Unreported Tribunal Decisions – August 2022
By Ajay R. Singh, Advocate and CA Rohit Shah
1. 263 rws. 54B: – Exemption not claimed by the Assessee in Original Return of Income but claimed in Response to the Return filed in response to Notice us 147 : Revision not justified :
The assessee filed his original return declaring total income of Rs.3,21,640/-, which was processed u/s 143(1) of the Act. Information was received by the AO leading him to believe that certain income escaped assessment. Notice u/s 148 was issued. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee had, inter alia, not disclosed the long-term capital gain. Therefore, AO added a sum of Rs.32,59,900/- as long term capital gain (net of exemption u/s.54B of the Act amounting to Rs.20,09,600/- towards the value of new agricultural land purchased). The ld. Pr.CIT observed that the assessee was not entitled to exemption u/s.54B of the Act since such a claim was not made in the return of income but only during the course of assessment proceedings. For this proposition, he relied on the judgment of Hon’ble Supreme Court in the case of Goetz India Ltd. Vs. CIT (2006) 284 ITR 232 (SC). Thus, in his opinion, rendered the assessment order erroneous and prejudicial to the interest of revenue. Held: The ld. Pr.CIT has not disputed the otherwise admissibility of exemption u/s.54B of the Act. His opinion was that such a claim could not have been made before the AO for the first time during the course of re-assessment proceedings otherwise than through filing a revised return. This, in his opinion, ran contrary to the judgment of the Hon’ble Supreme Court in the case of Goetz India Ltd. (supra). Clearly, the ratio of this decision is that the AO has no power to entertain a claim made otherwise than by way of revised return. However, it is worth mentioning that in this judgment itself, the Hon’ble Supreme Court has held that the power of the appellate authorities will not be affected by non-making of a claim in the return and the Tribunal has power to allow relief on a point for which no deduction was made in the return of income. In that view of the matter, it gets graphically clear that even though the AO is not empowered to allow exemption/deduction under the relevant provision unless a specific claim is made in the return of income, but such a claim can be entertained at the appellate stage, if it is really sustainable. Thus, the embargo is only on the AO and not on other higher authorities. Albeit, technically the AO was not competent to entertain such a claim, but legally the ld. Pr. CIT was duty-bound to accept it, when he was satisfied with its otherwise eligibility. Since the ld. Pr. CIT has not disputed the eligibility of the claim in law, it cannot be said that that the assessment order, seen in totality is erroneous and prejudicial to the interest of the Revenue and thus allowed the appeal.
Anandrao Sheshrao Bharose vs. Pr.CIT-1, Nashik
[ITA No.275/Pun/2021 dt 5/7/2022 ; Pune Bench : A ; A.Y. 2012-13 ]
2. Additional ground: Ground of Appeal not pressed inadvertently at the First Appellate Stage can be pressed subsequently:
The assessee and his family entered into a Joint Venture Agreement with M/s. Darode Jog & Associates for development of 5500 sq. mtrs. of land owned by the assessee. The said Joint Venture Agreement was registered on 15-07-2008, from which the assessee was to get 40% of gross sales proceeds. In pursuance of such understanding the assessee received Rs.55,00,000/- during the year as advance. The AO held Rs.50,00,000/- as business income considering the cost of land as on 01-04-1981 for Rs.5,00,000/-. Having aggrieved by the order of AO, the assessee raised said issue before the CIT(A) but however the CIT(A) dismissed the said issue as not pressed. Before Hon ITAT the Assessee submitted that by inadvertent mistake the said ground stated to have been not pressed before the CIT(A) and the assessee intends to prosecute the said ground before this Tribunal. The assessee submitted that the assessee held the said property as capital asset and for A.Y. 2007-08 the same was assessed as Long-Term Capital Gain. The assessee also drew attention to sub-section (2) of section 45 and argued that if investment is converted into stock-in-trade, gains on such investments is to be assessed u/s. 45(2) of the Act and referred to case laws compilation. Assessee also submitted that the AO has not appreciated the provisions of section 45(2) of the Act and wrongly charged as business income. He prayed to remand the issue to the file of AO with a direction to examine the issue with correct provisions of law u/s. 45(2) of the Act. The ld. DR vehemently opposed the same and argued that the assessee did not prosecute the said ground before the CIT(A) and intentionally withdrew the same. He submitted that there is no point in remanding the issue to the file of AO as the issue attained finality by withdrawal before the CIT(A). Held considering plea of the assessee Hon’ble ITAT remanded back the issue to the file of AO for its fresh consideration in determining the capital gains u/s. 45(2) of the Act. Thus, the additional grounds raised by the assessee was allowed for statistical purpose.
Baban G. Kumbharkar v. Dy. Commissioner of Income Tax, Central Circle-2(3), Pune
[ITA No. 2317/PUN/2016; dated 1/8/2022 ; Pune bench : A ; AY 2010-11]