THE issue before the Bench is - Whether when an assessee mistakenly fails to claim a deduction in its return, the same can be allowed as additional claim by the CIT(A) and Tribunal in exercise of their discretions. And the verdict goes against the Revenue.
Facts of the case
The Assessee had claimed a deduction u/s 43B in respect of payment of SEBI fees of Rs.10,00,000/- relevant to A.Y 2005-06. ++ an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction;
++ it is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made;
++ the CIT(A) and the Tribunal have held the omission to claim the deduction of Rs.40,00,000/- to be inadvertent. We see less reason to interfere with the exercise of discretion by the appellate authorities in permitting the respondent to raise this claim. That the respondent is entitled to the deduction in law is admitted and, in any event, clearly established;
++ the conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible.
The Assessee had claimed a deduction u/s 43B in respect of payment of SEBI fees of Rs.10,00,000/- relevant to A.Y 2005-06. ++ an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction;
++ it is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made;
++ the CIT(A) and the Tribunal have held the omission to claim the deduction of Rs.40,00,000/- to be inadvertent. We see less reason to interfere with the exercise of discretion by the appellate authorities in permitting the respondent to raise this claim. That the respondent is entitled to the deduction in law is admitted and, in any event, clearly established;
++ the conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible.
Thus, admittedly, for the relevant A.Y viz. 2004-05, the respondent was not entitled to a deduction in respect of the said payments. The respondent, in the course of the proceedings before the AO, stated that the claim was made through inadvertence. The respondent, however, made a claim of Rs.40,00,000/- u/s 43-B also being payment of the SEBI fees but made on 9th May, 2003 i.e. in the A.Y in question. The AO rejected the claim on the ground that he had no authority to allow any relief or deduction which had not been claimed in the return.The CIT(A) allowed the assessee's claim for deduction u/s 43B.Tribunal dismissed the Revenue Appeal.
On Appeal before the HC, Amicus Curiae submitted that there was no bar on an assessee making a claim by a letter without filing a revised return in a case under section 143(3). The Counsel also submitted that the impugned order of the Tribunal can be upheld on the basis of a circular issued by the CBDT. The Amicus further submitted that assuming that the AO was not entitled to grant a deduction on the basis of a letter requesting an amendment to the return filed, the appellate authorities were entitled to consider the claim and to adjudicate the same.
Having heard the parties, the HC held that,
On Appeal before the HC, Amicus Curiae submitted that there was no bar on an assessee making a claim by a letter without filing a revised return in a case under section 143(3). The Counsel also submitted that the impugned order of the Tribunal can be upheld on the basis of a circular issued by the CBDT. The Amicus further submitted that assuming that the AO was not entitled to grant a deduction on the basis of a letter requesting an amendment to the return filed, the appellate authorities were entitled to consider the claim and to adjudicate the same.
Having heard the parties, the HC held that,
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