2016 (1) TMI 684 - AT - Income Tax

Rectification of mistake - Long Term Capital Gain on sales of shares was wrongly offered to tax and that the same was exempted u/s 10(38) as per assessee - as per CIT(A) claim was not supported by a revised return of income - Held that - The CBDT Circular No.14 of 1955 dated 11.04.1955 has taken a view that the officers of the department must not take advantage of ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing reliefs. In my view therefore the revenue authorities ought not to have rejected the application u/s 154 of the Act on the ground that the assessee has not filed the revised return of income. The CIT(A) has placed reliance on the decision of the Hon ble supreme Court in the case of Goetz (India) Ltd. (supra) for sustaining the order of the AO u/s 154 of the Act. The Hon ble Supreme Court in it s decision rendered in the case of Goetze (India) Ltd vs CIT 2006 (3) TMI 75 - SUPREME Court has clarified that the appellate authorities under the Act have the power to consider the claim even if the business of the revised return of income. Therefore the claim of the assessee that Long Term Capital Gain is exempt u/s 10(38) of the Act has to be examined by the AO. It is seen from the order of AO u/s 154 of the Act that the AO wanted details of acquisition and proof of payment of STT. Therefore set aside the order of CIT(A) and remand the question of exemption of Long Term Capital Gain u/s 10(38) of the Act to the AO for fresh consideration. The assessee is directed to file necessary evidences before the AO to substantiate his claim. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Rectification of apparent error in Long Term Capital Gain taxation under section 154 of the Income Tax Act, 1961.
2. Validity of rejecting rectification application due to lack of revised return of income.
3. Interpretation of the applicability of section 10(38) exemption on Long Term Capital Gain.
4. Jurisdiction of appellate authorities to consider claims without a revised return of income.

Analysis:
1. The appellant, an individual, declared Long Term Capital Gain on the sale of shares for A.Y. 2005-06. The Assessing Officer (AO) accepted the income initially. However, the appellant filed a rectification application under section 154 of the Act, asserting that the Long Term Capital Gain was exempt under section 10(38). The AO rejected the application citing inadequate details of acquisition and proof of payment of STT.

2. The appellant appealed to the CIT(A), who upheld the AO's decision, emphasizing that the appellant did not file a revised return claiming exemption under section 10(38). The CIT(A) relied on the Goetze (India) Ltd case, stating that a claim unsupported by a revised return cannot be accepted. Subsequently, the appellant approached the Tribunal challenging the CIT(A)'s order.

3. The Tribunal referred to CBDT Circular No.14 of 1955, emphasizing the duty of revenue authorities to assist taxpayers in claiming reliefs. It disagreed with the CIT(A) and cited the Goetze (India) Ltd case to assert that appellate authorities can consider claims even without a revised return. The Tribunal directed the AO to re-examine the exemption claim under section 10(38) and instructed the appellant to provide necessary evidence.

4. Consequently, the Tribunal allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and remanding the question of Long Term Capital Gain exemption to the AO for fresh consideration. The appellant was directed to submit supporting evidence. The judgment was pronounced on 09.12.2015.