News Update

CBDT invites inputs from taxpayers on drafting of New Direct Tax LawI-T - When assessee has failed to deduct tax at source and even deductee has not paid tax on payment received as it filed loss return, assessee certainly cannot escape from consequences of Ss 201(1) & 40(a)(ia): HCGovt withdraws export duty on sugar exportsAdmission in PG Medical Courses - Govt hikes quota to 5% for differently abledGovt has sanctioned prosecution only against 12 IAS & IPS in DA cases in 3 yrsGovt withdraws export duty of 20% on sugar to stabilise prices in domestic marketACC appoints 1988 batch IRS Simanchala Dash as Pr Special Director in Enforcement Directorate for two yearsAfter UK India also warns Facebook & others of action if they try to influence electoral process through unfair meansDraft agri export policy seeks reform in 'APMC Act'GST should be considered as the start of a process, not the end (See 'JEST GST on GST Home Page')Anti-dumping duty imposed on Dimethylacetamide imported from PR China & TurkeyAnti-dumping duty on Meta Phenylene Diamine (MPDA) imported from PR China - levy extended till 21 March 2019Tariff Item 0713 20 Chickpeas sub-divided further into Kabuli Chana, Bengal gram (desi chana) & OthersSl. no. 21A to Notification 50/2017-Cus, Entry Kabuli Chana amended to reflect change in first scheduleExport duty on raw sugar, white or refined, reduced from 20% to NilST - There is no scope to exclude 'Academic Courses' conducted by respondent IIPM from purview of Service tax levy: CESTATIs notification 1/2018-CT(R) relating to Real Estate Services retrospective?I-T - CBDT Circular prohibiting 'freebies' to doctors for promotion of sales is not retrospective in nature: ITATRow over Royalty on Mineral RightsCus - S.19of CA, 1962 is an empowerment for classification, and not valuation - Matter remanded: CESTATWrit petition challenging constitutional validity of Section 140(3)(iv) of CGST Act dismissed by Bombay High Court; refuses to strike down 1 year time limit for transitional credit availment; holds transitional credit under GST law is a clear case of concession; no discrimination of dealers vis-a-vis manufacturers/service providersSC admits misuse of SC/ST Act; says no immediate arrest of public servantsSushma Swaraj admits that 39 Indians kidnapped by ISIS are officially deadICLS should promote ethics in business, says PresidentPostal Department inks MoUs to design new stamps & promote PhilatelyGovt partners with private entities to protect cyber-spaceCX - A Writ Petition would lie against an OiO, against which an appeal was filed and dismissed as time-barred - HC to exercise discretion, no straightjacket formula: HC Full BenchST VCES, 2013 is not an open ended scheme - benefits thereunder cannot be derived dehors scheme or after its life or duration has come to an end: High Court
I-T - In absence of claim in original return, AO has power to entertain new claim only through a revised return: ITAT

By TIOL News Service

KOLKATA, FEB 09, 2018: THE issue is - Whether in the absence of a claim in original return of income, the AO has power to entertain a new claim only through a revised return. YES is the verdict.

Facts of the case

The Assessee-company, engaged in banking activity as defined u/s 5(b) of the Banking Regulation Act, 1949. The Assessee had filed its return for the relevant AY along with tax audit report declaring losses. The said return was processed u/s 143(1). Later, the AO deemed the Assessee as a co-operative society and therefore, the said assessment was reopened by issuing a notice u/s 148. Subsequently notices u/s 143(2) and 142(1) were issued. In reply, the Assessee had filed necessary documents and papers. During the reassessment proceeding, the AO held that the total loss declared by the Assessee in its return represented its an accumulated loss and hence, the income for the relevant year had to be independently computed. Accordingly, after disallowing the expenditure claimed by the Assessee, the AO determined the Assessee's total income for the AY 2005-06. On appeal, the CIT(A) confirmed the AO's action but, directed the AO to consider the allowability of deduction u/s 80P.

In pursuance, the AO passed an order wherein, the Assessee's gross total income was set off against carried forward losses of earlier years. Later, as the AO found out that such set off of carried forward losses of earlier years was wrongly given, for the reason that no such loss remained to be set off, he issued a notice u/s 154. During the rectification proceedings, the Assessee made a claim for deduction u/s 80P which was rejected by the AO rejected on the ground that no such claim was made by the Assessee in its return. In the second round of appeal proceedings, the CIT(A) directed the AO to allow deduction u/s 80P.

On appeal, the Tribunal held that,

++ there is no claim by the Assessee regarding allowability of deduction u/s 80P in the return of income filed by it. This might possibly be so, as there was no positive income declared by the Assessee in its return of income originally filed. In the first round of appellate proceedings the CIT(A) directed the AO to examine the issue of allowability of deduction u/s 80P, in view of positive income determined by the AO, in the order giving effect to the order of the CIT(A). The AO in the order giving effect to the order of the CIT(A) passed u/s 153(5) (sic u/s 251) as on 05.06.2012 the Assessee's income was computed;

++ he disallowed the claim of deduction u/s 80P on the ground that the Assessee has not claimed he same in its return of income. Later, the AO realized that set off of carry forward losses of Rs. 32,23,84,000/- was wrongly allowed in this order dated 05.06.2012 to the Assessee. He initiated rectification proceeding u/s 154. In these proceeding u/s 154 the Assessee has once again claimed deduction u/s 80P. This was again denied by the AO by reiterating his stand that this deduction cannot be allowed as the Assessee has not claimed the same in its return of income. On appeal the CIT(A) in the second round of appeal proceedings directed the AO to allow this claim of the Assessee. In our view, the CIT(A) was wrong in his decision;

++ this Tribunal find that Supreme Court in the case of Goetz (I) Ltd., wherein it was made clear that the power of assessing authority is limited in entertaining a new claim, in the absence of a claim in original return of income. The AO has power to entertain the same only through a revised return of income. In the present case, the CIT(A) in the first round of appellate proceedings has directed the AO to consider the fresh claim of the Assessee for deduction u/s 80P in the order giving effect to his appellate order. In our view, a fresh claim u/s 80P cannot be considered in an order giving effect to the order of the CIT(A). An order u/s 153(5) is not a fresh assessment order. It is to be passed mechanically and there is no scope for fresh adjudication and framing an assessment order. Grant of deduction u/s 80P is a fresh exercise and requires examination and adjudication. This cannot be done in proceeding giving effect to the order of the CIT(A) in an order to be passed u/s 153(5);

++ this decision of the AO in his order dated 05.06.2012 was not challenged by the Assessee. Be as it may, the Assessee seeks grant of deduction u/s 80P in a proceeding u/s 154 which was initiated to rectify the mistake apparent on record in the order of the AO dated 05.06.2012. This fresh claim cannot be entertained in a proceeding u/s 154. Only mistakes apparent on record can be rectified. Thus, the direction of the CIT(A) in the order so challenged is erroneous and bad in law. Hence, the Revenue's appeal is allowed.

(See 2018-TIOL-226-ITAT-KOL)