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Income Tax Appellate Tribunal, ‘A’ SMC BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN
आदेश /O R D E R
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Puducherry, dated 27.01.2016 and pertains to assessment year 2004-05.
Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee was an employee of ICICI Bank and retired from service under Early Retirement Option Scheme 2003. The assessee has received a sum of `9,48,300/- towards retirement compensation. The assessee claimed relief under Section 89(1) of the Income-tax Act, 1961 (in short 'the Act') on the retirement proceeds received by him. The return was processed under Section 143(1) of the Act and, in fact, the Assessing Officer accepted the claim of the assessee under Section 89(1) of the Act.
Subsequently, the assessee filed a petition under Section 154 of the Act on 05.02.2008 claiming exemption under Section 10(10C) of the Act, which was omitted to be claimed, while filing the return of income. Since the assessee made a fresh claim in the application made under Section 154 of the Act, the Assessing Officer rejected the same. The assessee filed a petition under Section 264 of the Act which invoked the jurisdiction of the Commissioner and the Commissioner has also rejected the petition of the assessee under Section 264 of the Act. According to the Ld. counsel, thereafter, the assessee filed an appeal before the CIT(Appeals). The CIT(Appeals) found that the appeal is maintainable before him.
However, in view of the judgment of Apex Court in Goetze (India)
Ltd. v. CIT (2006) 284 ITR 323, the CIT(Appeals) found that the assessee cannot make a new claim without filing a revised return.
The CIT(Appeals) further found that since the claim of exemption under Section 10(10C) of the Act was not claimed in the return filed, the same cannot be raised by way of petition under Section 154 of the Act.
According to the Ld. counsel, the claim of the assessee for exemption under Section 10(10C) of the Act is not in dispute.
Merely because the retired employee by mistake omitted to claim exemption under Section 10(10C) of the Act, the Revenue cannot take advantage of that fact and retain the tax. According to the Ld. counsel, it is obligation of the Assessing Officer to inform the assessee that he is eligible for exemption under Section 10(10C) of the Act in respect of the benefits received by him out of the retirement scheme. The CIT(Appeals) condoned the delay in filing the appeal almost nearly eight years and also found that the appeal is maintainable before him. Even after allowing the claim, he rejected the application filed under Section 264 of the Act. Having found that the appeal is maintainable before him after condoning the delay, the CIT(Appeals) cannot take a technical plea that the same was not raised in the return of income. According to the Ld. counsel, of course, the provisions of Section 154 of the Act can be invoked to rectify the error which is apparent on the face of record.
The fact remains that the assessee received retirement benefit and eligible for exemption under Section 89(1) and 10(10C) of the Act is not in dispute, therefore, mere omission to claim exemption under Section 10(10C) of the Act cannot be adversely construed and the assessee cannot be penalized.
Referring to the judgment of Apex Court in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383, the Ld.counsel submitted that this Tribunal has power to entertain the additional ground and new claim which is arising on the facts of the case. Referring to the judgment of Goetze (India) Ltd. (supra), the Ld.counsel for the assessee submitted that the Apex Court has clearly found that the power of this Tribunal is to entertain the additional ground is not impugned. Therefore, according to the Ld. counsel, this Tribunal can very well examine the claim made by the assessee under Section 10(10C) of the Act. If the Tribunal feels that the claim has to be first examined by the Assessing Officer, the Ld.counsel submitted that he has no objection in remitting back the matter to the file of the Assessing Officer.
5. On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the assessee filed appeal before the Commissioner almost nearly eight years from the date of intimation received under Section 143(1) of the Act. The assessee filed an application under Section 264 of the Act before the Commissioner against the intimation received. The Commissioner rejected the claim of the assessee and no further appeal was filed against this order passed under Section 264 of the Act. However, the assessee filed appeal before the CIT(Appeals) after eight years. The CIT(Appeals) condoned the delay and also found that the appeal is maintainable even though the Administrative Commissioner rejected the appeal filed under Section 264 of the Act. On a query from the Bench – whether the Revenue has challenged the order of the CIT(Appeals) for condoning the delay of eight years and the finding of the CIT(Appeals) that the appeal is maintainable even after the rejection of application filed under Section 264 of the Act, the Ld. D.R. has fairly submitted that the Department has not filed any appeal before this Tribunal.
Referring to Section 154 of the Act, the Ld. D.R. submitted that Section 154 provides for rectification of error which is apparent on the face of record. The assessee has not made any claim under Section 10(10C) of the Act. The assessee claimed exemption under Section 89(1) of the Act, which was allowed. According to the Ld. D.R., the assessee cannot make a fresh claim by way of application under Section 154 of the Act. In other words, according to the Ld. D.R., the assessee cannot claim exemption under Section 10(10C) of the Act by way of petition under Section 154 of the Act.
I have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee filed return of income claiming deduction under Section 89(1) of the Act in respect of the retirement benefit received from ICICI Bank on the basis of Early Retirement Option Scheme, 2003.
Admittedly, the assessee has not made any claim for exemption under Section 10(10C) of the Act. The assessee has also not filed any revised return. Against the intimation under Section 143(1) of the Act, the assessee has not filed any appeal. In fact, the assessee filed a petition under Section 264 of the Act before the Administrative Commissioner. This petition filed before the Administrative Commissioner under Section 264 of the Act against the intimation issued under Section 143(1) was rejected.
Subsequently, the assessee filed an appeal against the intimation issued under Section 143(1) of the Act before the CIT(Appeals).
The CIT(Appeals) in his order clarified that the appeal was filed against the intimation issued under Section 143(1) of the Act and not against the order passed by the Assessing Officer under Section 154 of the Act. The delay of 8 years was condoned by the CIT(Appeals). The CIT(Appeals) has also found that the appeal of the assessee was maintainable even though the Administrative Commissioner rejected the petition filed against the intimation under Section 154 of the Act. This order of the CIT(Appeals), namely condoning the delay of nearly 8 years and the finding regarding maintainability of appeal, is not challenged by the Revenue either by way of a separate appeal or by way of cross-objection. The only contention of the Revenue before this Tribunal is that the claim of exemption under Section 10(10C) of the Act was not made by the assessee in the return of income, therefore, the assessee cannot make the claim by way of petition. At the best, the assessee can claim by way of a revised return. In this case, admittedly, revised return was not filed by the assessee. The fact remains that what was received by the assessee is retirement benefit consequent to Early Retirement Option Scheme, 2003 implemented by ICICI Bank.
Therefore, the assessee is eligible for exemption under Section 89(1) and 10(10C) of the Act. The Apex Court in the case of National Thermal Power Co. Ltd. (supra) found that this Tribunal can entertain an additional claim provided the facts are on record.
In Goetze (India) Ltd. (supra), the Apex Court again reiterated the power of the Tribunal by observing that the order in Goetze (India)
Ltd. would not impugn the power of the Tribunal.
We have also carefully gone through the judgment of Apex Court in CIT v. Shelly Products and Another (2003) 261 ITR 367.
The Apex Court found that the assessee can very well bring to the notice of the Assessing Officer in case an income which is otherwise chargeable to tax was included in the total income. The Apex Court observed as follows:-
“……if the assessee has, by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which, if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case where a refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the Revenue to refund the amount to the assessee without having to make any claim in that behalf. In appropriate cases, therefore, it is open to the assessee to bring the facts to the notice of the concerned authority on the basis of the return furnished, which may have a bearing on the quantum of refund. And the concerned authority, for the limited purpose of calculating the amount of refund under section 240 , may take all such facts into consideration and calculate the amount to be refunded.”
In view of the above, this Tribunal is of the considered opinion that when the assessee is eligible for exemption under Section 89(1) and 10(10C) of the Act, the same can very well be brought to the notice of the Assessing Officer. This Tribunal is of the considered opinion that the Assessing Officer has to examine the same on merit. In view of the above, this Tribunal is unable to uphold the order of the lower authority and accordingly, the same is set aside. The Assessing Officer shall examine the claim on merit and thereafter decide the issue in accordance with after giving a reasonable opportunity to the assessee.