ST. ANNS CONVENT,PHIRANGIPURAM vs. INCOME-TAX OFFICER, EXEMPTIONS, GUNTUR

At the outset, it is noticed from the appeal record that there is a delay of 75 days in filing the appeal before the Appellate Tribunal. After considering the submissions of the Ld.AR of the assessee, petition for condonation of delay and perusing the affidavit filed by the assessee, we are of the considered view that the assessee was prevented by “reasonable cause” in filing the appeal within the prescribed time. In the case of Vidya Shankar Jaiswal v. ITO [305 Taxman 83 (SC)], Hon’ble Supreme Court held that Courts should adopt a justice-oriented, liberal approach while condoning procedural delays in tax appeals rather than dismissing them on technical grounds. Following the ratio laid down by Hon’ble Apex Court the delay is condoned and proceed to adjudicate the appeal.

Before the Ld. CIT(A), the appellant has filed certain written submissions stating that from the inception of the Society, it is filing the Return of Income regularly including for the A.Y. 2023-24 which is the year under consideration. The appellant-trust declared an income of Rs.NIL after claiming exemption under section 11 of the Act. But while filing the return of income, inadvertently, out of contribution to other institutions of Rs.4,43,81,500, a sum of Rs.66,57,230/- which is 15% of contribution to other institution shown under SCHEDULE A (b) in Page No. 18 under the head “Expenditure not allowed as application other than application out of source of fund” as per explanation 4(iii) of section 11(1) which is actually applicable from A.Y.2024-25. The appellant filed a copy of the Return of Income also before the Ld.CIT(A). Before the First Appellate Authority, the appellant-trust has stated that “while processing return of income, CPC, Bangalore disallowed Rs.66,57,230/- and raised tax of Rs.25,88,850/-. The appellant’s total application of income, without disallowance of Rs.66,52,225/- is 91.47% and application of income as per Return of Income, considering disallowance is 85.01%. The CPC disallowed the above sum without mentioning any reasons and levied tax of Rs.25,88,850/-. In view of the same, the appellant-trust requested the Ld. CIT(A) to delete this addition. The appellant has fairly admitted that they committed a mistake in the Return of Income filed on 20.10.2023 and the appellant has not filed a Revised Return of Income by correcting the mistake committed by it in the year under consideration. After going through the brief submitted by the appellant-trust, the Ld. CIT(A) dismissed the appeal of assessee stating that the mistake was committed by the assessee and following the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., v. CIT in Civil Appeal No. 1761 of 2006 in [2006] 157 Taxman 1 (SC) dated 24th March, 2006 wherein it was held that the assessee cannot make a claim for deduction other than by filing a revised return. In other words, a claim for any expenditure/deduction shall be accompanied by Revised Return of Income only and not by filing a revised computation. Ld.AO does not have the power to entertain the claim of appellant without a revised return of income. In view of the same, the Ld. CIT(A) held that the Ld.AO / CPC has correctly passed the order under section 143(1) of the Act and dismissed the appeal by stating that there was no Revised Return of Income for claiming this deduction. The Ld. CIT(A) did not go into the merits of the case and simply confirmed the addition made by the Ld.AO / CPC without taking into consideration the arguments / written submissions of the appellant.

As the appellant did not get the required relief, an appeal was filed before ITAT stating that Goetze (India) Ltd., v. CIT (supra) is not applicable to the Appellate Authorities and the appellant can claim a relief before the Appellate Authorities even without filing revised Return of Income and the Appellate Authorities are bound by legal position that a claim can be raised at any point of time before the Appellate Authorities even without filing the revised return of income. The decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd., v. CIT (supra) is applicable only to the Assessing Officer and not to the Appellate Authorities. Ld.AR of the appellant, has argued that the Ld. CIT(A) did not adjudicate the issue on merits and simply dismissed the appeal by stating that the claim was not made either in the Return of Income or in the revised Return of Income. This denial of rectification of mistake is not in consonance with the decision of Goetze (India) Ltd., v. CIT (supra) of Hon’ble Supreme Court. In fact, the Hon’ble Supreme Court in the case of Goetze (India) Ltd., v. CIT (supra) has mentioned that prohibition of entertaining a claim without revised return applies to only to the Assessing Officer and not to the Appellant Forum. This position was made very clear by Hon'ble Bombay High Court in the case of Balmukund Acharya v. DCIT [310 ITR 310 (Bom)] and CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. [349 ITR 336 (Bom)] wherein it was held that the Appellate Authorities are duty bound to determine the correct taxable income, the technicality of revised return of income cannot deviate the legitimate claim. Even CBDT NO. 14(XL-35) of 1955 also obliges officers to allow legitimate claims even if they were not specifically claimed.

On the other hand, Ld. Departmental Representative (hereinafter in short “Ld.DR”) relied on the order of Ld. CIT(A) and pleaded the order of Revenue may be upheld.

Heard both sides. The Ld. CIT(A) ought to have passed a reasoned order based on the merits and the submissions made by the appellant. Instead, the Ld.CIT(A) has simply dismissed the appeal by stating that the Ld.AO / CPC is correct because the claim was not made before the Ld.AO either in the Return of Income or in the Revised Return of Income while dismissing the appeal. In fact, the Ld.AO / CPC added the amount without giving any reason, hence the same is not acceptable. In the case of Bala Mukunda Acharya v. DCIT [310 ITR 310], the Hon'ble Bombay High Court has held that the tax collection must strictly adhere to the provisions of the law. If an assessee over assessed their income due to the mistake, misconceptions or lack of proper guidance, the tax authorities are obligated to assist them and ensure that only the legitimate tax due are collected. In the case of CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (supra), the Hon'ble Bombay High Court has ruled that the assessee is legally entitled to raise new claims and deductions before the Appellate Authorities, even if those claims were not originally included in the Income Tax Return which was already filed or by way of a Revised Return. In fact, the CBDT Circular 14(XL-35) of 1955 also obliges officers to allow legitimate claims even if the same were not specifically claimed.

In view of the above, the Ld. CIT(A) is directed to pass an order after taking into consideration the submissions of appellant-trust and pass an order fresh. Hence, the appeal of the assessee is remitted back to the file of Ld. CIT(A) with the above direction. The appeal of the assessee is allowed for statistical purposes.

In the result, appeal filed by the Assessee is allowed for statistical purposes.