2013 (11) TMI 523 - AT - Income Tax

ITAT directs re-examination of denied claims, emphasizes fair treatment of taxpayers

The ITAT ruled in favor of the appellant, directing the Assessing Officer to re-examine the denial of additional claims for freight and prior period ... Claim of exemption / deduction during assessment proceedings - Denial of additional claims on the ground that claims were not made by way of filing the revised return under Section 139(5) of the Income-tax Act, 1961 – Held that:- Reliance has been placed on the Hon’ble Delhi High Court judgment in the case of CIT Vs. Sam Global Securities Ltd [2013 (9) TMI 876 - DELHI HIGH COURT] - Issue is now squarely covered in favour of the assessee by the decisions of Hon'ble Jurisdictional High Court - That in the case of Sam Global Securities Ltd. (supra), the facts were that in the return of income, the assessee had not claimed exemption under Section 10(35) on the dividend income from the mutual funds and the loss on sale of units as business loss. During assessment proceedings, the assessee filed the revised computation of income claiming exemption as well as business loss. However, the Assessing Officer as well as CIT(A) rejected the assessee's claim on the ground that the assessee had not claimed it by filing of revised return under Section 139(5) within the time limit. In the instant case, ratio of the above decision of Hon'ble Jurisdictional High Court would be squarely applicable - Set aside the orders of authorities below on this point and restored the matter to the file of the Assessing Officer – Decided in favor of Assessee. Issues:1. Denial of additional claims on the ground of not filing revised return under Section 139(5) of the Income-tax Act, 1961.2. Rejection of deduction u/s 43B of the Income-tax Act, 1961.3. Summary rejection of claims regarding freight expenses, prior period expenses, and deduction under Section 43B without considering merits and legal precedents.Issue 1: Denial of Additional Claims:The appellant contested the denial of additional claims for inadvertent disallowance of freight expenses and prior period expenses by the CIT(A) on the basis that these claims were not made through a revised return under Section 139(5) of the Income-tax Act, 1961. The appellant argued that these claims were not initially made due to a mistaken belief and were raised for the first time before the CIT(A). The appellant further contended that the Assessing Officer had acknowledged the factual correctness of the claims during remand proceedings. The ITAT, after considering the arguments and legal precedents, including decisions of the Jurisdictional High Court, held in favor of the appellant. Citing the case of Sam Global Securities Ltd., where similar claims were accepted by the ITAT and upheld by the High Court, the ITAT directed the matter to be restored to the Assessing Officer for a detailed examination of the additional expenditure claims.Issue 2: Rejection of Deduction u/s 43B:The CIT(A) rejected the appellant's claim for deduction under Section 43B of the Income-tax Act, 1961, amounting to Rs. 2,96,52,486, on the grounds that the claim was not made through a revised return within the stipulated time frame under Section 139(5). The appellant argued that the deduction should be allowed as the payment was made during the relevant accounting year. The ITAT, considering the legal precedents and the express provisions of Section 43B, directed the Assessing Officer to re-examine the claim on merits, emphasizing that the deduction should be allowed irrespective of the timing of the claim submission.Issue 3: Summary Rejection of Claims:The CIT(A) summarily rejected the appellant's claims related to freight expenses, prior period expenses, and deduction under Section 43B without a detailed examination of the merits and legal precedents. The appellant argued that the rejection ignored established judgments of higher courts and tax authorities emphasizing the collection of only legitimate tax due from the assessee. The ITAT, after considering the arguments and legal precedents, set aside the orders of the authorities below and directed the Assessing Officer to re-evaluate the claims on their merits, ensuring the appellant's right to be heard. The ITAT allowed the appeal for statistical purposes, emphasizing the comprehensive jurisdiction of the tribunal to consider factual and legal grounds raised by the assessee.This judgment highlights the importance of due consideration of claims, adherence to legal procedures, and the obligation to examine claims on their merits, ensuring fair treatment of taxpayers in accordance with established legal principles and precedents.