CPT V24P7-Art1 (Content).pmd - Taxmann

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674 DECISIONS Additional claim can be made otherwise than by filing a revised return An analysis of Commissioner of Income-tax, Central-I v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 23 taxmann.com 23 (Bom.) (i) Additional claim of deduction or exemption can be made by the assessee otherwise than by filing a revised return. (ii) Such additional claim can be made by the assessee before appellate authorities. (iii) The appellate authorities have jurisdiction and, therefore, discretion to entertain a new claim. FACTS D.C. AGRAWAL Advocate (Former CIT & Accountant Member of ITAT) 12345678901234567890123456 12345678901234567890123456 1234567890123456789012345678901 1234567890123456789012345678901 1234567890123456789012345678901 The assessee was apparently a share broker. For the A.Y. 2004-05 it claimed to have made payments of ` 40,00,000, ` 10,00,000 and another ` 10,00,000 to SEBI as payments of fee. In the return of income it made a claim of deduction under section 43B of ` 20,00,000 only. The Ld. A.O. disallowed this claim as payment of ` 10,00,000 each was made on 16th July, 2004 and 29th April, 2004, i.e., during the financial year 2004-05, relevant to the assessment year 2005-06. The assessee then made a claim of deduction under section 43B in respect of sum of ` 40,00,000 which was paid on 9-5-2003 but pertained to F.Y. 2001-02. It was submitted before the A.O. that incorrect claim was made through inadvertence. Since no revised return was filed, the A.O. rejected the claim of additional sum of ` 40,00,000 on the ground that it was not claimed in the return of income. The claim was repeated before Ld. CIT(A) and before the Tribunal which was allowed by both the authorities. The Department filed an appeal before the Hon’ble High Court which decided the issues arising from the appeals as above. COMMENTS August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 54 1234567890123456789012345 1234567890123456789012345 The rationale of permitting to raise additional claim or additional ground before the appellate authorities is that an assessee should be assessed on correct income for the correct A.Y. and in the hands of the right person. The Hon’ble Apex Court in ITO v. Ch. Atchaiah [1996] 84 Taxman 630 emphasized on the assessment in the hands of right person. In Jute Corporation of India Ltd. v. CIT [1990] 53 Taxman 85 (SC) referred by the Hon’ble Bombay High Court
in the above judgment observed that the appellate authority has all the powers which the original authority has in deciding the question before it subject to the restrictions and limitations prescribed by statutory provisions. The powers of the CIT(A) are co-terminus with the powers of the A.O. while deciding any issue before him. He can call for additional evidence, can do the enquiries or direct the A.O. to carry out requisite enquiries through remand. Therefore, there cannot be any restrictions or limitations on his powers to entertain new claim or new ground. He has to be only satisfied that the ground or claim raised before him was bona fide and it could not be raised earlier for good reasons. The power of the first appellate authority is derived from the statute wherein section 251 empowers him to confirm, reduce, enhance or annul the assessment and to pass such orders in the appeal as he thinks fit. The Explanation to section 251 empowers him to “consider and decide any matter arising out of the proceedings in which the order appealed against was passed notwithstanding that such matter was not raised before him by the appellant.” A new claim of deduction or exemption would affect the taxable income and, accordingly, tax liability of the assessee which is the core matter in the proceedings before the A.O. and, therefore, even if a matter is not raised before him CIT(A), he can consider and decide any issue arising out of the assessment proceedings. Even though Hon’ble M.P. High Court in CIT v. Nirbheram Deluram [1981] 5 Taxman 84 was of the view that the proceedings before the A.O. are limited to the matters expressly or impliedly raised by the assessee and by the A.O. and so considered by him, meaning thereby that new issues not raised by the assessee or by the A.O. will not be part of the proceedings before the A.O., but this view was reversed by the Hon’ble Apex Court in CIT v. Nirbheram Deluram [1997] 91 Taxman 181 by following the decision in Jute Corporation of India Ltd. (supra) wherein the Apex Court reiterated that the first appellate authority has wide powers “co-terminus with that of the Income-tax Officer”, so that, “he can do what the Income-tax Officer can do and can also direct him to do what he failed to do”. Such vast powers are conceded to the first appellate authority for the reason that the Department has no right of appeal against the assessment order and, in the course of scrutiny of appeal filed by the assessee, the appellate authority can see whether, in the interests of the Revenue, the tax has to be enhanced? The only limitation which seems to be placed on the powers of the first appellate authority is that he cannot travel beyond the record to find out new source of income. If he is able to identify new source of income from the record of the A.O. or his own record of appeal, it would be within his jurisdiction to consider new source of income. After considering the decisions in Nirbheram Deluram (supra); CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC); CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) and CIT v. Raj Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) the Hon’ble Delhi High Court in CIT v. Union Tyres [1999] 107 Taxman 447 laid down the principle that : “The first appellate authority is invested with very wide powers under section 251(1)(a) of the Act and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the Assessing Officer and determined in the course of assessment. However, there is a solitary but significant limitation to the power of revision, viz., that it is not open to the Appellate Assistant Commissioner to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subjectmatter of original assessment”. August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 55 675
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