SRI.SUHAIL AMEER MANAPPAT,KOCHI vs. THE DCIT(INT.TAXATION), KOCHI

Per George George K, JM

This appeal at the instance of the assessee is directed against the Commissioner of Income-tax (Appeals)’s order dated 05.04.2018. The relevant assessment year is 2012- 2013.

ITA No.296/Coch/2018 2 Sri.Suhail Ameer Ahmed.

(i) Income from house property Rs. 1,76,807 (ii) Long term capital gain Rs.11,44,73,010 (iii) Income from other sources Rs. 5,46,410 -------------------- Total income returned Rs.11,51,96,230 ============== 3.1 The assessment was completed u/s 143(3) vide order dated 28.03.2015. The total income assessed was Rs.11,67,98,280.

3.2 The assessee filed an appeal to the first appellate authority contending that the long term capital gain computed by the assessee was mistake. According to the assessee, instead of stating the cost of acquisition as Rs.20,00,000 by an inadvertent mistake, it mentioned as Rs.2 lakh (the number of shares instead of cost of shares). According to the assessee this mistake had resulted in overstating of long term capital gain by Rs.27,22,543. The CIT(A), however, rejected the contention raised by the assessee by observing as under:-

“4.2 I have perused the facts available on record. This mistake on part of the appellant is not a part of the assessment order. It is seen that the appellant has not filed a revised return, rectifying his own mistake. He also did not bring this mistake to the notice of the A.O. during the course of assessment proceedings and therefore nothing wrong with the assessment order can be found. This is also not a legal issue, which can be taken up at any stage of appeal. In view of these facts, and legal provisions, this ground of appeal of the appellant is not maintainable and the same is hereby dismissed.”

ITA No.296/Coch/2018 3 Sri.Suhail Ameer Ahmed.

ITA No.296/Coch/2018 4 Sri.Suhail Ameer Ahmed. purchased 2,00,000 shares @ Rs. 10 per share; the cost of acquisition being Rs. 20,00,000. But, while marking the cost at Rs. 20,00,000 in the Capital Gains Computation, by mistake it was marked as Rs. 2,00,000 (the number of shares instead of the cost of shares). This mistakes has resulted in an error of overstating the Capital Gains by Rs. 27,22,543.

6.1 The Commissioner of Income Tax (Appeals) rejected the prayer of the assessee on a technical ground that the mistake was committed by the assessee himself and not by the Assessing Authority and that the assessee had not filed any revised return to correct the mistake. The revised return could have been filed by the assessee only if the mistake was noted before completion of the assessment. In the present case, the mistake came to notice only when the assessment order was received and perused. There is no Rule or Law which prevents the correction of a honest mistake. The prayer of the assessee was not based on any new set of facts that was not placed before the Assessing Authority; the prayer was to correct a mistake and adopt the correct amount from the particulars already placed on record before the Assessing Authority.

6.2 The statutory function of assessment is quasi-judicial. The Assessing Authority needs to be just and fair in determining the tax liability. The Hon'ble Delhi High Court in CIT Vs. Sam Global Securities Ltd. (2014) 360 ITR 682 has held that assessment proceedings are not adversarial in nature. If any mistake is found in the computation filed by the

ITA No.296/Coch/2018 5 Sri.Suhail Ameer Ahmed. assessee, it is the lawful obligation cast on the Assessing Authority to correct it. It is immaterial, whether such correction benefits the assessee or Revenue.

6.3 In a case, Rachna S Talreja V s. DCIT (Mum) (T), considered by ITAT, assessee during the course of assessment proceedings filed revised computation of income and claimed additional deduction in respect of payment of interest. Assessing Authority refused to consider the revised claim on the ground that the assessee has not filed any revised return u/s.139(5). In appeal, the CIT(A) upheld the order relying on Goetze (India) Ltd. Vs. CIT 284 ITR 323 (SC). But, the ITAT admitted the additional claim and allowed the appeal referring to Pradeepkumar Harlarkar V s. ACIT (2011) 47 SOT 2014 URO (Mum)(Trib).

6.4 In Ricoh India Ltd. Vs. DCIT (2013) 38 Taxmann.com 264(Mum) (Trib), it was held that the restriction discussed in Goetze (India) Ltd. Vs. CIT 284 ITR 323 (SC) applies to Assessing Authority alone and not apply to Appellate Authorities.

6.5 In the present case, the assessee is not claiming any new/additional deduction. The prayer is to adopt the correct amount of Capital Gains, the particulars of which have already been furnished to and available with the Assessing Authority. Therefore, the decision rendered in the case of Goetze (India) Ltd. Vs. CIT 284 ITR 323 (SC) does not apply.

ITA No.296/Coch/2018 6 Sri.Suhail Ameer Ahmed.

6.6 CBDT Circular No. 14(XL35) dated 1110411955 provides for responsible assessment that the Assessing Authority to have reasonable approach in completing an assessment, to grant lawful and eligible deduction to the assessee, even if it was not claimed by the assessee. The Assessing Authority has to see that the Income of the assessee has been determined after allowing all the lawful outgoings and statutory deductions.

6.7 The recent judgment of the Hon’ble jurisdictional High Court in the case of Raghavan Nair v. ACIT [(2018) 402 ITR 400 (Ker.)] had held that it is the duty of the Assessing Officer to refrain from assessing an non-taxable income returned by the assessee on mistaken understanding. The relevant observation of the Hon’ble High Court reads as follows:-

“11. It is beyond dispute that the powers of the Assessing Officers under the Act are quasi-judicial in nature and they are duty-bound, therefore, to act fairly in the discharge of their functions. They are also invested with the authority to do justice to the assessees. True, in a given case where the self- assessment made by an assessee is proposed to be revised on the ground that the deduction made by him in the return under a particular head is inadmissible, the Assessing Officer, in the absence of a revised return, would proceed on the basis of the facts disclosed by the assessee in the return. But, in a case where it is apparent on the face of the record that the assessee has included in his return, an income which is exempted from payment of Income-tax, on account of ignorance or by mistake, according to me, the Assessing Officer is bound to take into account the said fact in a proceeding under section 143 of the Act. In other words, if the capital gains on a transaction is exempted from payment of tax, the Assessing Officer has a duty to refrain from levying tax on the said capital gains and the Assessing Officer cannot, in such cases, refuse to grant relief under section 143 of the Act to the assessee on the technical plea that the assessee has not filed a revised return.” 6.8 For the aforesaid reasoning, we are of the view that the assessee is entitled to the relief sought for in this appeal. It is ordered accordingly.

ITA No.296/Coch/2018 7 Sri.Suhail Ameer Ahmed.

6.9 In the result, the appeal filed by the assessee is allowed. Order pronounced on this 10th day of April, 2019.

Sd/- Sd/- (Chandra Poojari) (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER

Cochin ; Dated : 10th April, 2019. Devdas*

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The Pr.CIT, Kochi. 4. The CIT(Appeals)-II, Kochi. 5. DR, ITAT, Cochin 6. Guard file.

BY ORDER,

(Asstt. Registrar) ITAT, Cochin