2021 (8) TMI 1084 - AT - Income Tax

Rectification of mistake - error in filing the correct column in the return of income with correct figures have resulted into a huge demand - appellate authorities power to admit fresh claim - HELD THAT - It is the assessee who has claimed to have made alleged mistake while filing return of income and now the assessee is resiling from its own position, thus, burden cast on assessee is very heavy. We are also of the view that the various documents/evidences filed by assessee in support of its contentions require verification. The claims of the assessee has been rejected by the CIT(A) only on the ground that returned income is accepted and secondly no revised return is filed. We have observed that Hon'ble Superior Courts have taken consistent view that appellate authorities have power to admit fresh claim, even if the same is not claimed through filing of revised return of income. Keeping in view entire factual matrix of the case and in the interest of fair play and justice, we remit the matter back to the file of the CIT(A) for fresh determination of the issue and to pass detailed/speaking order. Needless to say that learned CIT(A) has powers which are co-terminus with the powers of Assessing Officer. The ld. CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law.

Issues Involved:
1. Jurisdiction of the ITAT Allahabad Bench.
2. Error in the return of income filed by the assessee.
3. Rejection of the appeal by CIT(A) due to non-filing of revised return.
4. Admissibility of fresh claims not made through revised return.

Detailed Analysis:

1. Jurisdiction of the ITAT Allahabad Bench:
The appeal was directed against an appellate order passed by the CIT(A), Kanpur, for the assessment year 2013-14. The jurisdictional issue arose due to a request by the assessee to transfer the appeal to the ITAT, Lucknow Bench, citing the absence of Members at the ITAT, Allahabad Bench. However, no administrative order for such a transfer was available. The Division Bench clarified that the correct jurisdiction lies with the ITAT, Allahabad Bench, as the assessee is located in Banda, U.P., which falls under its jurisdiction. The jurisdiction of the tribunal is determined by the location of the Assessing Officer, as per the Standing Order issued under sub-rule (1) of rule 4 of the Income-Tax (Appellate Tribunal) Rules, 1963.

2. Error in the Return of Income Filed by the Assessee:
The assessee filed a return of income electronically, declaring a total income of ?1,39,810/-, which included ?1,166/- as bank interest and ?1,38,644/- as income from other sources. The income tax payable was shown as nil. However, the Revenue assessed the income at ?1,39,810/- and held a tax liability of ?54,300/-. The assessee contended that the return filed erroneously declared gross receipts instead of net income, resulting in a higher tax demand. The error was attributed to the filing clerk's ignorance.

3. Rejection of the Appeal by CIT(A) Due to Non-Filing of Revised Return:
The CIT(A) dismissed the appeal, stating that the computation was based on the assessee's own disclosure, and no revised return was filed to correct the error. The CIT(A) held that the appeal is not the remedy when the claim is neither lodged nor adjudicated by the first authority. The CIT(A) suggested that the assessee could have sought revision under section 264 of the Act or filed a revised return, which was not done.

4. Admissibility of Fresh Claims Not Made Through Revised Return:
The tribunal considered the assessee's contention that there was an error in the return filed, and the correct income should have been ?436/- as per audited accounts. The assessee relied on judicial precedents allowing fresh claims even if not made through revised returns. The tribunal observed that the objective of the taxing statute is to bring to tax the correct income and noted the CBDT Circular No. 14(XL-35) of 1955, which instructs officers to assist taxpayers in bringing correct income to tax. The tribunal held that the CIT(A) has powers co-terminus with the Assessing Officer and should admit the evidences and submissions provided by the assessee.

Conclusion:
The tribunal remitted the matter back to the CIT(A) for fresh determination and to pass a detailed and speaking order, ensuring proper and adequate opportunity of being heard to the assessee. The appeal filed by the assessee was allowed for statistical purposes, with the CIT(A) directed to adjudicate the matter on merits, considering the evidences and submissions provided by the assessee.

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