2009 (1) TMI 300 - AT - Income Tax

Tribunal Rejects New Exemption Claim; Upholds Rule on Filing Revised Returns, Citing Supreme Court Precedent.

The Tribunal upheld the CIT(A)'s order, dismissing the assessee's appeal. It concluded that the AO was correct in not entertaining the new claim for ... Doctrine of mutuality - New claim raised without filing a return before the AO u/s.139 - Whether the CIT(A) instead of directing the AO, can admit this claim itself and adjudicate? - assessee is a co-operative group housing society registered under Maharashtra State Co-operative Societies Act - receipt got from the members of the society relating to NOC and received interest from co-operative bank. HELD THAT:- We find that undisputedly in the original return of income the assessee has offered the receipts from its members for issuing NOC for taxation. Within a time-limit prescribed u/s.139, the assessee has not filed any revised return for revising its claim. During the course of assessment proceedings, the assessee raised a claim that the entire receipts are exempted from tax on the ground of mutuality, relying upon the judgment in the case of CIT vs. Adarsh Co-operative Housing Society Ltd.[1994 (10) TMI 32 - GUJARAT HIGH COURT] and in the case of Shivalika Co-operative Group Housing Society Ltd. vs. ITO [2006 (6) TMI 142 - ITAT DELHI]. Admittedly, this claim was raised after the expiry of the period for filing a revised return. AO following the judgment of the apex Court in the case of Goetze (India) Ltd. vs. CIT [2006 (3) TMI 75 - SUPREME COURT] did not entertain the claim and rejected it. The CIT(A) confirmed the order of the AO having observed that AO has passed an order following the order of the apex Court. In NTPC vs. CIT [1996 (12) TMI 7 - SUPREME COURT] which was passed by a Larger Bench of the apex Court comprising of 3 Judges. But, in that case, their Lordships have not held anywhere that any ground can be raised at any point of time before any of the appellate authorities. They have passed a qualified judgment and also explained the circumstances under which new ground or additional ground can be raised before the Tribunal. No doubt, they have held, the Tribunal have jurisdiction to examine a question of law which arises from the facts as found by the IT authorities and having a bearing on the tax liability of the assessee. But, they further held the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings. If the facts are not available in the record of the assessment proceedings, the question of law relating to those facts cannot be admitted by the Tribunal. Can the Tribunal pass any order and direct the AO to adjudicate the claim of the assessee which was not entertained by the AO in the light of the judgment of the apex Court? - The answer is certainly 'No'. If the Tribunal passes such order, it would certainly be against the spirit of the judgment of the apex Court. More so, it is a settled position of law that when a particular act or a power cannot be exercised directly by an authority, that act cannot be done indirectly under the garb of directions of the appellate authority. We, therefore, are of the view that since the AO has passed an order pursuant to the judgment of the apex Court, the order of the AO or the CIT(A) who has confirmed the order, cannot be disturbed or set aside in order to provide an opportunity to the assessee to prove his claim. So far as admission of this ground is concerned, we are of the view that since this issue requires a proper verification of facts and the relevant facts are not available on record or in the assessment proceedings, it 'cannot be admitted. If we admit the ground, it has to go back to the AO' for verification and the order for directing the AO to verify the facts and adjudicate the claim of the assessee would again be against the spirit of the Supreme Court judgment. We, therefore, are of the considered view that the claim 6f the assessee with regard to doctrine of mutuality cannot be entertained at this stage. In the light of these facts, we do not see any infirmity in the order of the CIT(A) and we confirm the same. In the result, appeal of the assessee is dismissed. Issues Involved:1. Whether the new claim raised by the assessee without filing a return before the AO under s. 139 can be entertained by the AORs.2. Whether the CIT(A) can entertain that claim or direct the AO to entertain the same if the AO did not entertain the same during the course of assessment proceedingsRs.Issue-Wise Detailed Analysis:1. New Claim Raised Without Filing a Return Before the AO Under s. 139:The assessee, a co-operative housing society, received various amounts including interest from banks and funds from members for issuing NOC, which were initially offered for taxation. During assessment proceedings, the assessee claimed exemption on these receipts based on the doctrine of mutuality, referencing the Gujarat High Court decision in CIT vs. Adarsh Co-operative Housing Society Ltd., without filing a revised return as per s. 139. The AO, adhering to the Supreme Court judgment in Goetze (India) Ltd. vs. CIT, did not entertain this claim, as it was not submitted through a revised return. The CIT(A) upheld the AO's decision, emphasizing that the AO was not legally obligated to entertain claims not filed through a revised return.2. CIT(A)'s Power to Entertain or Direct AO to Entertain the Claim:The assessee appealed to the Tribunal, citing the Supreme Court judgment in National Thermal Power Co. Ltd. vs. CIT, arguing that new grounds could be entertained and adjudicated by the Tribunal to ensure correct tax liability assessment. The Tribunal examined the applicability of the Goetze (India) Ltd. vs. CIT judgment, which restricts the AO from entertaining claims not filed through a revised return. The Tribunal noted that the NTPC judgment allowed new legal grounds to be raised before the Tribunal if all relevant facts were on record and no further verification was needed. However, in this case, the facts regarding the doctrine of mutuality required verification, which was not feasible without directing the AO to investigate, contrary to the Supreme Court's directive in Goetze (India) Ltd. vs. CIT.Conclusion:The Tribunal concluded that it could not direct the AO to entertain the claim or verify the facts, as it would contravene the Supreme Court's judgment in Goetze (India) Ltd. vs. CIT. Additionally, since the relevant facts were not available on record, the Tribunal could not admit the new ground itself. Consequently, the Tribunal upheld the CIT(A)'s order and dismissed the assessee's appeal, reiterating that the claim regarding the doctrine of mutuality could not be entertained at this stage.