SHRI KANDASAMY VELAYUDAM,CHENNAI vs. ITO , CORPORATE WARD 6(1), CHENAI

Brief facts of the case are that the assessee filed his return of income for the assessment year 2016-17 on 17.10.2016 admitting an income of ₹.41,93,970/-. After following due procedure, the Assessing Officer has completed the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 30.12.2018 by assessing total income of the assessee at ₹.46,43,569/- after making various additions.

Thereafter, the assessee filed a petition under section 154 of the Act dated 01.01.2019, wherein, it was stated that the cost of acquisition of property sold was wrongly adopted in the return filed for the assessment year 2016-17at ₹.10 lakhs instead of ₹.21,12,000/-, which resulted in capital gains being offered at ₹.4,44,221/-, which fact was brought to the notice of the Assessing Officer during the course of scrutiny proceedings and the same was not considered by the Assessing Officer. After considering the submissions of the assessee, the Assessing Officer has concluded that the assessee has not filed any revised return of income under section 139(5) of the Act and therefore, the plea of the assessee was not considered and moreover, there was no error in the assessment order passed under section 143(3) of the Act and accordingly, the rectification petition filed by the assessee was rejected vide order under section 154 of the Act dated 22.10.2019. On appeal, the ld. CIT(A) confirmed the order passed under section 154 of the Act.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the ld. CIT(A) has failed to adjudicate on a deduction claimed by the assessee without filing the revised return of income and the decision of the Hon’ble Supreme Court in Goetze (India) Ltd.’s case has not prohibited to make such claim before the appellate authorities and prayed that the ld. CIT(A) may be directed to adjudicate on the deduction claimed by the assessee.

On the other hand, the ld. DR supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available and gone through the orders of authorities below including paper book filed by the assessee. It is an admitted fact that the assessee has not made any fresh claim, but plea for modify the claim of deduction, in fact, during the course of assessment proceedings, the assessee has brought to the notice of the Assessing Officer that the cost of acquisition of property sold was wrongly adopted in the return of income filed for the assessment year 2016-17 at ₹.10 lakhs instead of ₹.21,12,000/-, which resulted in capital gains being offered at ₹.4,44,221/-. Since the Assessing Officer has not heed to the plea of the assessee and rejected the claim to modify the deduction since the assessee has not filed revised return under section 139(5) of the Act, by following the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. v. CIT 284 ITR 323 (SC), the Assessing Officer rejected the claim of the assessee. On appeal, while dismissing the appeal of the assessee, the ld. CIT(A) has observed that the issue is not amenable to section 154 of the Act, and if at all, the issue should have been challenged by the assessee by an appeal against the order under section 143(3) of the Act dated 30.12.2018. The ld. Counsel for the assessee has submitted that the appeal against the order under section 143(3) of the Act dated 30.12.2018 is pending before the ld. CIT(A). Under the above facts and circumstances, we remit the matter back to the file of the ld. CIT(A) to adjudicate the claim of deduction while adjudicating the appeal against the assessment order under section 143(3) of the Act by affording reasonable opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 30th August, 2022 in Chennai.