2013 (4) TMI 604 - AT - Income Tax

Revised return - taxpayer s claim of exclusion of the capital gain arising on sale of agricultural land as the same was wrongly included in the original return - valid or not? - Held that - After considering the provisions of section 139(5) of the Act which enables the taxpayer to file a revised return. As per section 139(5), if any person having furnished a return of income either u/s 139(1) or in pursuance of a notice issued u/s 142(1), discovers any omission or wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. In this case, the return was not filed either u/s 139(1) or u/s 142(1) of the Act. Therefore, the taxpayer cannot revise the return. Hence, the revised is not a valid return. When the taxpayer by mistake or ignorance of law included an income which is not taxable otherwise, can it be brought to the notice of the A.O. in the course of assessment proceedings held that - In view of the above judgment of the Apex Court in CIT vs Shelly Products 2003 (5) TMI 4 , it is obvious that any mistake or inadvertence or on account of ignorance any income which is exempt from payment of tax or is not an income within the contemplation of law it may be brought to the notice of the assessing authority, which, if satisfied, may grant him relief or refund the taxes paid in excess, if any. Therefore, if any income which is otherwise not taxable is included in the return of income, it can be brought to the notice of the assessing authority in the course of assessment proceedings. Thus, the claim made by the taxpayer with regard to the assessability of the capital gain on sale of land needs to be examined by the A.O. even though such a claim was not made in the original return and the revised return was invalid.

Summary

Issues:
Validity of revised return filed by taxpayer under section 139(5) of the Income-tax Act.
Assessability of capital gain on the sale of land by the taxpayer.
Jurisdiction of the Administrative Commissioner under section 263 of the Income-tax Act.

Validity of Revised Return:
The taxpayer filed a revised return after including capital gain from the sale of agricultural land. The ld.senior counsel argued that the revised return was valid as it was filed before the due date for filing returns under section 139(4) of the Act. However, the ld.DR contended that since the taxpayer did not file the original return under sections 139(1) or 142(1), the revised return was invalid. The Tribunal held that as the original return was not filed under the specified sections, the revised return filed by the taxpayer was not valid.

Assessability of Capital Gain:
The Administrative Commissioner found that the land sold by the taxpayer was commercial property, leading to capital gain taxation. The assessing officer did not adequately examine the nature of the land or the taxpayer's ownership status. The Tribunal noted errors in the assessing officer's order, emphasizing the need for a proper inquiry. The Tribunal cited precedents requiring the assessing officer to record reasons for decisions and apply his mind to the facts. Despite the invalid revised return, the Tribunal directed the assessing officer to reevaluate the capital gain assessability issue independently and provide the taxpayer with a reasonable opportunity.

Jurisdiction of Administrative Commissioner:
The Administrative Commissioner invoked section 263 of the Act due to perceived errors in the assessing officer's order. The ld.senior counsel referenced legal precedents to argue against the Commissioner's findings. The Tribunal observed flaws in the assessing officer's handling of the case, emphasizing the need for a thorough examination. Ultimately, the Tribunal modified the Administrative Commissioner's order, directing the assessing officer to reevaluate the capital gain issue in compliance with the law.

In conclusion, the Tribunal partially allowed the taxpayer's appeal, emphasizing the importance of a comprehensive assessment process and the need for assessing officers to diligently consider all relevant factors before making determinations regarding tax liabilities.