2022 (7) TMI 280 - AT - Income Tax

Revision u/s 263 - Reopening of assessment u/s 147 - non-declaration of long term capital gain at the net level - HELD THAT - As claim could not have been made before the AO for the first time during the course of re-assessment proceedings otherwise than through filing a revised return. This, in his opinion, ran contrary to the judgment of the Hon ble Supreme Court in the case of Goetz India Ltd. ( 2006 (3) TMI 75 - SUPREME COURT - Clearly, the ratio of this decision is that the AO has no power to entertain a claim made otherwise than by way of revised return. However, it is worth mentioning that in this judgment itself, the Hon ble Supreme Court has held that the power of the appellate authorities will not be affected by non-making of a claim in the return and the Tribunal has power to allow relief on a point for which no deduction was made in the return of income. In that view of the matter, it gets graphically clear that even though the AO is not empowered to allow exemption/deduction under the relevant provision unless a specific claim is made in the return of income, but such a clam can be entertained at the appellate stage, if it is really sustainable. Thus, the embargo is only on the AO and not on other higher authorities. Adverting to the facts of the instant case, it is found that the Pr.CIT has nowhere disputed the otherwise eligibility of the assessee to claim exemption u/s.54B - His only objection has been that the AO could not have allowed this claim during the course of assessment proceedings without filing of a revised return. Albeit, technically the AO was not competent to entertain such a claim, but legally the Pr. CIT was duty-bound to accept it, when he was satisfied with its otherwise eligibility. Since the ld. Pr. CIT has not disputed the eligibility of the claim in law, we hold that the assessment order, seen in totality, cannot be declared as erroneous and prejudicial to the interest of the Revenue - Appeal of assessee allowed.

Summary

Issues: Delay in filing appeal before Tribunal, Claim of exemption u/s.54B of the Income-tax Act, 1961

Delay in filing appeal before Tribunal:
The appeal by the assessee was filed with a delay of 45 days, attributed to the Covid-19 pandemic period. The delay was condoned based on the judgments of the Hon'ble Supreme Court in Cognizance for Extension of Limitation cases. The Tribunal admitted the appeal for disposal on merits despite the delay.

Claim of exemption u/s.54B of the Income-tax Act, 1961:
The case involved the assessee not disclosing long term capital gain in the original return, leading to a reassessment where the Assessing Officer added the capital gain amount. The Principal CIT contended that the assessee was not entitled to exemption u/s.54B as the claim was not made in the original return but during assessment proceedings. The Principal CIT relied on the judgment in the case of Goetz India Ltd. vs. CIT. The Tribunal analyzed the legal position and held that while the AO cannot entertain a claim made outside the return without a revised return, the appellate authorities can consider such claims if found sustainable. In this case, the Principal CIT did not dispute the eligibility of the claim but objected to its timing. The Tribunal concluded that since the claim was eligible and the Principal CIT did not contest its legality, the assessment order was not erroneous or prejudicial to revenue. Therefore, the impugned order was set aside, and the appeal was allowed.

In summary, the Tribunal addressed the delay in filing the appeal due to the pandemic and admitted it for disposal on merits. The case primarily dealt with the claim of exemption u/s.54B of the Income-tax Act, where the Tribunal clarified the distinction between the powers of the AO and appellate authorities regarding entertaining claims made outside the return. The Tribunal found the claim eligible and held that the assessment order was not erroneous, ultimately allowing the appeal.