Case Law Details
The assessment proceedings u/s 143(2) of the Act are not meant for the benefit of the assessee but are for the benefit of Revenue only so that the AO is able to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner.
Relevant Text of the ITAT Order is as follows:-
(C.2). The second ground of appeal is in respect of the direction of the Ld.CIT(A) in para 6.1 of her appellate order dated 31.10.2012 wherein the Ld.CIT(A) directed the AO to reduce the taxable income by Rs.79,32,289/-. As a result of this direction of the Ld.CIT(A), the assessed income of the assessee becomes even lower than the returned income. In the second ground of appeal, the Revenue has objected to the direction of the Ld.CIT(A) by pointing out that period specified u/s 139(5) of I.T.Act had expired and the assessee had not filed any revised return. The aforesaid amount of Rs.79,32,289/- was shown by the assessee as taxable income in the return filed by the assessee u/s 139(4) of the I.T.Act. The assessee did not plead before the AO till the completion of assessment proceedings, that the aforesaid amount was not Rs.79,32,289/- taxable income. The assessee had not given any intimation to the AO, till finalization of the assessment order, excluding this amount from taxable income; and the aforesaid amount continued to be offered as taxable income by the assessee till the assessment order was passed. In any case, the assessee was not eligible to revise the return u/s 139(5) of I.T.Act as the return filed by the assessee was a belated return u/s 139(4) of the Act. It was for the first time before Ld.CIT(A) that the assessee took the plea that the aforesaid amount of Rs.79,32,289/- was not taxable income. The Ld.CIT(A) directed the AO to reduce the taxable income by aforesaid Rs.79,32,289/-. The relevant portion of the appellate order of Ld.CIT(A) is reproduced as under:–
6.1. “In the course of the appellate proceedings, the appellant inter alia objected the action of the AO for non computing the Income as per latest decision of Apex Court in the case of CIT vs. Ghanshyam Dass HUF, while filing the return of income the appellant included interest income of Rs. 79,32,289 as taxable. The AO accepted the Income declared by the appellant and made an addition of Rs.20,60,810/- which is deleted by me in my this order. The grievance of the appellant is that due to the ignorance of law the appellant offered the exempt income for tax and paid the income tax on exempt interest income, which was received U/s 28 of the land acquisition act, 1894. In the remand report the AO has stated that the appellant voluntarily offered the interest amount for taxation and since the AO was of the view that this is taxable income hence the question of re-computing the income does not arise. I have considered the facts of the case carefully. The Hon’ble Supreme Court of India in the case of Ghanshayam HUF supra has held that the interest received u/s 28 of the Land Acquisition Act is exempt from tax. Admittedly the interest received by appellant is u/s 28 of the Land Acquisition Act, hence is exempt from tax. This is also an admitted fact that the appellant has offered this amount for taxation before the decision of Hon’ble Apex Court in the case of Ghanshyam dass HUF. After this decision the situation has changed and the amendment made in statute by Finance Act, 2010 is applicable from the Assessment year 2010-11. Hence amended provision is not applicable n this case since appeal relates to assessment year 2008-09. It is settled law that the appellant is entitled to raise an additional claim before the AO or the appellate authority which was not raised earlier. Useful reference can be made to the decision of Hon’ble Delhi High Court in the case of CIT vs. Parabolic springs Ltd. 306 ITR 42 (Del). The Hon’ble Apex Court of India, CIT vs. Mahalaxmi Sugar Mill Co. Ltd. (1986) 58 CTR 138 (SC) held that there is duty cast on the AO to apply the relevant provisions of the Income Tax Act 1961 for the purpose of determining the true figure of taxable income and consequential tax liability. That the appellant fails to claim the benefit cannot relieve the AO of his duty to apply the relevant provision of the Act. From the above observation of Hon’ble Apex Court it is clear that the AO is duty bound to determine the correct taxable income irrespective of the facts whether the appellant has claimed the benefit or not. As I held in the earlier part of my order that the interest received by appellant is received U/s 28 of the land Acquisition Act therefore is exempt from tax. The amount of Rs. 79,39,289 was also received U/s 28 of the land Acquisition Act, and is exempt from Tax. Merely not making a claim cannot be basis to deprive the appellant from a legitimate claim. In view of above, the AO is directed to allow the relief to the appellant and reduce the taxable income by Rs. 79,32,289/- which is already included in income assessed by the AO. Accordingly this ground of appeal is allowed.”
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