2017 (9) TMI 576 - AT - Income Tax

Revised computation of total income - AO ignoring the revised computation of total income submitted during the course of assessment proceedings on the ground that no revised return of income was filed - Held that - Now, the law is quite settled to the extent that a claim made before the AO by way of a letter even it did not form part of original return of income can be entertained by the AO. It is trite law that income tax proceedings are not adversial proceedings. The decision of the Hon ble Supreme Court in the case of Goetze (India) Ltd. (2006 (3) TMI 75 - SUPREME Court) held to be inapplicable to the proceedings before the CIT(A) and Tribunal and it is also well settled that the AO can always entertain a claim made before him by way of letter and in this context. AO as well as the CIT(A) ought not to have rejected the revised computation filed during the course of assessment proceedings and we therefore, remit the matter back to the file of the AO to consider the revised computation in accordance with the provisions of law.

Summary

Issues Involved:
1. Whether an assessee can revise his return of income by filing a revised statement of income instead of a revised return under Section 139(5) of the Income Tax Act.
2. Whether the Assessing Officer (AO) is justified in ignoring the revised computation of income submitted during the assessment proceedings without a revised return.

Detailed Analysis:

Issue 1: Revising Return of Income by Filing a Revised Statement
The appellant, a government company, filed its original return based on provisional accounts and later submitted a revised computation of income based on audited accounts during the assessment proceedings. The AO ignored this revised computation because it was not submitted as a revised return under Section 139(5) of the Income Tax Act.

The legal framework under Section 139(5) allows an assessee to file a revised return if any omission or wrong statement is discovered in the originally filed return. This revised return must be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The statute does not recognize a revised statement of income as a substitute for a revised return.

The judgment cited several precedents, including the Supreme Court ruling in Goetze (India) Ltd., which held that the AO has no power to entertain a fresh claim made by the assessee after filing the original return, except through a revised return. The principle that "if a statute provides for a thing to be done in a particular manner, it has to be done in that manner or not at all" was reiterated, emphasizing that other methods are not permissible.

Issue 2: AO's Justification in Ignoring Revised Computation
The AO completed the assessment based on the original return and did not consider the revised computation submitted during the assessment proceedings. The CIT(A) upheld this decision, stating that there is no provision under the Income Tax Act to enable an assessee to revise his income by filing a revised statement of income.

However, the Tribunal noted that income tax proceedings are not adversarial and that claims made before the AO by way of a letter, even if not part of the original return, can be entertained. The Tribunal referenced judgments from the Delhi High Court and the Madras High Court, which established that appellate authorities, including the CIT(A) and the Tribunal, have the power to consider claims based on material already on record, even if such claims were not part of the original or revised return.

The Tribunal concluded that the AO and the CIT(A) should not have rejected the revised computation filed during the assessment proceedings. The matter was remitted back to the AO to consider the revised computation in accordance with the provisions of law.

Conclusion:
The appeal was partly allowed for statistical purposes. The Tribunal directed the AO to consider the revised computation of income submitted during the assessment proceedings, emphasizing the principle that appellate authorities can entertain claims based on material already on record, even if not part of the original or revised return. The judgment underscores the importance of adhering to statutory provisions while also recognizing the flexibility within appellate proceedings to ensure justice.