Tribunal allows appeal for deduction claim under section 80JJAA, citing COVID-19 delay

The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Assessing Officer to reconsider the deduction claim under section 80JJAA of the Income Tax Act. The Tribunal emphasized that appellate authorities can entertain fresh claims not made in the return of income, disagreeing with the hyper-technical approach of the CIT(A) in rejecting the claim. The delay in pronouncing the order beyond the 90-day period was justified by the Tribunal due to the COVID-19 lockdown and exceptional circumstances.

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Issues Involved:
1. Denial of benefit of deduction under section 80JJAA of the Income Tax Act.
2. Rejection of rectification petition under section 154.
3. Jurisdiction of appellate authorities to entertain claims not made in the return of income.

Detailed Analysis:

1. Denial of Benefit of Deduction under Section 80JJAA:
The appellant (assessee) is engaged in providing software solutions and IT-enabled services. For the assessment year 2011-12, the assessee filed a return of income but failed to claim the deduction under section 80JJAA of the Income Tax Act. The assessee later made the claim during assessment proceedings and submitted the mandatory Form DA. However, the Assessing Officer (AO) did not consider this claim in the assessment order dated 27/03/2015. The assessee argued that the deduction under section 80JJAA was allowed in previous and subsequent years, thus questioning the denial for the impugned year.

2. Rejection of Rectification Petition under Section 154:
The assessee filed a rectification petition under section 154 to consider the deduction claim, which the AO rejected based on the Supreme Court decision in Goetze (India) Ltd. vs. CIT. The AO's rejection was not on the grounds of maintainability but on the basis that the claim was not made in the original or revised return of income. The CIT(A) dismissed the appeal against the order under section 154, stating that the appropriate remedy was to appeal against the assessment order under section 143(3).

3. Jurisdiction of Appellate Authorities to Entertain Claims Not Made in the Return of Income:
The assessee contended that the appellate authority has the inherent power to consider claims not made in the return of income, supported by the Bombay High Court decision in CIT vs. Pruthvi Brokers and Share Holders. The assessee argued that the rejection of a genuine claim due to technicalities constitutes a mistake apparent from the record. The Department countered that the AO had no occasion to consider the claim as it was made after the assessment order was passed, and fresh claims cannot be entertained under section 154.

Tribunal's Findings:
- The Tribunal acknowledged that the assessee did not make the deduction claim in the return or revised return but allegedly made it during assessment proceedings.
- The AO did not note the claim in the assessment order as it was received after the order was passed.
- The Tribunal disagreed with the CIT(A)'s hyper-technical approach of rejecting the claim on procedural grounds.
- The Tribunal held that while the AO was justified in rejecting the claim based on the Goetze (India) Ltd. decision, appellate authorities are not precluded from entertaining fresh claims not made in the return of income.

Conclusion:
- The Tribunal restored the issue to the AO for reconsideration of the deduction claim under section 80JJAA, without commenting on its merits.
- The AO is directed to allow a reasonable opportunity of hearing to the assessee and to examine the claim in accordance with the law.

Additional Note on Pronouncement Delay:
The order was pronounced beyond the 90-day period due to the COVID-19 lockdown, which the Tribunal justified by referencing the extraordinary circumstances and relevant judicial precedents.

Final Order:
The appeal of the assessee is allowed for statistical purposes.

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