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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Chandra Poojari & Shri Soundararajan K
O R D E R
Per Soundararajan K, JM :
This is an appeal filed by the assessee challenging the order of the Commissioner of Income-tax (Appeals)-12, Bengaluru [“CIT(A)” for short] dated 20.02.2023 in respect of the assessment year 2007- 2008.
2. The facts of the case are that the assessee is an Airhostess, employed with Kuwait Airways, New Delhi, had filed her original return of income on 18.07.2007 declaring `Nil’ income in the status of NRI. The assessee also got refund of the TDS amount deducted by the employer. Thereafter, the case was selected for scrutiny by CASS and notice u/s.143(2) of the Income-tax Act, 1961 (“the Act” for short) was issued, for which the assessee furnished copy of acknowledgement for filing revised return and the annexure filed along with the return and declared her residential status as resident and withdrew the claim of exemption made in the original return. The (AY 2007-2008) Smt.Tresa Jolly. assessee also claimed loss in the house property and deduction u/s.80C of the Act in the revised return, but the Assessing Officer (AO) had not accepted the same since the said claims were not made in the original return and the revised return is also beyond the period of limitation. Against the above said order, the assessee preferred an appeal before the CIT(A) and contended that the AO should have considered the claim and allowed the same since the same are legal issues and also the claim was made well before the assessment has been made. The CIT(A) had not accepted the contentions of the assessee for the reason that the assessee had filed the revised return almost a year after the notice u/s.143(2) of the Act was issued. The CIT(A) further observed that since there is no revised return in the eyes of law, the claim of the assessee are not admissible. Against the said order of the CIT(A), the assessee has filed the present appeal before the Tribunal, raising following grounds:-
“1. The Order of the Commissioner of Income tax (Appeals) is against law.
The CIT(Appeals) is not justified in not considering the loss from house property and also not granting deduction under section 80C on the grounds that the deduction was not claimed in the original return and the revised return was beyond the time under 139(5) while taking income as per revised return. The Commissioner of Income tax (Appeals) failed to appreciate that Your appellant had made the claim before the completion of assessment by filing a return ofincome and the assessing officer was bound to consider the same while completing the assessment. We rely on the following decisionsDy CIT vs Lab India Instruments Private Ltd ( 93 ITD 120) CIT vs TBB Motilal Malwaise Trust (195 (TR 825) 3. Without prejudice to our above argument, the CIT(Appeals) erred in not following the CBDT No.14(XL-35) dated 11.4.1955 which casts a duty on the assessing officer to assist the tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in (AY 2007-2008) Smt.Tresa Jolly. guiding the tax payer where proceedings before them indicate that some refund is due to them. The CIT(Appeals) was bound to allow the relief to the appellant which was rightly due to her, but omitted to be claimed in the original return.”
At the time of hearing, the learned AR submitted that the AO had taken into consideration the income declared by the assessee in the revised return and also the financial statements, and therefore, he ought to have granted the statutory deductions voluntarily even though the assessee had not claimed the same. The learned AR relied on the Circular issued by the CBDT and prayed to allow the appeal. The learned AR also relied on the orders of the Cochin Bench of the Tribunal in the case of Smt.Halima Zubair vs. ACIT in dated 01.04.2019 and ACIT vs. The South Indian Bank Ltd. in ITA Nos.390 & 373/Coch/2019 dated 22.08.2019 in support of his contention that there is no such bar on the appellate authorities for entertaining a claim on any issue not raised in the return.
The learned Departmental Representative argued that the order of the lower authorities are in order and prayed to dismiss the appeal filed by the assessee.
We heard the arguments of both the parties and perused the material available on record. As seen from the assessment order, the AO had accepted the income returned by the assessee in the revised return, but declined to accept the loss in respect of house property and the deduction claimed u/s.80C of the Act only for the reason that the same were not made in the original return of income.Therefore, the only question to be decided in this appeal is (AY 2007-2008) Smt.Tresa Jolly. whether the assessee can claim the deductions before the CIT(A) or not? In this aspect, the Constitution Bench of the Hon’ble Supreme Court had delivered a judgment in the case of National Thermal Power Co. Ltd. v. CIT reported in (1998) 229 ITR 383 (SC), wherein it was held as follows:- “7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide, e.g., C.I.T, v. Anand Prasad (Delhi), C.I.T. v. KaramchandPremchand P. Ltd. and C.I.T. v. Cellulose Products of India Ltd.. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to considerquestion of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.”
In the above judgment, the Hon’ble Supreme Court has held that the CIT(A) have the discretion to allow or not to allow a new ground. It was further held that if a question of law arose from the facts available on record, that should be allowed to be raised and considered the same. Therefore, in the present case, even though the assessee had filed the original return and claimed `Nil’ income,but in the revised return the assessee had declared the income and also claimed various deductions which are otherwise eligible for deduction. The AO refused to consider the claim only for the reason that the same were not claimed in the original return. No doubt, the AO cannot consider the claim but the appellate authority, i.e., the CIT(A) can very well look into the same and decide the eligibility for allowing the deduction, if the facts are otherwise in order. Therefore, as seen from the principles laid down by the Hon’ble Supreme Court, the AO has no power to accept the belated claim but the appellate 4 (AY 2007-2008) Smt.Tresa Jolly. authority has the power to examine the same and decide it in accordance with law. The above view of the Constitution Bench of the Hon’ble Supreme Court has been followed by the Hon’ble Supreme Court in the judgment reported in the case of Goetze (India) v. CIT (2006) 284 ITR 323 (SC) and therefore the same is in favour of the assessee. The CIT(A) had misunderstood the judgement and dismissed the appeal which is not correct.
We have also gone through the orders relied on by the learned AR in the case of Smt.Halima Zubair v. ACIT (supra), wherein the ITAT Cochin Bench had given a categorical finding about the admissibility of a fresh claim through a revised return. The relevant part of the order of the Tribunal reads as follows:-
9.2 Before concluding, it is to be mentioned that the claim of deduction u/s 54F of the I.T.Act was dismissed at the threshold by the CIT(A) on the ground that the claim was not raised through the return of income, hence, it cannot be considered by the A.O. The CIT(A) failed to note that the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT (2006) 284 ITR 323 (SC) wherein the Hon'ble Supreme Court had put an embargo on Assessing Officers entertaining a fresh claim other than through a revised return but the same decision has held that there is no such bar on appellate authorities entertaining a claim on any issue not raised in the return. The Hon'ble Delhi High Courtin the case of Pr.CIT v. Western India Shipyard Ltd. [(2015)379 ITR 289 (Del.)], had held that : the Tribunal was right in holding that while there was a bar on the Assessing Officer entertaining such claim without a revised return being filed by the assessee, there was no such restraint on the Commissioner (Appeals) during the appellate proceedings....". Moreover, as per Circular No. 14(XI-35) of 1955, dated 11th April, 1955, the Assessing Officer having included the notional income from new residential property in the income of the assessee, he can also consider the claim of deduction u/s 54F of the I.T.Act provided the conditions are satisfied for claiming such deduction. It is ordered accordingly.
(AY 2007-2008) Smt.Tresa Jolly. 8. Similarly, the ITAT Cochin Bench in the case of ACIT v. The South Indian Bank Ltd. (supra) had also considered the issue and gave a finding, as follows:-
13. After hearing both sides and perusing the material on record, in our opinion, the observation of the CIT(A) is not proper as held by the Bangalore Bench of Tribunal in the case of Rakesh Singh v. ACIT in dated 24th August, 2012 relevant to assessment year 2007-2008, wherein the Tribunal observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter.The exercise of discretion is entirely different from the existence of jurisdiction. For that purpose, the Tribunal relied on the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006) 284 ITR 323 (SC) and remanded the issue to the file of CIT(A) for fresh consideration. In view of the above decision of the Tribunal cited supra, we are inclined to remit all the above grounds to the CIT(A) to consider afresh and decide the same in accordance with law.
In view of the judgment of the Hon’ble Supreme Court as well as the orders of the Cochin Bench of the Tribunal, we have no doubt that the assessee can raise the issue before the CIT(A) and the CIT(A) can examine the same and decide the issue accordingly.
We, therefore, thought it fit to remit the issue to the files of the AO to decide the claims made by the assessee, after giving an opportunity of being heard to the assessee.
(AY 2007-2008) Smt.Tresa Jolly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18th July, 2024.