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2014 (1) TMI 1179 - AT - Income TaxDisallowance u/s 37(7) of the Act - Revised return filed Held that - The decision in CIT Vs. M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT followed - The assessee had filed revised computation of income before the Assessing Officer at the time of assessment proceedings claiming expenditure which were erroneously disallowed u/s.37(7) while filing the return of income - the assessee has not filed any fresh claim - It is not the case where the assessee is claiming additional deduction or exemption - The assessee is only claiming expenditure which was left out at the time of filing of original return - During assessment proceedings, the Assessing Officer has power to make upward and downward adjustment in the income returned by the assessee - Where the assessee has not claimed certain expenditures clearly evident from records and it comes to the knowledge of Assessing Officer at the time of assessment proceedings, the Assessing Officer should grant relief to the assessee order of the CIT(A) set aside Decided in favour of Assessee.
Issues Involved:
1. Whether the assessee can claim additional expenses without filing a revised return. 2. The duty of the Assessing Officer to consider rectified computations submitted during assessment proceedings. Issue 1: Claiming Additional Expenses Without Filing a Revised Return The primary issue in this case was whether the assessee could claim additional expenses that were inadvertently omitted in the original return without filing a revised return. The assessee argued that the error in the computation sheet, which led to an underreported loss, was identified during the scrutiny assessment proceedings. The assessee then submitted a revised computation of income to claim the additional loss. The Assessing Officer disallowed this claim, stating that such claims must be made through a revised return filed within the due date as per the Act. The CIT(Appeals) upheld the Assessing Officer's decision, referencing the Supreme Court judgment in Goetze India Limited Vs. CIT, which held that the assessing authority is not entitled to entertain a claim for deduction otherwise than by filing a revised return. The Revenue also supported this view, citing the Madras High Court judgment in CIT Vs. M/s. Shriram Investments. However, the Tribunal distinguished these cases, noting that the assessee had not made any fresh claims but was merely correcting an error in the computation of already claimed expenses. The Tribunal referenced the Bombay High Court judgment in CIT Vs. M/s. Pruthvi Brokers & Shareholders Pvt. Ltd., which allowed for claims to be made through revised computations submitted during assessment proceedings without the necessity of filing a revised return. Issue 2: Duty of the Assessing Officer to Consider Rectified Computations The Tribunal emphasized that during assessment proceedings, the Assessing Officer is responsible for making necessary adjustments to the income returned by the assessee. This includes considering any apparent errors or omissions in the original return that are brought to light. The Tribunal cited a CBDT Circular from April 11, 1955, which directs Assessing Officers to assist taxpayers in claiming and securing reliefs they are entitled to, even if such claims were omitted in the original return. The Tribunal found that the assessee's submission of a revised computation during the assessment proceedings was a rectification of an error, not a new claim. The Tribunal held that the Assessing Officer should have considered the rectified computation of income, as it was within his jurisdiction to do so. Conclusion: The Tribunal concluded that the Assessing Officer should have taken into account the rectified computation of income submitted by the assessee during the assessment proceedings. The Tribunal set aside the impugned order and allowed the appeal of the assessee, recognizing the additional expenses claimed. The judgment underscores the duty of the Assessing Officer to consider rectifications and ensure that taxpayers are not prejudiced by inadvertent errors in their original returns.
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