2024 (10) TMI 694 - AT - Income Tax

Remedy for making fresh claim - fresh claim made in preliminary assessment u/s 143(1) - Deduction of the prior period expenses and CSR expenses disallowed u/s. 37(1) - Assessee failed to claim the same in the original return of income - DR submitted there is no grievance to the assessee as the AO accepted the return of income filed by the assessee and the issue raised by the assessee in the present appeal is not covered u/s 143(1) HELD THAT - We observed that all the case law relied by the assessee are relating the fresh claim made by the assessee in the regular assessment proceedings, not in the case of preliminary assessment u/s 143(1) of the Act. The mandate of the preliminary assessment u/s 143(1) of the Act is different, it is only to process the return of income to vouch for the arithmetical error, detect the incorrect claim of expenses, losses, verify and cross check the claim made in the audit report, claim of deductions, cross verify the income declared in form 26AS or form 16A etc. The AO is not allowed to go beyond the above mandate given under section 143(1) of the Act. We observe from the record that the assessee has received the intimation u/s 143(1) and its case was not selected for the regular assessment and also the time for revision of return also already elapsed. The assessee finds it easy to claim the same by filing the appeal before appellate authorities. In our considered view, the assessee has filed the present appeal before us without there being any grievance in preliminary or intimation order in which the Assessing Officer accepted the return of income filed by the assessee. A Assessee may have two types of fresh claim, which may be genuine claim which is traceable from the return filed by the assessee, which can be claimed by the assessee, the other type is debatable issues which may be claimed only upon making proper verification and assessment, this will lead to discretion of the relevant authorities including the Board. The remedy for the fresh claim is not with any appellate authority and the remedy lies only with the administrative officers or with the board. In case the board rejects the application, the remedy available only in the writ proceedings. With the above observations, we are inclined to dismiss the grounds raised by the assessee.

Summary

Issues Involved:

1. Deduction of prior period expenses.
2. Deduction of CSR expenses under Section 80G of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deduction of Prior Period Expenses:

The first issue pertains to the disallowance of prior period expenses amounting to Rs. 3,93,388/- claimed by the assessee. The assessee argued that there was no dispute regarding the allowability of the expenses except for the period to which they pertain. The assessee relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. Excel Industries Ltd., which allows such expenses when there is no change in the tax rate between the years involved. The assessee contended that the tax rate remained the same for both AY 2018-19 and AY 2019-20, hence, the expenses should be allowed. However, the CIT(A) dismissed the appeal, emphasizing that the claim was an afterthought and should have been included in a revised return before the due date, as per the precedent set by the Supreme Court in Goetze (India) Ltd.

2. Deduction of CSR Expenses under Section 80G:

The second issue involves the disallowance of CSR expenses amounting to Rs. 81,00,000/-, which the assessee claimed should be deductible under Section 80G of the Income Tax Act. The assessee made donations to various charitable trusts, which are eligible for deduction under Section 80G. The appellant argued that the deduction should be allowed despite not being claimed in the original return of income, citing Article 265 of the Constitution and various case laws supporting the claim of deductions not initially claimed in the return. The assessee also referenced CBDT Circular No. 14, which mandates that tax officers should assist taxpayers in claiming due reliefs. However, the CIT(A) and the Revenue argued that the claim could not be entertained as it was not part of the original return and relied on the decision in Goetze (India) Ltd., which restricts the allowance of new claims not made in the return.

Tribunal's Findings:

The Tribunal considered the submissions and observed that the assessee had filed the return of income, which was accepted under section 143(1) of the Act. The Tribunal noted that the assessee's claims were not part of the original return, and the time for filing a revised return had elapsed. The Tribunal emphasized that the preliminary assessment under section 143(1) is limited to processing the return for arithmetical errors and incorrect claims, and does not allow for new claims. The Tribunal suggested alternative remedies such as filing a revision application under section 264 or an application under section 119(2)(b) for genuine hardship. The Tribunal concluded that the remedy for fresh claims does not lie with the appellate authority but with administrative officers or the Board. Consequently, the Tribunal dismissed the appeal, indicating that the correct procedure had not been followed by the assessee for claiming the deductions.

Conclusion:

The appeal filed by the assessee was dismissed. The Tribunal held that the claims for prior period expenses and CSR deductions under Section 80G were not maintainable as they were not included in the original return and the appropriate procedures for making such claims were not followed. The Tribunal reiterated that the remedy for such claims lies with administrative authorities and not with appellate bodies.