Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.
As there was no representation on behalf of the assessee, we hereby proceed to decide the appeal by hearing the learned Departmental Representative ('ld.DR' for short) and on perusal of the materials available on record.
The assessee has challenged this appeal on the following grounds:
1. In law and as per the facts and in the circumstances of the appellant's case, the Hon'ble CIT(A), NFAC has erred in not granting the long term capital loss claim of the appellant before the ld. A0, to the tune of Rs. Rs.23,04,35,532/- which was inadvertentły missed out while filing 2 (A.Y. 2018-19) Bapa Real Estate Pvt. Ltd. vs. CIT (Appeal)-NFAC return of income and for which necessary details and documents were provided during the course of assessment proceedings and first appellate proceedings.
2. In law and as per the facts and in the circumstances of the appellant's case, the Hon'ble CIT(A), NFAC has grossly ignored/turned blind eye to the crystal clear position of the statute (encompassing judicial decisions, circulars of the courts/CBDT) in not permitting the claim of long term capital loss made during assessment proceedings. This action of the hon'ble CIT(A), NFAC, is against the principle of natural justice, beyond the spirit of the law, unjust and unfair to the appellant and hence illegal and deserves to be reversed.
3. In law and as per the facts and in the circumstances of the appellant's case, the Hon'ble CIT(A), NFAC has grossly erred in relying on the decision of the Supreme Court in the case of Goetze (India) Ltd. Vs. CIT [2006] 157 Taxman 1 (SC) which is against the principle of natural justice and thus the claim of the appellant shall be accepted.
4. In law and as per the facts and in the circumstances of the appellant's case the hon'ble CIT(A) ought to have considered various judicial decisions passed on the issue allowing such a claim as in the case of ITO Vs Sanjay Gurudasmal Chawla ((TAT Mumbai) (1TA NO. 2931/MUM/2017) which followed the decision of the jurisdictional High Court in the case of CIT V. M/s. Pruthvi Brokers & Shareholders (P.) Ltd. in IT Appeal. No. 3908 of 2010 dated 21.06.2012. Thus, the claim of long term capital loss deserves to be accepted.
The brief facts are that the assessee is a private limited company engaged in the business of real estate and finance activities and is a partner in M/s. Shree Balaji Associates and M/s. Dynamix Bapa Associates. The assessee filed its return of income dated 25.09.2018 declaring loss of Rs.37,98,772/- and the assessee’s case was selected for limited scrutiny to examine on the issue relating to expenses incurred for earning exempt income. Notice u/s. 143(2) and 142(1) were issued and served upon the assessee.
The ld. Assessing Officer ('A.O.' for short) passed the assessment order u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Act dated 08.04.2021, determining a loss at Rs.1,76,164/- after making the adjustment as per intimation u/s. 143(1) of the Act dated 08.11.2019 amounting to Rs.34,2,749/-. The assessee has challenged the non granting of Long Term Capital Loss claimed by the assessee on sale of share of Aplomb Real Estate Private Limited amounting to Rs.23,04,35,532/- which the assessee submits that was not claimed, inadvertently while filing the return of income. The ld. CIT(A) dismissed the its return of income and has also not filed a revised return for the said claim. The ld. CIT(A) further held that the assessee has made the claim on LTCL before the ld. A.O. which was rightly rejected by the A.O. as the ld. A.O. was not authorized to accept the same. The ld. CIT(A) also held that the CBDT Circular No. 14 (XL-35 dated 11.04.1995) relied upon by the assessee was a very old Circular which cannot be relied upon and that the Hon'ble Apex Court in the case of Goetze India Ltd. vs. CIT [2006] 157 taxmann.com 1 (SC) wherein it was said that the assessee cannot amend a return filed for making a claim for deduction and that the same can be done only by filing the revised return of income. The ld. CIT(A) dismissed the grounds of appeal raised by the assessee on the said observation.
6. The assessee is in appeal before us, challenging the order of the ld. CIT(A).
We have heard the learned Departmental Representative ('ld.DR' for short) and perused the materials available on record. It is observed that the assessee has claimed LTCL amounting to Rs.23,04,35,532/- towards sale of share of Aplomb Real Estate Private Limited and Reniwal Properties Private Limited being the group companies which were sold at cost. The assessee further stated that inadvertently the said claim of LTCL was not claimed while filing the original return of income. The assessee during the assessment proceeding had raised the claim for the first time and had submitted the working of the LTCL on sale of the said shares along with the working and balance sheet of the said companies for determining the FMV as per the last audited balance sheet prior for ease of ready reference:
CBDT Circular on Assessee's Rights There is an old Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL- 35) dated April 11, 1955. It states: "officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in quiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and Iiabilities and as to the procedure to be adopted for claiming refunds and reliefs." The above circular has been judicially noted and approved in many judgments and has been relied upon in support of the Assessees claim.
From the above said Circular, it can be inferred that the Revenue cannot take advantage of the ignorance of the assessee where the assessee has mistakenly failed to claim any refund or relief and it also states that the department has to assist the assessee in getting the refund or relief which they are entitled to. The ld. CIT(A), on the other hand, has rejected the contention of the assessee by placing reliance on the decision of the Hon'ble Apex Court in the case of Goetze India Ltd.(supra) for the reason that the assessee should have filed a revised return for claiming the deduction which was not claimed during the filing of the original return of income. We would like to place our reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Pruthvi Brokers & Shareholders (P) Ltd. (in IT Appeal No. 3908/2010 dated 21.06.2012) which on identical facts has considered the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. (supra), National Thermal Power Ltd. vs. CIT [1998] 229 ITR 383 and has also considered the decision of the division bench of the Hon’ble Delhi High Court in the case of CIT vs. Jai Parabolic Springs Ltd. [2008] 306 ITR 42 (del) and has held that the assessee can claim deduction before the ld. A.O. though it was not claimed during filing of the original return of income nor was revised return filed by the assessee. It was further held that the appellate authorities can very well entertain such claim for deduction otherwise than by revised return. The relevant extract of the said decision is cited hereunder for ease of reference:
It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in Goetze (India) Limited v. Commissioner of Income-tax, (2006) 157 Taxman 1. We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs. Commissioner of Income-tax (supra). The question before the Court was whether the appellant- assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought SRP 23/26 ITXA3908 to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Company Limited contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held:- "4. The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income- tax Act, 1961. There shall be no order as to costs." [emphasis supplied] SRP 24/26 ITXA3908 23. It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254.
6 (A.Y. 2018-19) Bapa Real Estate Pvt. Ltd. vs. CIT (Appeal)-NFAC 24. A Division Bench of the Delhi High Court dealt with a similar submission in Commissioner of Income-tax v. Jai Parabolic Springs Limited, (2008) 306 ITR 42. The Division Bench, in paragraph 17 of the judgment held that the Supreme Court dismissed the appeal making it clear that the decision was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the Tribunal. In paragraph 19, the Division Bench held that there was no prohibition on the powers of the Tribunal to entertain an additional ground which, SRP 25/26 ITXA3908 according to the Tribunal, arises in the matter and for the just decision of the case.
In the circumstances, it is not necessary to decide the other questions raised by Mr. Mistri.
In view of the above said decision, we deem it fit to remand this issue back to the file of the ld. CIT(A) for admitting the claim of the assessee and to grant the relief claimed by the assessee based on the merits of the case.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 25.09.2023.