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2022 (7) TMI 1489 - AT - Income TaxRejection of application u/s 154 as alleged Long Term Capital Gain on sale of agricultural land made by the Appellant - assessee has shown LTCG on sale of agricultural land. The said agricultural land is situated outside the Municipal limit having population of less than 10,000 - as argued section 237 which prescribed that if a person satisfies AO that the amount of tax paid by him or his on behalf for treated by him or on his behalf for any assessment year, exceeding the amount which he is properly chargeable under the Act for that year, he shall be entitled to a refund of excess - HELD THAT - We are in full agreement with the submission of Ld. AR for the assessee that as per mandate of Section 237 if the amount of tax on behalf of assessee is paid in excess of the amount, he is properly chargeable; the assessee is entitled for refund of it. Further, Article-265 of the Constitution of India also mandates that no tax can be levied or collected without authority of law. In the case in hand, we find a peculiar situation, wherein the assessee himself offered and paid the impugned tax, however on realizing his mistake, the assessee immediately filed an application for rectification u/s 154 of seeking refund of tax paid. Therefore, considering the peculiar facts of the case and various submissions of assessee and the ratio of various decisions, we treat the rectification application filed under section 154 of assessee as additional claim of the assessee and admit the same for consideration. Our view is also strengthen by the decisions Hon'ble Supreme Court in Goetez (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT while discussing the scope of power of Tribunal under section 254 clarify though the assessing officer is not empower to entertain new claim without the assessee revising the return of income, however, this restriction is not impinge on the power of Tribunal under section 254. Further in the case of CIT vs Mitesh Impex 2014 (4) TMI 484 - GUJARAT HIGH COURT , Pruthvi Broker Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT ,CIT Vs Sam Global Securities Ltd. 2013 (9) TMI 876 - DELHI HIGH COURT wherein it was held that Ld. CIT(A) as well as Tribunal have jurisdiction to consider additional claim. It was also held that such claims need not be those which became available on account of change of circumstances of law but which were even available when return of income was filed. (emphasis added by us). As we have admitted such claim, thus, the issue is restore back to the file of assessing officer to adjudicate the same in accordance with law. The Assessing Officer to examine the fact that whether the LTCG earned on sale of such agricultural land, is exempt or not as the assessee claimed that the agriculture land sold by the assessee does not fall within the definition of asset as define section 2(14) of the Act. Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Rejection of application under section 154 of the Income Tax Act. 2. Legality of the claim regarding Long Term Capital Gains (LTCG) on the sale of agricultural land. 3. Scope and limitations of rectification under section 154. 4. Application of CBDT Circular No.14(XL-35) dated 11.04.1955. 5. Entitlement to refund under section 237 of the Income Tax Act. 6. Tribunal's power to consider additional claims under section 254. Detailed Analysis: 1. Rejection of Application under Section 154 of the Income Tax Act: The assessee filed an application under section 154 for rectification of the assessment order, claiming that the agricultural land sold was not a capital asset and thus not liable for LTCG. The Assessing Officer (AO) rejected the application, stating that no prima facie adjustment could be made during the processing of the return under section 143(1) and that the AO could not disturb the income disclosed in the return. The AO also noted that the assessee did not file a revised return. The CIT(A) upheld the AO's decision, emphasizing that the mistake required examination and inquiry, which was beyond the scope of section 154. 2. Legality of the Claim Regarding LTCG on Sale of Agricultural Land: The assessee contended that the agricultural land sold was situated outside the municipal limits with a population of less than 10,000, and thus, it was not a capital asset as defined under section 2(14) of the Act. The assessee argued that the LTCG should not have been included in the taxable income, and the tax paid on it was not due. 3. Scope and Limitations of Rectification under Section 154: The Tribunal noted that section 154 allows for rectification of mistakes apparent from the record, but it does not permit extensive inquiry or cross-verification. The AO and CIT(A) held that the mistake in this case was not apparent from the record and required detailed examination, which was not permissible under section 154. 4. Application of CBDT Circular No.14(XL-35) Dated 11.04.1955: The assessee relied on CBDT Circular No.14(XL-35), which mandates that tax officers should not take advantage of an assessee's ignorance and should assist taxpayers in claiming legitimate reliefs. The Tribunal acknowledged the circular and noted that it had not been withdrawn. The Tribunal also referred to various judicial precedents, including the jurisdictional High Court's decision in CIT vs. Ahmedabad Keiser-E-Hind Mills Co. Ltd., which emphasized the duty of tax officers to guide taxpayers in claiming reliefs. 5. Entitlement to Refund under Section 237 of the Income Tax Act: The Tribunal agreed with the assessee's contention that under section 237, if the tax paid exceeds the amount properly chargeable, the assessee is entitled to a refund. The Tribunal noted that the assessee had paid tax on LTCG, which was later claimed to be exempt, and thus, the assessee was entitled to seek a refund of the excess tax paid. 6. Tribunal's Power to Consider Additional Claims under Section 254: The Tribunal referred to the Supreme Court's decision in Goetz (India) Ltd. vs. CIT, which clarified that while the AO cannot entertain new claims without a revised return, the Tribunal has the power to consider additional claims under section 254. The Tribunal also cited various High Court decisions supporting the view that appellate authorities can consider additional claims even if they were not raised in the original return. Conclusion: The Tribunal admitted the assessee's additional claim regarding the exemption of LTCG on the sale of agricultural land and restored the matter to the AO for fresh adjudication. The AO was directed to examine whether the agricultural land sold by the assessee fell within the definition of a capital asset under section 2(14) and to adjudicate the claim on its merits. The appeal was allowed for statistical purposes.
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