Supreme Court’s decision in the case of Goetze (India) Ltd. vis-à-vis Article 265 of the Constitution of India.
It is a well settled law that the Assessing Officer does not have the power to entertain a fresh claim raised before him otherwise than by filing a revised return. The same has been decided by the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs CIT [2006] 284 ITR 323 (SC) wherein the Apex Court has held that
“The decision [National Thermal Power Co. Ltd. v. CIT[1998] 229 ITR 383 (SC)] in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, 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.”
Therefore, what becomes evident is that even if a claim of the assessee, due to a bonafide mistake, remained to be claimed, the assessee won’t be able to claim the same if the due date for filing the revised return has expired. As a result, the assessee does not have a choice but to file an appeal before the Commissioner of Income Tax (Appeals) or a revision application u/s 264 before the Commission of Income Tax.
With due respect to the Supreme Court’s decision in the case of Goetze (India) Ltd. (supra), what needs to be kept in mind is Article 265 of the Constitution of India. The said Articicle reads as under:
“265. Taxes not to be imposed save by authority of law No tax shall be levied or collected except by authority of law.”
The Bombay High Court in the case of Nirmala L. Mehta vs. A. Balasubramaniam, C.I.T. (2004) 269 ITR 1 (Bom) has held that “There cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law.”
In another instance the Bombay High Court in the case of Balmukund Acharya vs DCIT, CIT and UOI 310 ITR 310 (Bom) has held that “Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected.”
In Sanchit Software & Solutions (P.) Ltd. vs CIT [2012] 349 ITR 404 (Bombay) it has been held that “In any civilized system, the assessee is bound to pay the tax which he liable under the law to the Government. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee. It is in aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of assessee’s ignorance and/or mistake.”
Further Circular No. 14(XL-35) of 1955, dated 11.4.1955, issued by the Central Board of Direct Taxes reads as under:
“Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a 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 guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should –
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs”.
In light of Article 265 of the Constitution of India, decisions of the Bombay High Court and CBDT Circular can it still hold good that the Assessing Officer cannot admit a claim otherwise than by filing a revised return?
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Nice observation. Goetze India needs to be reconsidered by a larger bench.