2012 (11) TMI 503 - AT - Income Tax

Tax Tribunal denies revised return due to late filing; allows additional claims before appellate authority.

The Tribunal held that the revised return filed by the assessee could not be considered due to the belated filing of the original return. However, it ... Depreciation allowance - additional legal submissions before the appellate authorities - revised return filled by assessee - Held that:- The depreciation allowance under Explanation 5 of section 32 is mandatory allowable if the said asset is used for the purpose of business of the assessee. Whether the assessee makes a claim of depreciation or not in his return of income, AO is duty bound to grant depreciation allowance by virtue of Explanation 5 to section 32(1) of the Act (Inserted by Finance Act, 2001 w.e.f. 1/4/2002). Circular No.14 (XI-35) of 1955, dated April 11, 1955 provides that the officers of the department must not take advantage of the ignorance of an assessee as to his rights and that although the responsibility for claiming refunds and reliefs rests with the assessee on whom it is imposed by law, yet the officers should draw the attention of the assessees to any refund or relief to which they are entitled to but which they have omitted to claim for some reason or other, and 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. As decided in CIT v Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME COURT] the declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the ITO, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Therefore, that 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. Thus CIT (A) has not examined the issue in correct perspective taking into consideration the Explanation 5 to section 32(1) and the Board's Circular mentioned supra. The CIT (A) is empowered to consider additional claim made before him, though not made in the return filed. Therefore, in the interest of justice and equity, the case is restored to the file of the CIT (A) to consider the issues afresh and to take appropriate action in accordance with the provisions of the Act - appeal of the assessee is allowed for statistical purposes. Issues Involved:1. Legitimacy of the revised return filed by the assessee.2. Consideration of income from house property as declared in the revised return.3. Allowance of interest on car loans and depreciation on cars.4. Assessment of short-term capital gain versus claimed loss.Detailed Analysis:1. Legitimacy of the Revised Return:The primary issue was whether the revised return filed by the assessee could be considered, given that the original return was filed belatedly. The CIT(A) held that since the original return was filed late, no revised return could be filed under section 139(5) of the Act, citing the Supreme Court's judgments in Kumar Jagdish Chandra Sinha v. CIT and Goetze (India) Ltd. v. CIT. The Tribunal agreed that the revised return could not be taken cognizance of due to the belated filing of the original return. However, the Tribunal noted that additional claims could still be made before the appellate authority, which is duty-bound to consider them.2. Consideration of Income from House Property:The assessee claimed variations in deductions related to house property in the revised return, which were not accepted by the Assessing Officer. The Tribunal highlighted that the assessee had corrected the anomalies in the revised return, but these were not considered due to the procedural issue of the belated original return. The Tribunal emphasized that the appellate authority has the jurisdiction to entertain new claims, even if not made in the original return, and should consider the revised computation of income.3. Allowance of Interest on Car Loans and Depreciation on Cars:The assessee also claimed deductions for interest on car loans and depreciation on cars in the revised return, which were not claimed in the original return. The Tribunal referred to Explanation 5 to section 32(1) of the Act, stating that the Assessing Officer is duty-bound to grant depreciation allowance if the asset is used for business purposes, regardless of whether the claim was made in the return. The Tribunal also cited Circular No.14 (XI-35) of 1955, which obligates officers to assist taxpayers in claiming all entitled reliefs and deductions.4. Assessment of Short-Term Capital Gain versus Claimed Loss:The assessee reported a short-term capital gain in the original return but claimed a short-term capital loss in the revised return due to an adjustment involving a co-investor. The Tribunal noted that the assessee had revised the computation of the short-term capital gain after realizing that the co-investor had declared the entire sum received as other income. The Tribunal held that the appellate authority should consider this revised computation and determine the correct tax liability.Conclusion:The Tribunal concluded that the CIT(A) should have considered the additional claims made by the assessee, even though the original return was filed late. The Tribunal restored the case to the CIT(A) to re-examine the issues afresh, considering the provisions of the Act and the Board's Circular. The appeal was allowed for statistical purposes, and the CIT(A) was directed to call for a comprehensive remand report and afford the assessee an opportunity of being heard.