ACIT, CIR-30, KOLKATA, KOLKATA vs. SHEELA DEVI KANORIA, KOLKATA

2) The Ld. CIT(A) has erred in not considering the fact that powers of appellate authority is co-extensive with that of original authority and it is not open to appellate authority to exercise a jurisdiction, which Assessing Officer did not have as has been held by the Allahabad High Court in the case of CIT, Faizabad Vs Utpadan Mandi Samiti, 11 taxmann 270(2011)”.

The assessee in the present case is an individual, who derives income from capital gain and other sources. The return of income for the year under consideration was filed by her on 31.07.2007 declaring total income of Rs.95,71,176/-. Vide an order dated 04.12.2009 passed under section 143(3), the assessment was completed by the Assessing Officer assessing the total income at the same figure of Rs.95,71,176/- as declared by the assessee in the return of income.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) claiming inter alia exemption in respect of dividend income amounting to Rs.43,32,873/-, long-term capital gain of Rs.38,84,170/- on which STT had been paid and interest of Rs.64,642/- on PPF and RBI Bonds. During the course of appellate proceedings before the ld. CIT(Appeals), it was pointed out that the said income was duly claimed to be exempt by the assessee in Schedule E-1 forming part of the income-tax return and even though at page 2 of the income-tax return, the total income was declared at Rs.95,71,176/-, exemption in respect of the income of Rs.82,81,685/- was clearly and distinctly claimed in the income-tax return itself and also in the computation of total income filed along with the return. It was contended on behalf of the assessee before the ld. CIT(Appeals) that it was incumbent upon the Assessing Officer to have allowed such exemption and his action in not allowing the same was totally unjustified and uncalled for in the facts and circumstances of the case. Reliance in support of this contention was placed on behalf of the assessee, inter alia, on the decision of the Hon’ble Calcutta High Court in the case of West Bengal State Housing Corporation –vs.- CIT [157 ITR 149] and that of Hon’ble Madhya Pradesh High Court in the case of CIT – vs.- K.N. Oil Industries [142 ITR 13].

The submissions made by the assessee were forwarded by the ld. CIT(Appeals) to the Assessing Officer seeking the latter’s comment ./2014 Assessment year: 2007-2008 Page 3 of 5 thereon. In the remand report submitted to the ld. CIT(Appeals), the Assessing Officer offered his comments and after considering the same as well as the other material available on record, the ld. CIT(Appeals) allowed the claim of the assessee for exemption in respect of long-term capital gain, dividend income and interest aggregating to Rs.82,81,685/- for the following reasons given in paragraph no. 4.1.1 to 4.1.3 of his impugned order:- “4.1.1. These grounds are against the action of the AO in treating the long-term capital gain of Rs.38,84,489/-, dividend income of Rs.43,32,873/ - and interest income relating to PPF of Rs.64,642/ - as taxable income, though the same was exempt u/s 10. The AO in the assessment proceedings has failed to appreciate the fact that though the total income in the return of income was shown at Rs.95,71,176/- but exemption in respect of income of Rs.82,81,685/- was claimed in the Income-tax return itself. Since such deduction in respect of exempt income was made in the return of income itself. The AO should have excluded the exempt income of Rs.38,84,170/ - being the long term capital gain exempt u/s 10(38) and dividend income on shares and mutual funds of Rs.43,32,870/- exempt u/s 10(34) & 10(35) and interest on PPF of Rs.64,642/- exempt u/s 10. In such respect, it has to be considered that even where the assessee has not claimed any deduction/ exemption it is the AO's duty to allow deduction in terms of Circular No. 14 (XL-35) of 1955 dt. 11.4.1955 which enjoins upon the Income-tax Authority to allow and/or relief even though the same has not been claimed by the aaseasee.

At the time of hearing fixed in this case on 11.04.2017, none has appeared on behalf of the assessee. This appeal of the Revenue is, therefore, being disposed of ex-parte qua the respondent-assessee after hearing the arguments of the ld. D.R. and perusing the relevant material available on record.

The only contention put forth by the ld. D.R. in support of the revenue’s case on the issue is that her claim for exemption in respect of dividend income, long-term capital gain and interest on PPF and RBI Bonds was not made by the assessee by filing the revised return and in the absence of such revised return, the Assessing Officer was fully justified in not allowing the said claim of the assessee for exemption as held by the Hon’ble Supreme Court in the case of Goetz India Limited – vs.- CIT (supra). We are unable to accept this contention of the ld. D.R. First of all, the claim for exemption in respect of dividend income, long- term capital gain and interest on PPF and RBI Bonds was specifically made by the assessee in Schedule EE-1 of her income-tax return filed for the year under consideration and even if there was some mistake on the part of the assessee in indicating her total income at Rs.95,71,176/- including exempt income at page 2 of the income tax return, the Assessing Officer was duty bound to consider and allow the same. Moreover, the said exemption was claimed by the assessee even in the statement of total income filed by her along with the return of income and the Assessing Officer was not justified in ignoring or overlooking the same when the assessment was made by him on scrutiny under section 143(3) of the Act. ./2014 Assessment year: 2007-2008 Page 5 of 5 In any case, as clarified by the Hon’ble Supreme Court in the case of Goetz India Limited (supra), the claim made by the assessee even otherwise by filing the revised return can be entertained and considered on merit by the appellate authority and the ld. CIT(Appeals), in our opinion, therefore, was fully justified to consider and allow the claim of the assessee for exemption in respect of dividend income, long-term capital gain and interest on PFF and on RBI Bonds aggregating to Rs.82,81,685/- which was otherwise allowable on merit. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss this appeal filed by the Revenue.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on May 12, 2017.