2017 (3) TMI 879 - HC - Income Tax

Entitled to raise a fresh claim before the Appellate Authorities - claim which was not made in the return of income originally filed under Section 153A r.w.s. 143(3) of the Act before the Assessing Officer and also before the appellate Authorities under the Act - Held that - The pending assessment before the Assessing Officer consequent to return filed under Section 139(1) of the Act for the subject Assessment years had abated. This was on account of the search and as provided in second proviso to Section 153A(1) of the Act. The consequence of notice under Section 153A(1) of the Act is that assessee is required to furnish fresh return of income for each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessement by the Revenue for the first time in the case of abated assessment proceedings. Consequent to notice under Section 153A of the Act the earlier return filed for the purpose of assessment which is pending, would be treated as non est in law. Further, Section 153A(1) of the Act itself provides on filing of the return consequent to notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the respondent-assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act and the case laws on the provision of the Act would equally apply. This Court in Pruthvi Brokers and Share holders P.Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ) while dealing with a return of income filed under Section 139(1) of the Act has held that an assessee is entitled to raise a fresh claim before the Appellate Authorities, even if the same was not raised before the Assessing Officer at the time of filing return of income or by filing a revised return of income. - Decided in favour of assessee

Summary

Issues:
Challenging order under Section 260-A of the Income Tax Act, 1961; Entitlement to make a claim not originally filed; Claim for deduction of retention money; Applicability of previous court decisions; Fresh claim before Appellate Authorities.

Analysis:
The Appeals under Section 260-A challenge the Tribunal's order dated 31st October, 2013, concerning Assessment Years 2003-04, 2006-07, 2007-08, and 2008-09. The key issue revolves around whether the respondent assessee was entitled to make a claim not originally filed under Section 153A r.w.s. 143(3) of the Act. The respondent, engaged in construction contracts, faced a search and seizure action leading to a notice under Section 153A for the mentioned years. The dispute arose when the respondent, in its return of income post-notice, claimed deduction for retention money not included in the original return. The Assessing Officer, citing precedent, rejected this claim, leading to subsequent appeals.

The crux of the matter lies in the Tribunal's decision regarding the legitimacy of the deduction claim. The Tribunal held that the claim, though not quantified in the original return, was indicated in principle and later quantified during assessment proceedings. It differentiated this case from previous judgments, allowing the deduction claim based on the merits presented during the assessment. Furthermore, the Tribunal emphasized the right of the assessee to raise fresh claims before Appellate Authorities, citing relevant case law supporting this stance.

The Revenue's grievance centered on the Tribunal's departure from established court decisions, particularly the applicability of the Goetze (India) Ltd. ruling. However, the High Court clarified that the right to raise fresh claims before Appellate Authorities is well-established, as supported by previous judgments. The Court highlighted that the return filed under Section 153A is akin to a return under Section 139, subject to the Act's provisions. The decision in Pruthvi Brokers and Shareholders P. Ltd. reinforced the assessee's entitlement to present fresh claims before the Appellate Authorities, irrespective of the original filing.

Ultimately, the High Court dismissed the Appeals, emphasizing that the issue had been settled by previous judgments, notably Pruthvi Brokers and Shareholders P. Ltd., rendering the proposed substantial question of law irrelevant. The Court's decision reaffirmed the assessee's right to raise fresh claims before the Appellate Authorities, even if not initially presented to the Assessing Officer.