2022 (7) TMI 281 - AT - Income Tax

Tribunal Reverses CIT(A) Orders, Emphasizes Procedural Compliance

Dy. Commissioner of Income Tax, Circle – 8, Pune Versus Shri Kishor Shankar Garve

The Tribunal allowed both appeals of the Revenue, reversing the CIT(A)'s orders and restoring the AO's decisions. The Tribunal emphasized the importance ... Deduction u/s 80IB - commencement certificate was obtained first time on 31.03.2005 - allowability of deduction on profits u/s. 80IB(10) of the Act which was withdrawn by the assessee himself in revised return of income - contention of assessee that claim for deduction u/s. 80IB(10) was withdrawn by the assessee on the pressure exercised by the AO during the course of survey proceedings - CIT-A allowed the deduction - HELD THAT:- Contention of assessee cannot be accepted in the absence of any evidence on record. No material was placed before us showing that any complaints were lodged against the AO before the higher officials. Provisions u/s. 80IB provides for a deduction of profits held from the eligible housing project subject to the conditions stipulated therein. The provision of sub-section (5) of section 80A provides that where an assessee fails to make a claim in the return of income, for any deduction under the provisions of Chapter VIA, no deduction shall be allowed. Admittedly, in the present case in the original return of income filed by the assessee, made a claim for deduction of profits under the provisions of section 80IB(10) of the Act. The claim was withdrawn in the revised return of income. Once, the revised return is filed, the original return of income must be taken to be withdrawn and substituted by the revised return. If we are, to accept the contention of assessee that the revised return was not filed on account of any omissions found in the original return, it should be construed to mean that the revised return was filed to cure defects in the original return of income, revised return would relate back to the original filing date, which means that the assessee had not made any claim in the return of income for deduction of profits u/s. 80IB(10) of the Act read with the provisions of sub-section (5) of section 80A of the Act. Claim had not undergone the process of assessment by the AO, therefore, such claims cannot be allowed by the CIT(A) for the first time in contravention of plain provisions of sub-section (5) of section 80IA of the Act and there is nothing on record to indicate that the CIT(A) had satisfied himself as to the satisfaction of conditions necessary for allowing the benefit u/s. 80IB(10) of the Act - CIT(A) failed to refer to material on record, if any, that the assessee is entitled to benefit of deduction u/s. 80IB(10) of the Act and in any event the direction of CIT(A) allowing the benefit u/s. 80IB(10) of the Act is contrary to plain provisions of sub-section (5) of section 80A of the Act. Thus, the order of CIT(A) is illegal and perverse, cannot be sustained in the eyes of law, hence, reversed and the order of AO is restored. Thus, grounds raised by the Revenue are allowed. Rectification of mistake u/s 154 - Deduction on profits earned from housing project u/s. 80IB(10) of the Act in exercise of powers vested u/s 154 - HELD THAT:- Deduction under the provisions of section 80IB(10) can be allowed subject to condition that the assessee makes a claim in the return of income as provided by the provisions of sub-section (5) of section 80A of the Act. There was no claim made by the assessee for deduction u/s. 80IB(10) of the Act in the original return of income. Thus, the order of CIT(A) in allowing benefit of deduction is plainly contrary to the provisions of Income Tax Act. CIT(A) ought not to have exercised his jurisdiction u/s. 154 of the Act, in as much as, there is no mistake apparent on record in the order of CIT(A). It is settled position of law that the CIT(A) does not have power to review his own order in the absence of any express power granted by the statue. The power conferred u/s. 154 is a limited power, conferred with a view to correcting those mistakes which are apparent from the record. CIT(A) had not pointed out the mistakes in the original order passed by him and without referring to any mistakes apparent from the record, the CIT(A) had merely reviewed his own order in the garb of exercising power of rectification, which is not permissible under the law. Thus, the CIT(A) had grossly erred in both exercising the power of rectification as well as allowing the benefit of deduction u/s. 80IB(10) on merits. Thus, we set aside the order of CIT(A) and the order of AO is restored. Thus, grounds raised by the Revenue are allowed. Issues Involved:1. Allowability of deduction under section 80IB(10) of the Income Tax Act.2. Jurisdiction of the Commissioner of Income Tax (Appeals) [CIT(A)] in allowing a new claim not made in the original return.3. Validity of the revised return filed by the assessee under pressure.4. Power of CIT(A) under section 154 of the Income Tax Act to rectify an order.Issue-wise Detailed Analysis:1. Allowability of Deduction under Section 80IB(10):The primary issue in both appeals was whether the assessee was entitled to a deduction under section 80IB(10) for profits derived from housing projects. The assessee initially claimed the deduction but later withdrew it in the revised return filed after a survey operation. The CIT(A) allowed the deduction, but the Tribunal found that the CIT(A) erred in doing so since the revised return, which did not claim the deduction, replaced the original return. The Tribunal cited precedents, including decisions from the High Courts of Allahabad, Gujarat, and Bombay, to support this view, emphasizing that once a revised return is filed, it supersedes the original return, and any claims not made in the revised return cannot be considered.2. Jurisdiction of CIT(A) in Allowing a New Claim:The Tribunal held that the CIT(A) exceeded his jurisdiction by allowing the deduction under section 80IB(10) when it was not claimed in the revised return. According to section 80A(5), deductions under Chapter VIA cannot be allowed if not claimed in the return of income. The Tribunal noted that the CIT(A) cannot entertain a new claim that was not subjected to assessment by the Assessing Officer (AO).3. Validity of the Revised Return Filed Under Pressure:The assessee contended that the revised return withdrawing the deduction claim was filed under pressure from the AO during the survey. However, the Tribunal found no evidence to support this claim. The Tribunal emphasized that without any material evidence, such as complaints against the AO, the assertion of coercion could not be accepted.4. Power of CIT(A) Under Section 154:In the second appeal, the Tribunal addressed whether the CIT(A) was justified in allowing the deduction under section 80IB(10) in a rectification order under section 154. The Tribunal concluded that the CIT(A) misused the power of rectification, which is limited to correcting apparent mistakes on record. The Tribunal noted that the CIT(A) effectively reviewed his own order without identifying any specific mistake, which is not permissible under the law. The Tribunal reiterated that the CIT(A) does not have the power to review his own order unless expressly provided by statute.Conclusion:The Tribunal allowed both appeals of the Revenue, reversing the CIT(A)'s orders and restoring the AO's decisions. The Tribunal's judgment underscored the importance of adhering to procedural requirements and the limitations of the CIT(A)'s jurisdiction in allowing new claims and exercising powers under section 154. The Tribunal emphasized that deductions under section 80IB(10) must be claimed in the return of income, and any revised return supersedes the original, thereby nullifying any claims not reiterated in the revised return.