2023 (11) TMI 536 - AT - Income Tax

Fresh claim in the return of income filed pursuant to notice u/s 153A - assessee has not claimed the benefit of deduction u/s 80IA in the original return of income, but was claimed while filing the return of income in pursuance to the notice issued u/s 153A - HELD THAT - The assessee has not claimed deduction u/s 80IA in the original proceedings and also have not filed the audit report however, at the time of filing of return of income u/s 153A of the Act, the assessee had filed the audit reports and claimed deduction u/s 80IA of the Act. A perusal of the assessment order passed u/s 143(3) r.w.s. 153A shows that the AO has accepted the income determined as per the assessment order u/s 143(3). Thus, no addition was made by the Assessing Officer during the assessment proceedings u/s 143(3) r.w. section 153A - In our view, the AO was right in denying the claim of deduction u/s 80IA to the assessee as no addition was made in the hands of the assessee during the assessment proceedings on account of any incriminating material. Further, the issues which have attained finality, in an unabated assessment are required to be restricted having a live link with the incriminating material. We are of the opinion that re-assessment proceedings u/s 153A is not a denovo re-assessment as the re-assessment can only be made with respect to the incriminating material found during the course of search. We are of the opinion that the assessee cannot be permitted to make a fresh claim of deduction in the re-assessment proceedings u/s 153A of the Act. The above said finding is not only based on the interpretation of the provision of section 153A r.w.s. 139(1) of the Act, but also based on the mandatory provisions which require the assessee to file the audit report along with the original return of income for claiming the deduction under Chapter VI of the Act. Once the assessment proceedings have attained finality, then the additions can only be made in the hands of the assessee based on the incriminating material unearthed during the search. The Assessing Officer has no reason to entertain any fresh claim, which was not raised in the original return of income. Hence, we are of the considered opinion that the assessee is not entitled to file fresh return of income under Section 153A of the Act, with respect to claiming the deductions which had not been claimed by the assessee earlier in the original return of income. Hence, respectfully relying upon the above said decisions, we are of the opinion that the legal ground raised by the Revenue regarding the claim of fresh deduction u/s 80IA at the time of filing the return of income u/s 153A of the Act is sustainable. We are of the considered opinion that the findings of the CIT(A) is not in accordance with law and the assessee cannot be permitted to make a fresh claim of deduction for the first time in the return filed in response to notice u/s 153A of the Act. Thus, the legal ground is decided in favour of the Revenue and against the assessee.

Summary

Issues Involved:
1. Whether the CIT(A) erred in granting deduction u/s 80IA for the first time in return filed in response to notice u/s 153A.
2. Whether the CIT(A) erred in allowing deduction u/s 80IA without examining if the assessee satisfies the parameters set by ITAT in previous cases.
3. Whether the assessee can claim deduction u/s 80IA in the return filed in response to notice u/s 153A if it was not claimed in the original return of income.

Summary:

Issue 1: Deduction u/s 80IA in Return Filed in Response to Notice u/s 153A
The Revenue argued that the CIT(A) erred in granting the deduction u/s 80IA, as the claim was made for the first time in the return filed in response to notice u/s 153A. The assessee originally did not claim the deduction in the return filed u/s 139(1). The Tribunal held that the assessee cannot be permitted to make a fresh claim of deduction in the re-assessment proceedings u/s 153A, as the return of income filed in response to notice u/s 153A must comply with the provisions of section 139, including the due date for filing the return.

Issue 2: Parameters for Deduction u/s 80IA
The Revenue contended that the CIT(A) allowed the deduction without examining whether the assessee met the parameters fixed by the ITAT in the case of Sushi Hitech, which include developing, operating, and maintaining any infrastructure facility. The Tribunal noted that the assessee was engaged in infrastructural activities but was not the owner of the infrastructure facilities, which were owned by the government departments. Therefore, the assessee did not satisfy the conditions for claiming the deduction u/s 80IA.

Issue 3: Fresh Claim of Deduction in Return Filed u/s 153A
The Tribunal emphasized that the re-assessment proceedings u/s 153A are not de novo assessments and can only address issues related to incriminating material found during the search. The Tribunal referred to section 80AC, which mandates that deductions under section 80IA can only be claimed if the return is filed on or before the due date specified under section 139(1). Since the assessee did not claim the deduction in the original return or during the original assessment proceedings, the Tribunal held that the fresh claim made in the return filed in response to notice u/s 153A is not permissible.

Conclusion:
The Tribunal ruled in favor of the Revenue, reversing the CIT(A)'s order and restoring the Assessing Officer's decision to disallow the deduction u/s 80IA. The appeals by the Revenue were allowed, and the assessee was not permitted to make a fresh claim of deduction in the re-assessment proceedings u/s 153A.