. The court referred to the Supreme Court's judgment in Jute Corporation of India Limited v. CIT, which held that the appellate authority has plenary powers to consider additional grounds even if not raised before the Income Tax Officer. The court affirmed that an assessee is entitled to raise additional claims before the appellate authorities, and they have the jurisdiction to entertain such claims.

3. Authority of the Assessing Officer to entertain a claim made after filing the original return without a revised return:
The court examined whether the Assessing Officer has the power to entertain a claim made by an assessee after filing the original return without a revised return. The Assessing Officer had rejected the claim on the ground that he had no authority to allow any relief or deduction not claimed in the return. However, the court found that appellate authorities, including the CIT(A) and the Tribunal, have the jurisdiction to consider additional claims. The court referred to the Supreme Court's judgment in National Thermal Power Company Limited v. CIT, which held that the Tribunal has the jurisdiction to examine questions of law arising in assessment proceedings even if not raised earlier. The court clarified that the appellate authorities themselves considered and allowed the additional claim, directing the Assessing Officer to allow the deduction of Rs.40,00,000/- under section 43B.

Conclusion:
The court dismissed the appeal, affirming that the appellate authorities have the jurisdiction to consider additional claims not made in the original return and not supported by a revised return. The court held that the appellate authorities exercised their jurisdiction correctly in allowing the respondent's claim for deduction under section 43B. The court also clarified that the Supreme Court's judgment in Goetze (India) Limited v. CIT did not negate the jurisdiction of the appellate authorities to entertain such claims.