2018 (4) TMI 1427 - AT - Income Tax

Deduction u/s 54F - denial of deduction for want of filing the revised return of income - Held that - Neither the AO nor the ld. CIT (A) has examined the claim of the assessee on merits but rejected the same in limini for want of filing the revised return of income. It is pertinent to note that the claim under section 54F was not made by the assessee against the income which was offered to tax in the return of income so that the condition of filing the revised return can be attracted. There is no embargo in the jurisdiction and powers of the CIT (A) to entertain a fresh claim if the relevant facts for adjudication of the said claim are already on record. In the case in hand there is no denial that the assessee filed all the relevant documents when the assessee has filed the revised computation of income claiming deduction under section 54F and the AO without considering the claim on merits has rejected on technical ground. Therefore in the facts and circumstances of the case we are of the considered view that the ld. CIT (A) is not justified in rejecting the claim of the assessee - set aside this issue to the record of ld. CIT (A) for re-considering the same on merits - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Denial of deduction under section 54F for not filing a revised return of income.

Analysis:
The primary issue in this case revolves around the denial of a deduction under section 54F due to the non-filing of a revised return of income by the assessee. The assessee, an individual running a Petrol Pump, initially declared a loss on the sale of land in the return of income. Subsequently, during assessment proceedings, the assessee revised the computation of income, declaring income from the sale of land as long-term capital gains and claimed a deduction under section 54F for the purchase of a new property. The Assessing Officer (AO) rejected the claim citing non-filing of a revised return as required by section 139(5). The assessee contended that the claim was not fresh but against the income already assessed by the AO. The appellate authority also rejected the claim solely based on the technical ground of non-filing of a revised return.

The contention put forth by the assessee was that the claim under section 54F was not a fresh claim but related to the income already offered to tax during assessment proceedings. The assessee argued that the appellate authority should have considered the claim based on the available facts without insisting on a revised return. The assessee relied on a High Court decision stating that there are no restrictions on the appellate authority to entertain a claim without a revised return when all relevant facts are on record. Additionally, the assessee cited a CBDT Circular to support the argument that the AO should assess the correct income without taking advantage of any mistake by the assessee in the original return.

On the contrary, the Revenue argued that the case involved concealment of facts as the assessee initially did not disclose the purchase of a new property in the original return of income. The Revenue contended that the claim under section 54F required verification of both legal and factual aspects, which the appellate authority should not entertain without a revised return. The Revenue also disputed the applicability of the decision cited by the assessee to the current case.

Upon review, it was observed that the AO and the appellate authority rejected the claim solely on the ground of non-filing of a revised return, without delving into the merits of the claim. The income assessed by the AO was based on deeming provisions, and the claim under section 54F was consequential to the addition made during assessment proceedings. The authorities' approach of rejecting the claim based on a technicality was deemed improper. The Tribunal held that there was no limitation on the appellate authority's jurisdiction to entertain a fresh claim if all relevant facts were already on record. The case was remanded to the appellate authority for reconsideration on merits, ensuring the fulfillment of conditions under section 54F and providing the assessee with a hearing opportunity.

In conclusion, the appeal of the assessee was allowed for statistical purposes, emphasizing the need for a thorough reconsideration of the claim under section 54F based on merits and existing facts on record.