Anju Mittal, Jaipur vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 201/JP/2014 fu/kZkj.k o"kZ@Assessment Year : 2010-11

Smt. Anju Mittal cuke The ACIT M/s. Sanjiv Prakashan Vs. Circle- 1 Amar Jain Building Jaipur Chaura Rasta, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACCPM 1421 D vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Goyal , CA jktLo dh vksj ls@ Revenue by : Smt. Rolee Agarwal, CIT -DR

lquokbZ dh rkjh[k@ Date of Hearing : 08/04/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30 /04/2015

vkns'k@ ORDER

PER R.P. TOLANI, JM

This is an assessee's appeal challenging the order dated 28-02-2014

passed u/s 263 of the Act by the ld. CIT, holding that the deduction of

Rs. 1.30 crores u/s 54F of the Act given by the AO was erroneous and

prejudicial to the interest of the Revenue.

2.1 Brief facts of the case are - The assessee an individual filed her

return of income including Long term capital gain amounting to Rs. 2 ITA No. 201/JP/2014

Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

20,64,755/-. During the course of assessment proceedings, it turned out

that that stamp duty value of the sold property was more by an amount of

Rs. 5,48,796/- from the declared sale value. Similarly, the assessee had

acquired a residential house on 20-07-2010 for Rs. 1.30 crores, which

was eligible for deduction u/s 54Fof the Act; however due to inadvertence

it was not claimed by her in the return of income. The assessee by letter

dated 08-02-2013 filed a revised computation making these corrections.

The AO framed the assessment on 19-02-2013 u/s 143(3) of the Act

allowing the corrections. It may be pertinent to mention that in the order

except a reference about a letter of revised computation there is no

discussion or observation about the merits of allow ability of the claim u/s

54F qua acquisition of house property amounting to Rs. 1.30 crores.

2.2 The ld. CIT while exercising his power u/s 263, was of the view

that the order of the AO was erroneous and prejudicial to the interest of

the Revenue inasmuch as AO failed to take cognizance of Hon'ble Apex

Court in the case of Goetze (India) Ltd. vs. CIT , (2006) 284 ITR 323

laying down a binding legal proposition that any fresh claim cannot be

allowed to assesee without a valid revised. Consequently ld. CIT

issued show cause notice dated 5-02-2014 u/s 263 of the Act in this

behalf.

3 ITA No. 201/JP/2014

Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

2.3 The assessee in reply thereof, filed written submissions dated 24-

02-2014 claiming that she inadvertently failed to claim deduction u/s 54F

of the Act and the mistake was noticed during the course of assessment

proceedings. She tried to file the revised return of income on 12.02.2013

which was not accepted by the Aayakar Seva Kendra and AO as the

revised return was beyond the time limit stipulated in Sec. 139(5) of the

Act. Assessee relied on the Board's Circular No.14(XI-35) of 1955 dated

11.04.55 claiming that AO can not take advantage of the ignorance of the

assessee and he is duty bound to allow such a relief suo moto. Since,

there was no time limit available to the assessee to file a revised return u/s

139(5), it was impossible for the assessee to comply with the law laid

down the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Ld.

A.R. relied on various court decisions to argue that benevolent circular of

the Board is binding on the Assessing Officer. Hence, the deduction u/s

54F allowed by the AO on the basis of revised computation of income

filed during the assessment proceedings was in accordance with the

Board's Circular and the assessment order was neither erroneous nor

prejudicial to the interest of revenue. He, therefore, requested to drop the

proceedings initiated u/s 263 of the Act.

4 ITA No. 201/JP/2014

Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

2.4 The ld. CIT rejected assessee's explanation by following

observations.

''3.1 I have duly considered the submission of the assessee and material available on record. It is evident from records that AO issued a show cause letter dated 21.12.2012 asking the assessee to explain that sale consideration shown in the computation of capital gains is less by Rs.5,48,796/- as compared to sale value adopted by the Sub-Registrar, resulting into addition of Rs.5,48,796/- u/s 50C of the Act. In the revised computation of income filed on 08.02.2013, assessee agreed for enhancing the sale consideration in terms of sec. 54C of the Act and also claimed a deduction u/s 54F of the Act. It was stated in his letter dated 08.02.2013 that the assessee purchased one residential house on 20.07.2010 for Rs.1,30,00,000/- in respect of which he was eligible for deduction u/s 54F of the Act. He also enclosed a copy of the sale deed of the said house. AO accepted this additional claim of deduction u/s 54 F without any further verification. He did not examine whether the other conditions laid down in sec. 54F were fulfilled or not by the assessee e.g. whether the assessee owned more than one residential house, other than the new asset, on the date of transfer of the original asset or whether the assessee purchased any residential house other than the new asset, within a period of one year after the ate of transfer of the original asset, etc. AO allowed the deduction u/s 54F on the basis of revised computation of income filed by the assessee. Neither any query was raised nor the decision of Hon'ble Supreme Court in the case of Goetze (India) ltd. (supra) was considered. Non-application of mind, non-verification of facts and non-application of correct provisions of law and the decision of Apex Court by the AO itself makes his assessment order as erroneous. Allowing the deduction u/s 54F without assessee filing the revised return of income has made the order prejudicial to the interest of revenue. The Hon'ble Supreme Court in the case of Goetze (India) Ltd. Has categorically held that the Assessing Officer has no power to entertain a claim for deduction otherwise through a revised return. Hence, AO has exceeded his jurisdiction and power in allowing the deduction u/s 54F of the Act in the absence of a revised return filed by the assessee. 5 ITA No. 201/JP/2014

Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

3.2 The reliance of Ld. AR on the Board's Circular dated 11.04.1955 and various case laws is misplaced. The said Board's Circular nowhere suggested that AO should entertain a claim of assessee for any relief which has become time barred or which is otherwise not allowable under the Act. The facts relating to fresh claim of deduction u/s 54 were not available on record before AO as the same were not filed with the return of income. Hence, as per return of income filed by assessee, no deduction u/s 54F was allowable to assessee. It is one thing to say that assessee was eligible for deduction on the basis of facts available on record and it is a different this to allow the assessee to file new facts before AO during assessment proceedings and make a fresh claim on that basis. In the case of assessee, fact of purchase of new residential house was not disclosed in the return of income. Hence, claim of deduction u/s 54F on the basis of such investment was not allowable in the absence of revised return as held by Apex Court.

4. Considering all the facts and circumstances of the case as discussed above, I hold that the assessment order dated 19.02.2013 for A.Y. 2010-11, was erroneous in so far as prejudicial to the interest of revenue in terms of sec. 263 of the IT Act. AO has erred in allowing the deduction u/s 54F of the Act. He is directed to withdraw this deduction and recomputed the total income and tax thereon. ''

2.5 Aggrieved, the assessee is before us. The ld. Counsel for the

assessee referred to gist of the written submission filed by the assessee

and contends that :-

(i) The AO has referred to filing of revised computation.

(ii) M/s. Goetze (India) Ltd. case lays a proposition that

assessee can make a new claim only by revised return. The

assessee has demonstrated its difficulty that revised return 6 ITA No. 201/JP/2014 Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

was not accepted and there was no way left except to file the

revised computation before the AO. The Hon'ble Apex Court

in the case of Goetze (India) Ltd. (supra) debars the AO from

a examining a new claim inasmuch as the issue of capital

gain and withdrawal of Rs. 1.30 crors emerged from the

record before him. The Hon'ble Apex Court judgment in the

case of M/s. Goetze (India) Ltd. (supra) lays down that the

assessee cannot claim as a matter of right if the claim is

rejected by the AO in the absence of revised return.

However, the appellate authority can entertain such claim. In

this case, it is not a case of refusal of claim by the AO. There

are Board's Circulars dated 11-04-55 which enjoins the duty

on the AO to allow legitimate claim of the AO while framing

the assessment even though the claim was not made by the

assessee

Further reliance is placed by the ld. AR of the assessee as under:-

1. Navnit Lal Javeri V K K Sen, 56 ITR 198 (SC)

2. Ellerman Lines Ltd. vs. CIT , 82 ITR 913 (SC)

3. K.P. Vergese vs. ITO 131 ITR 597, 612-13(SC)

4. Keshavji Raviji & Co. vs. CIT , 183 ITR 1, 17 (SC) 7 ITA No. 201/JP/2014 Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

5. J.B. Boda & Co. (P) ld vs. CBDT 223 ITR 271, 280 (SC)

6. CIT vs. Hero Cycles (P) Ltd. 228 ITR 463 (SC)

7. UCO Bank vs. CIT (SC) dated 13-05-1999

2.6 On the other hand, the ld. DR vehemently contends that the ld. CIT

is perfectly justified inasmuch as the order of the AO was erroneous and

prejudicial to the interest of the Revenue on following counts.

(i) The AO failed to consider the binding judgment of Hon'ble Apex Court in the case of Goetze (India) Ltd. (supra) which constitutes and error and is prejudicial to the interest of revenue. Consequently the provisions of sec. 263 have been rightly applied by ld. CIT.

(ii) The facts relating to fresh claim have not been referred or placed on record before the AO.

(iii) Except making casual reference to the revised computation, not a word of observation has been mentioned by the AO in his order regarding the merits of eligibility of claim u/s 54F qua the acquisition of house property of Rs.

1.30 crores to be set off Long term capital gain offered by the assessee

Thus the order of the AO is erroneous & prejudicial to the interest of the

revenue on these three counts, therefore, ld. CIT properly exercising his

statutory power u/s 263 revised the order in a justifiable manner which

deserves to be upheld.

8 ITA No. 201/JP/2014

Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

2.7 We have heard the rival contentions and perused the materials

available on record. It is a settled law that income tax assessment shall be

fair and reasonable; the valid claim which are due to the assessee should

be allowed to it. However hon'ble Apex Court in the case of Goetz (India)

Ltd. (supra) held as under:-

''The decision in question is that the power of the Tribunal under section 254 of the I.T. Act , 196, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances, of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal u/s 254 of the I.T. Act , 1961. There shall be no order as to costs.''.

In Goetz case, the claim of the assessee was refused to be entertained by

the AO as no revised return was filed. Hon'ble Supreme Court held that

the AO may refuse to entertain the claim in the absence of revised return.

The appellate authorities i.e. ITAT can entertain the same as they have

the vested power provided by the statute. Various CBDT circulars and 9 ITA No. 201/JP/2014 Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

other judicial precedents also enjoin a duty on the AO to consider lawful

claims of the assessee though they may not have been claimed in the

return. The legal position which emerges from the above is to the extent

that AO may refuse to entertain the claim by way of revised return.

However, if this claim is valid then there is no bar on his power to allow

any claim in terms of above judgments and CBDT circulars . In this case

what we find is that the AO has allowed the claim without commenting

on the merits of the claim of the assessee and there is no observation in

this behalf and what facts were filed along with return of income. The AO

should have made proper observation about the validity of the claim and

eligibility of the assessee which is totally missing. Thus in view thereof,

we are inclined to hold that the AO's order is erroneous and prejudicial to

the interest of the Revenue. However, we may add that the ld. CIT

looking at the lack of inquiries, instead of disallowing the claim outright

should have set aside the erroneous issue back to the file of the AO to

properly conduct inquiries and decide the merits of the claim.

Consequently, we uphold the order of the ld. CIT but we modify the order

by a direction of setting aside the issue to the file of the AO to decide it

afresh after conducting proper inquiries in accordance with law by 10 ITA No. 201/JP/2014 Smt. Anju Mittal vs. ACIT, Circle- 1,Jaipur

providing reasonable opportunity of being heard to the assessee. Thus the

appeal of the assessee is partly allowed.

3.0 In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 30/04/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@ Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 30 /04/ 2015 *Mishra

vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Smt. Anju Mittal, Jaipur

2. izR;FkhZ@ The Respondent- The ACIT, Circle- 1, Jaipur

3. vk;dj vk;qDr¼vihy ) @ CIT(A), Jaipur

4. vk;dj vk;qDr@ CIT, Jaipur

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No.201/JP/2014)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@ Assistant. Registrar