2014 (3) TMI 768 - AT - Income Tax

Claim of exemption u/s 11(1) of the Act exemption not originally claimed Revised return not filed - Whether the CIT(A) is justified in allowing the claim of the assessee trust u/s 11(1) of the Act Held that - The decision in CIT Vs. Pruthvi Brokers and Shareholders (P) Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT followed - the AO was satisfied about the claim of the appellant that the income declared in the return u/s.11(1B) was done erroneously, as on this claim made by the appellant during assessment, no adverse finding has been made - the claim of the appellant is not a claim for deduction of a benefit but was for exclusion of an amount which was not an income under the Income tax Act - what was more important to be considered was the concept of real income, which is the duty and the responsibility of the Assessing Officer to arrive at in any assessment proceeding. The AO was engaged in the process of making a scrutiny assessment and if he was satisfied, as the record shows, then he cannot hide under the shelter of a technicalities to tax a person in respect of an amount which is otherwise not taxable in law but has been so shown erroneously in the return - if the appellant has made the claim during the scrutiny assessment, the AO was not entertaining a claim for deduction but was to appreciate whether the receipt is an income or not - If an amount is not a taxable income, the same can become so only because it was included erroneously in the return - thus, the AO has erred in not accepting the claim of the appellant thus, there is no infirmity in the order of the CIT(A) Decided against Revenue.

Summary

Issues:
Allowance of claim by the CIT(A) for a charitable trust under section 11(1) of the Income Tax Act without it being originally claimed in the return of income and without a revised return.

Analysis:
The appeal pertains to a Charitable Trust's income declaration for Assessment Year 2008-09, where the Assessing Officer applied section 11(1B) of the Income Tax Act, 1961, resulting in a tax assessment of Rs.19,67,15,860. The trust contended that the income declared was erroneously included and requested rectification. The Assessing Officer rejected this based on the Goetze India Ltd. case, stating that a deduction not claimed in the return cannot be entertained without a revised return. The CIT(A) allowed the claim, emphasizing the concept of real income and the Assessing Officer's duty to assess accurately.

The Revenue appealed the CIT(A)'s decision, arguing that the claim was not originally made in the return and contravened the Goetze India Ltd. case. The ITAT Pune considered the issue, referencing the Hon'ble Bombay High Court's decision in CIT Vs. Pruthvi Brokers and Shareholders (P) Ltd. The High Court held that an assessee can amend a return to claim deductions without filing a revised return, as long as the claim is inadvertent and supported by facts. The ITAT Pune upheld the CIT(A)'s decision, as it aligned with the High Court's ruling, dismissing the Revenue's appeal.

The ITAT Pune's judgment emphasized that the appellate authorities have the jurisdiction to consider additional claims if supported by facts, as demonstrated in various judgments, including the National Thermal Power Co. Ltd. case. The Supreme Court's decision in Goetze India Ltd. did not negate the appellate authorities' power to entertain such claims. The ITAT Pune concluded that the CIT(A)'s order was in line with the High Court's decision, thus upholding the allowance of the claim for the charitable trust under section 11(1) without an original claim in the return or a revised return.

In summary, the ITAT Pune dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the claim for the charitable trust under section 11(1) of the Income Tax Act, despite it not being originally claimed in the return of income or supported by a revised return, citing relevant legal precedents and emphasizing the appellate authorities' jurisdiction in such matters.