BNP PARIBAS INDIA HOLDING P. LTD., MUMBAI V. ACIT -14(1)(1), MUMBAI

ITA 1496/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5056 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 13-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Source of fund; Question of law; Wholly owned subsidiary; Right to appeal; Revised return; Bonafide mistake; Set aside
• Section: 43B; 143(3); 234B; 143(1); 201; 143(2); 13; 22; 37; 154

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.1496/MUM/2020 - ASSESSMENT YEAR 2017 - 18 BNP PARIBAS INDIA HOLDING PVT. LTD., 1 NORTH AVENUE, MAKER MAXITY, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI - 400 051 PAN: AAECB6544R VS. ACIT - 14(1)(1) R. NO. 460, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 20 A PPELLANT RESPONDENT ASSESSEE BY : SHRI FARROKH V. IRANI , AR REVENUE BY : SHRI RAHUL RAMAN , CIT - DR DATE OF HEARING : 20 .08.2020 DATE OF PRONOUNCEMENT : 12 . 10 .2020 PER RAVISH SOOD, J .M: THE CAPTIONED APPEAL FI LED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 22 MUMBAI, DATED 15.01.2020 , WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT 1961 (FOR SHORT ACT), DATED 26.06.2019 F OR A.Y. 2017 - 18 . THE REVENUE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSISTANT COMMISSIONER OF INCOME - TAX 14(1 )(1) (LEARNED AO) UND ER SECTION 143(3) OF THE ACT. 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSISTANT COMMISSIONER OF INCOME - TAX 14(1)(1) BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 2 (LEARNED AO) ISSUED UNDER SECTION 143(3) OF THE ACT BY MAKING AN UPWARD ADJ USTMENT FOR REVERSAL OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS, AMOUNTING TO RS 81,72,24,557; WITHOUT CONSIDERING THE DETAILED SUBMISSIONS MADE BEFORE THE CIT(A) BY THE APPELLANT. THE CIT(A) FAILED TO APPRECIATE THAT THE ACTION OF THE LEARNED AO RESULTED IN THE APPELLANT BEING ASSESSED TWICE ON THE SAME AMOUNT OF RS 81,72,24,557, ONCE IN AY 2013 - 14 AND ONCE IN AY 2017 - 18. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN HOLDING THAT NO ADDITION HAD BEEN MADE IN THE ORDE R UNDER SECTION 143(3) OF THE ACT EVEN WHEN THE LEARNED AO HAD AGREED, ON THE MERITS, WITH THE INCOME PROCESSED UNDER SECTION 143(1) OF THE ACT AND UPHELD THE INCOME COMPUTED IN THE INTIMATION UNDER SECTION 143(1) OF THE ACT AND RAISED THE DEMAND UNDER SEC TION 156 OF THE ACT PURSUANT TO ORDER UNDER SECTION 143(3) OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRONEOUSLY HELD THAT THE APPELLANT WAS NOT AGGRIEVED ON ACCOUNT OF THE ORDER ISSUED UNDER SECTION 143(3) OF THE ACT , EVEN WHEN THE LEARNED AO HAD AGREED, ON THE MERITS, WITH THE INCOME PROCESSED UNDER SECTION 143(1) OF THE ACT AND FURTHER THE COMPUTATION IN THE ORDER UNDER SECTION 143(3) OF THE ACT AND THE NOTICE OF DEMAND UNDER SECTION 156 OF THE ACT UPHELD THE ADDITI ON MADE IN INTIMATION UNDER SECTION 143(1) OF THE ACT. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO ERRED IN LEVYING INCORRECT INTEREST UNDER SECTION 234B AND SECTION 234C OF THE ACT AMOUNTING TO RS 7,66,13,553 AND RS 1,42,61,232 RESPECTIVE LY. THE APPELLANT DENIES ITS LIABILITY FOR SUCH INTEREST UNDER SECTION 234B AND SECTION 234C OF THE ACT. 2. BRIEFLY STATED, THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF BNP PARIBAS SA AND OPERATES AS A NON - BANKING FINANCIAL COMPANY OF THE B NP PARIBAS GROUP IN INDIA. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A.Y 2017 - 1 8 ON 30.11.2017 , DECLARING ITS TOTAL TAXABLE INCOME AT RS. 7,58,47,850/ - . THE GROSS TOTAL INCOME OF THE ASSESSEE COMPRISED OF I NTEREST INCOME OF RS. 7,60,45,260/ - AGAINST WHICH IT HAD CLAIMED DEDUCTION UNDER CHAPTER VIA OF RS. BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 3 1,97,415/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED BY THE CENTRAL PROCESSING CENTER, BANGALORE (FOR SHORT CPC) AND AN INTIMATION UNDER SEC. 143(1)(A) OF THE ACT WAS ISSUED ON 02/10/2018, WH EREIN AN UPWARD ADJUSTMENT OF RS. 81,72,24,557/ - WAS PROPOSED TO BE MADE. IN RESPONSE TO THE SAID INTIMATION THE ASSESSEE SUBMITTED AN ONLINE RESPONSE DATED 01.11.2018 , OBJECTING TO THE AFORE SAID ADJUSTMENT. SUBSEQUENTLY, AN INTIMATION U/S 143(1) OF THE AC T WAS ISSUED BY THE CPC ON 30.03.2019 , WHEREIN AN UPWARD ADJUSTMENT OF INCOME ON ACCOUNT OF REVERSAL OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - WAS MADE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION . ACCORDINGLY, A N ADDITIONAL DEMAND OF RS. 36,61,35,993/ - WAS DETERMINED AS PAYABLE BY THE ASSESSEE. 3. AS IS DISCERNIBLE FROM THE RETURN OF INCOME FOR A.Y 2013 - 14, THE ASSESSEE HAD CREATED A PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF R S. 81,72,24,557/ - DURING THE YEAR ENDED 31 ST MARCH, 2013. HOWEVER, THE SAID PROVISION WAS DISALLOWED BY THE ASSESSEE IN ITS RETURN OF INCOME FOR A.Y 2013 - 14. THE AFORESAID FACTUAL POSITION CAN SAFELY BE GATHERED FROM A PERUSAL OF THE ASSESSEES RETURN OF I NCOME FOR A.Y 2013 - 14, WHEREIN IN SCHEDULE BP - A(15) [I.E AS PER ( 7H OF PART - OI )] AN AMOUNT AGGREGATING TO RS. 82,27,73,590 (INCLUDING PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - ) WAS DISALLOWED BY THE ASSESSEE U/S 37 OF THE ACT. RESULTANTLY, THE ASSESSEE HAD IN ITS RETURN OF INCOME FOR A.Y 2013 - 14 REPORTED AN INTEREST INCOME OF RS. 13,16,82,560/ - UNDER THE HEAD NCOME FROM O THER SOURCES. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND THE A.O VIDE HIS ORDER PASSED U/S 143(3), DATED 28.10.2016 ASSESSED ITS INCOME AT RS. 13,16,82,560/ - . 4. DURING THE YEAR IN QUESTION I.E A.Y 2017 - 18 THE ASSESSEE HAD REVERSED THE AFORESAID PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 4 81,72,24,557/ - IN ITS BOOKS OF ACCOUNT. AS CAN BE GATHERED FROM THE RETURN OF INCOME FOR A.Y 2017 - 18 , THE TOTAL OF CREDITS IN THE ASSESSEES PROFIT & LOS S A/C AGGREGATING TO RS. 89,32,69,817/ - COMPRISED OF , VIZ. (I). INTEREST INCOME :RS. 7,60,45,260/ - ; AND (II). REVERSAL OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS :RS. 81,72,24,557/ - . AS PER COL. A3(C) OF THE SCHEDULE BP - COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION OF THE RETURN OF INCOME, THE ASSESSEE HAD WHILE COMPUTING ITS INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION EXCLUDED THE AFORESAID AMOUNT OF RS. 89,32,69,817/ - CREDITED IN ITS PROFIT & LOSS A/C ON THE PRETEXT THAT THE SAME WAS TO BE SEPARATELY CONSIDERED UNDER THE HEAD INCOME FROM THER SOURCES. HOWEVER , THE ASSESSEE HAD AS PER COL. 4 OF THE SCHEDULE OS [INCOME FROM OTHER SOURCES] - ACCOUNTED FOR ONLY THE INTER E ST INCOME OF RS. 7,60,45,260/ - UNDER THE HEAD INCOME FROM O THER SOURCES . AS FOR THE REVERSAL OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - THAT WAS EXCLUDED WHILE COMPUTING OF ITS INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION , THE SAME WAS HO WEVER NOT OFFERED BY THE ASSESS EE FOR TAX UNDER ANY HEAD OF INCOME IN ITS RETURN OF INCOME, FOR THE REASON, THAT IT WAS ALREADY DISALLOWED IN A.Y 2013 - 14. 5. ON RECEIPT OF THE INTIMATION U/S 143(1) OF THE ACT, DATED 30.03.2019 FROM THE CP C, BANGALORE, WHEREIN AN UPWARD ADJUSTMENT OF INCOME ON ACCOUNT OF REVERSAL OF PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - WAS MADE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION, THE ASSESSEE FILED A RECTIF ICATION APPLICATION, DATED 24.04.2019 . IT WAS THEREIN STATED BY THE ASSESSEE THAT AS THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - CREATED IN THE F.Y 2012 - 13 WAS DISALLOWED/ADDED BACK IN ITS RETURN OF INCOME FOR A.Y 2013 - 14, THEREFORE, THE REVERSAL OF THE SAID PROVISION DURING THE YEAR UNDER CONSIDER A TION WAS RIGHTLY REDUCED FROM THE ASSESSEES TOTAL INCOME. AS THE APPLICATION FILED BY THE BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 5 ASSESSEE SEEKING RECTIFICATION OF MISTAKE WAS NOT DISPOSED OFF BY THE A.O, THE SAME WAS THEREAFTER FOLLOWED BY REMINDER LETTERS DATED 30.05.2019, 11.08.2019, 17.08.2020 AND 18.08.2020, BUT TO NO AVAIL. AS HAD BEEN BROUGHT TO OUR NOTICE BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE THE AFORESAID APPLICATION FILED BY THE ASSESSEE U/S 154 OF T H E ACT HAD TILL DATE NOT BEEN DISPOSED OFF BY THE A.O. 6. IN THE MEAN TIME THE CASE OF THE ASSESSEE FORT HE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT U/S 143(2) OF THE ACT. BEFORE THE A.O, THE ASSESSEE OBJECTED TO THE UPWARD ADJUSTMENT OF ITS INCOME ON ACCOUNT OF REVERSAL OF THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - . HOWEVER, THE A.O WAS OF THE VIEW THAT AS THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION OF THE PROVISIO N FOR DIMINUTION IN THE VALUE OF INVESTMENTS IN SCHEDULE BP OF ITS RETURN OF INCOME, THEREFORE, THERE WAS NO REASON FOR HIM TO INTERFERE AS REGARDS ITS INCOME PROCESSED U/S 143(1) OF THE ACT. OBSERVING, THAT NO ADDITION WAS BEING MADE IN THE ASSESSMENT FRAMED BY HIM , THE A.O ASSESSED THE INCOME VIDE HIS ORDER PASSED U/S 143(3), DATED 26.06.2019 AT RS. 89,30,72,400/ - I.E THE INCOME PROCESSED VIDE THE INTIMATION U/S 143(1), DATED 30.03.2019. 7. AGGRIEVED, THE ASSESSEE CARRIED THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3), DATED 26.06.2019 IN APPEAL BEFORE THE CIT(A). THE ASSESSEE ASSAILED THE UPWARD ADJUSTMENT OF ITS INCOME ON ACCOUNT OF REVERSAL OF THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - BEFORE THE CIT(A). HO WEVER, THE CIT(A) DECLINED TO ACCEPT THE AFORESAID CLAIM OF THE ASSESSEE. HOLDING A CONVICTION THAT THE AFORESAID UPWARD ADDITION DID NOT EMANATE FROM THE IMPUGNED ORDER PASSED BY THE A.O U/S 143(3) OF THE ACT, DATED 26.06.2019, THE CIT(A) DECLINED TO DEAL WITH THE SAME AND DISMISSED THE APPEAL. BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 6 8. B EING AGGRIEVED WITH THE ORDER OF THE CIT(A) THE ASSESSEE HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORI Z ED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE TOOK US TH R OUGH THE FACTS OF THE CASE. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENTS PRESSED INTO SERVICE BY THEM. AS OBSERVE D BY US HEREINABOVE, THE ASSESSEE COMPANY HAD CREATED A PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - DURING THE YEAR ENDED 31 ST MARCH, 2013. HOWEVER, THE SAID PROVISION WAS DISALLOWED BY THE ASSESSEE IN ITS RETURN OF INCOME FOR A.Y 2013 - 14. THE AFORESAID FACTS ARE CLEARLY DISCERNIBLE FROM THE ASSESSEES RETURN OF INCOME FOR A.Y 2013 - 14, WHEREIN IN SCHEDULE BP - A(15) [I.E AS PER ( 7H OF PART - OI )] AN AMOUNT AGGREGATING TO RS. 82,27,73,590 (INCLUDING PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - ) WAS SUO MOTTO DISALLOWED BY THE ASSESSEE U/S 37 OF THE ACT. IN SUM AND SUBSTANCE, THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - CREATED BY THE ASSESSEE DURING THE YEAR END ED 31.03.2013 WAS DISALLOWED U/S 37 AND THEREIN OFFERED FOR TAX DURING A.Y 2013 - 14. THE SAID FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT. IN FACT, THE CONCERNED A.O WHO HAD APPEARED IN THE COURSE OF THE PROCEEDINGS BEFORE US HAD ADMITTED T HE SAID FACTUAL POSITION. IN THE BACKDROP OF THE AFORESAID FACTS, NOW WHEN THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - WAS DISALLOWED/ADDED BACK BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH IT WAS CR EATED I.E A.Y 2013 - 14, THE SAME THEREAFTER COULD NOT HAVE BEEN INCLUDED IN ITS INCOME FOR THE YEAR IN QUESTION IN WHICH IT WAS REVERSED. TO SUM UP, A PROVISION WHICH IS DISALLOWED BY AN ASSESSEE AND NEVER CLAIMED AS A DEDUCTION WHILE COMPUTING ITS INCOME CANNOT THEREAFTER BE INCLUDED IN ITS INCOME FOR THE YEAR IN WHICH THE SAME IS REVERSED. HOWEVER, WE FIND THAT THE ENTIRE CONTROVERSY BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 7 ARISES FROM A N INADVERTENT CLERICAL MISTAKE ON THE PART OF THE ASSESSEE IN NOT REDUCING THE REVERSAL OF THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - FROM ITS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION I.E IN COLUMN 33 AMOUNT A LLOWABLE AS DEDUCTION OF THE SCHEDULE BP - COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION , AND INSTEAD , WRONGLY REPORTING THE SAME IN COLUMN A3(C) INCOME/RECEIPTS CREDITED TO PROFIT AND LOSS ACCOUNT CONSIDERED UNDER OTHER HEADS OF INCOME I.E OTHER SOURCES OF SCHEDULE BP OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT IS THUS FOR THE AFORESAID INADVERTENT CLERICAL MISTAKE THAT THE ASSESSEE VIDE AN INTIMATION ISSUED U/S 143(1), DATED 30.03.2019 HAD BEEN SADDLED WITH AN EXORBITANT TAX LI ABILITY WHICH THOUGH MILITATES AGAINST THE SETTLED POSITION OF LAW. 9. OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE ASSESSEE, TO ADJUDICATE, AS TO WHETHER OR NOT THE CIT(A) IS CORRECT IN CONCLUDING THAT AS THE ADDITION MADE ON ACCOUNT OF REVERSAL OF THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - DID NOT EMERGE FROM THE IMPUGNED ORDER PASSED BY THE A.O U/S 143(3), DATED 30.03.2019, THE SAME COULD NOT BE ADJUDICATED UPON BY HIM . AS OBSERVED BY US HEREINABOVE, WE HAVE NO DOUBT IN OUR MIND INSOFAR PRINCIPALLY ANSWERING THE VALIDITY OF THE ADDITION MADE IN THE HANDS OF THE ASSESSEE IS CON CERNED. IN OUR CONSIDERED VIEW , NOW WHEN THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT S OF RS. 81,72,24,557/ - WAS DISALLOWED/ADDED BACK BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH THE SAID PROVISION WAS CREATED I.E A.Y 2013 - 14, THE SAME THEREAFTER COULD NOT HAVE BEEN INCLUDED IN ITS INCOME FOR THE YEAR IN QUESTION I.E A.Y 2017 - 18 IN WHICH IT WAS REVERSED IN THE BOOKS OF ACCOUNT . IN FACT, TAKING A VIEW TO THE CONTRARY WOULD UNDOUBTEDLY AMOUNT TO DOUBLE TAXATION IN THE HANDS OF THE ASSESSEE. B OTH THE LD. D.R AND THE A.O (WHO HAD APPEARED BEFORE US IN THE COURSE OF THE HEA RING OF THE APPEAL) HAD FAIRLY ADMITTED THAT AS BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 8 NO DEDUCTION FOR THE AFORESAID PROVISION WAS CLAIMED BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH IT WAS CREATED I.E A.Y 2013 - 14, THE INCLUSION OF THE SAME ON ITS REVERSAL IN THE BOOKS OF ACCOUNT DURING THE YEAR IN QUESTION I.E A.Y 2017 - 18 WOULD LEAD TO DOUBLE TAXATION IN ITS HANDS. HOWEVER, THE CONTROVERSY INVOLVED IN THE PRESENT APPEAL HINGES AROUND THE ASPECT THAT AS WHETHER AN ADJUSTMENT MADE VIDE AN INTIMATION U/S 143(1) CAN THEREAFTER BE DISLODGED BY THE A.O WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT. ADMITTEDLY, THE ASSESSEE HAD NOT ACCEPTED THE IMPUGNED ADJUSTMENT TO ITS RETURNED INCOME ON ACCOUNT OF REVERSAL OF THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - AS CARRIED OUT BY THE CPC, BANGALORE, VIDE ITS INTIMATION U/S 143(1), DATED 30.03.1999, AND HAD ASSAILED THE SAME BY WAY OF AN A PPLICATION FILED WITH THE A.O U/S 154 OF THE ACT. BEFORE PROCEEDING ANY FURTHER, WE MAY HEREIN OBSERVE THAT AS THE INTIMATION U/S 143(1) WAS ISSUED TO THE ASSESSEE COMPANY ON 30.03.2019 I.E SUBSEQUENT TO THE ISSUANCE OF THE NOTICE U/S 143(2), DATED 21.08.2 018 , THE SAME WOULD THUS NOT BE VALID IN THE EYES OF LAW. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT ELECTRICITY BOARD (2003) 260 ITR 484 (SC) , WHEREIN THE HONBLE APEX COURT HAD OBSERVED TH AT IT IS NOT OPEN TO THE REVENUE TO ISSUE AN INTIMATION UNDER S. 143(1)(A) AFTER NOTICE FOR REGULAR ASSESSMENT HAS BEEN ISSUED UNDER S. 143(2) . BE THAT AS IT MAY, WE SHALL FOR ANSWERING THE ISSUE THAT AS TO WHETHER AN ADJUSTMENT MADE VIDE AN INTIMATION U/S 143(1) CAN THEREAFTER BE DISLODGED BY THE A.O WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, HEREINAFTER DELIBERATE UPON THE POWERS OF AN A.O AND ALSO THE RIGHTS VESTED WITH AN ASSESSEE IN THE CO URSE OF ASSESSMENT PROCEEDINGS. 10. BEFORE ADVERTING ANY FURTHER, WE SHALL LOOK INTO THE VARIOUS JUDICIAL PRONOUNCEMENTS, ON THE ASPECT, THAT AN ASSESSEE IS VESTED WITH A RIGHT TO RAISE AN ADDITIONAL CLAIM WHICH THOUGH MIGHT NOT HAVE BEEN RAISED IN THE RETURN BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 9 OF INCOME, AND THE APPELLATE AUTHORITIES ARE ENTITLED TO CONSIDER AND ADJUDICATE THE SAME. WE FIND THAT THE ISSUE AS TO WHETHER AN ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS COULD BE PERMITTED TO RAISE A CLAIM, WHICH WOULD LEAD TO EXCLUSI ON OF AN INCOME OFFERED BY HIM IN HIS RETURN OF INCOME HAD BEEN DELIBERATED UPON AT LENGTH BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (P) LTD. (2012) 349 ITR 336 (BOM) . IN ITS SAID JUDGMENT, IT WAS HELD BY TH E HONBLE HIGH COURT THAT AN ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS NOT MERELY IN TERMS OF LEGAL SUBMISSIONS, BUT ALSO ADDITIONAL CLAIMS TO WIT CLAIMS NOT MADE IN THE RETURN FILED BY IT . THE HONBLE HIGH COURT WHILE CONCLUDING AS HEREINABOVE, HAD AFTER REFERRING TO A LONG LINE OF JUDICIAL PRONOUNCEMENTS OBSERVED AS UNDER: 10. A LONG LINE OF AUTHORITIES ESTABLISH CLEARLY THAT AN ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS NOT MERELY IN TERMS OF LEGAL SUBMISSIONS, BUT ALSO ADDITIONAL CLAIMS TO WIT CLAIMS NOT MADE IN THE RETURN FILED BY IT. IT IS NECESSARY FOR US TO REFER TO SOME OF THESE DECISIONS ONLY TO DEAL WITH TWO SUBMISSIONS ON BEHALF OF THE DEPARTME NT. THE FIRST IS WITH RESPECT TO AN OBSERVATION OF THE SUPREME COURT IN JUTE CORPORATION OF INDIA LIMITED V. COMMISSIONER OF INCOME TAX, 1991 SUPP (2) SCC 744 = (1991) 187 ITR 688. THE SECOND SUBMISSION IS BASED ON A JUDGMENT OF THE SUPREME COURT IN GOETZE (INDIA) LIMITED V. COMMISSIONER OF INCOME TAX. 11(A). IN JUTE CORPORATION OF INDIA LIMITED V. CIT, FOR THE ASSESSMENT YEAR 1974 - 75 THE APPELLANT DID NOT CLAIM ANY DEDUCTION OF ITS LIABILITY TOWARDS PURCHASE TAX UNDER THE PROVISIONS OF THE BENGAL RAW JUTE TAXATION ACT, 1941, AS IT ENTERTAINED A BELIEF THAT IT WAS NOT LIABLE TO PAY PURCHASE TAX UNDER THAT ACT. SUBSEQUENTLY, THE APPELLANT WAS ASSESSED TO PURCHASE TAX AND THE ORDER OF ASSESSMENT WAS RECEIVED BY IT ON 23 RD NOVEMBER, 1973. THE APPELLANT CHALLENG ED THE SAME AND OBTAINED A STAY ORDER. THE APPELLANT ALSO FILED AN APPEAL FROM THE ASSESSMENT ORDER UNDER THE INCOME TAX ACT. IT WAS ONLY DURING THE HEARING OF THE APPEAL THAT THE ASSESSEE CLAIMED AN ADDITIONAL DEDUCTION IN RESPECT OF ITS LIABILITY TO PURC HASE TAX. THE APPELLATE ASSISTANT COMMISSIONER (AAC) PERMITTED IT TO RAISE THE CLAIM AND ALLOWED THE DEDUCTION. THE TRIBUNAL HELD THAT THE AAC HAD NO JURISDICTION TO ENTERTAIN THE ADDITIONAL GROUND OR TO GRANT RELIEF ON A GROUND WHICH HAD NOT BEEN RAISED B EFORE THE INCOME TAX OFFICER. THE TRIBUNAL ALSO REFUSED THE APPELLANT'S APPLICATION FOR MAKING A REFERENCE TO THE HIGH COURT. THE HIGH COURT UPHELD THE DECISION OF THE TRIBUNAL AND REFUSED TO CALL FOR A STATEMENT OF CASE. IT IS IN THESE CIRCUMSTANCES THAT THE APPELLANT FILED THE APPEAL BEFORE THE SUPREME COURT. THE SUPREME COURT HELD AS UNDER : - BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 10 '5. IN CIT V. KANPUR COAL SYNDICATE, A THREE JUDGE BENCH OF THIS COURT DISCUSSED THE SCOPE OF SECTION 31(3)(A) OF THE INCOME TAX ACT, 1922 WHICH IS ALMOST IDENTICAL TO SECTION 251(1)(A). THE COURT HELD AS UNDER: (ITR P. 229) 'IF AN APPEAL LIES, SECTION 31 OF THE ACT DESCRIBES THE POWERS OF THE APPELLATE ASSISTANT COMMISSIONER IN SUCH AN APPEAL. UNDER SECTION 31(3)( A) IN DISPOSING OF SUCH AN APPEAL THE APPELLATE ASSISTANT COMMISSIONER MAY, IN THE CASE OF AN ORDER OF ASSESSMENT, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; UNDER CLAUSE (B) THEREOF HE MAY SET ASIDE THE ASSESSMENT AND DIRECT THE INCOME TAX OFFICER TO MAKE A FRESH ASSESSMENT. THE APPELLATE ASSISTANT COMMISSIONER HAS, THEREFORE, PLENARY POWERS IN DISPOSING OF AN APPEAL. THE SCOPE OF HIS POWER IS CO - TERMINUS WITH THAT OF THE INCOME - TAX OFFICER. HE CAN DO WHAT THE INCOME - TAX OFFICER CAN DO AND ALSO DIRE CT HIM TO DO WHAT HE HAS FAILED TO DO.' (EMPHASIS SUPPLIED) 6. THE ABOVE OBSERVATIONS ARE SQUARELY APPLICABLE TO THE INTERPRETATION OF SECTION 251(1)(A) OF THE ACT. THE DECLARATION OF LAW IS CLEAR THAT THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IS C O - TERMINUS WITH THAT OF THE INCOME TAX OFFICER, IF THAT BE SO, THERE APPEARS TO BE NO REASON AS TO WHY THE APPELLATE AUTHORITY CANNOT MODIFY THE ASSESSMENT ORDER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE INCOME TAX OFFICER. NO EXCEPTION COULD B E TAKEN TO THIS VIEW AS THE ACT DOES NOT PLACE ANY RESTRICTION OR LIMITATION ON THE EXERCISE OF APPELLATE POWER. EVEN OTHERWISE AN APPELLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF A SUBORDINATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL A UTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS IF ANY PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE APPEARS TO BE NO GOOD REASON AND NONE WAS PLACED BEFORE US TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKI NG MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME TAX OFFICER.' [EMPHASIS SUPPLIED] (B) IT IS CLEAR, THEREFORE, THAT AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES, BUT IS ALSO ENTITL ED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT CANNOT, HOWEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THEY HAVE THE JURISDICTI ON TO ENTERTAIN THE NEW CLAIM. THAT THEY MAY CHOOSE NOT TO EXERCISE THEIR JURISDICTION IN A GIVEN CASE IS ANOTHER MATTER. THE EXERCISE OF DISCRETION IS ENTIRELY DIFFERENT FROM THE EXISTENCE OF JURISDICTION. 12. AT PAGE 694, AFTER REFERRING TO CERTAIN OBSE RVATIONS OF THE SUPREME COURT IN ADDITIONAL COMMISSIONER OF INCOME - TAX V. GURJARGRAVURES P. LTD., (1978) 111 ITR 1, THE SUPREME COURT OBSERVED AT PAGE 694 AS UNDER : - 'THE ABOVE OBSERVATIONS DO NOT RULE OUT A CASE FOR RAISING AN ADDITIONAL GROUND BEFORE TH E APPELLATE ASSISTANT COMMISSIONER IF THE GROUND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE, OR THAT THE GROUND BECAME AVAILABLE ON ACCOUNT OF BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 11 CHANGE OF CIRCUMSTANCES OR LAW . THERE MAY BE SEVERAL FACTORS JUSTIFYING RAISING OF SUCH NEW PLEA IN APPEAL, AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. IF THE APPELLATE ASSISTANT COMMISSIONER IS SATISFIED HE WOULD BE ACTING WITHIN HIS JURISDICTION IN CONSIDERING THE QUESTION S O RAISED IN ALL ITS ASPECTS. OF COURSE, WHILE PERMITTING THE ASSESSEE TO RAISE AN ADDITIONAL GROUND, THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HIS DISCRETION IN ACCORDANCE WITH LAW AND REASON. HE MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASONS. THE SATISFACTION OF THE APPELLATE ASSISTANT COMMISSIONER DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE AND NO RIGID PRINCIPLES OR ANY HARD AND FAST RULE CAN BE LAID DOWN F OR THIS PURPOSE.' [EMPHASIS SUPPLIED] 13. THE UNDERLINED OBSERVATIONS IN THE ABOVE PASSAGE DO NOT CURTAIL THE AMBIT OF THE JURISDICTION OF THE APPELLATE AUTHORITIES STIPULATED EARLIER. THEY DO NOT RESTRICT THE NEW/ADDITIONAL GROUNDS THAT MAY BE TAKEN BY T HE ASSESSEE BEFORE THE APPELLATE AUTHORITIES TO THOSE THAT WERE NOT AVAILABLE WHEN THE RETURN WAS FILED OR EVEN WHEN THE ASSESSMENT ORDER WAS MADE. THE SENTENCE READ AS A WHOLE ENTITLES AN ASSESSEE TO RAISE NEW GROUNDS/MAKE ADDITIONAL CLAIMS : - 'IF THE GRO UND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE...' 'OR' IF 'THE GROUND BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW' THE APPELLATE AUTHORITIES, THEREFORE, H AVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE FIRST PART VIZ. 'IF THE GROUND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE... 'CLEARLY RELATE TO CASES WHERE THE GROUND WAS AVAILABLE WHEN THE RETURN WAS FILED AND THE ASSESSMENT ORDER WAS MADE BUT 'COULD NOT HAVE BEEN R AISED' AT THAT STAGE. THE WORDS ARE 'COULD NOT HAVE BEEN RAISED' AND NOT 'WERE NOT IN EXISTENCE'. GROUNDS WHICH WERE NOT IN EXISTENCE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE FALL WITHIN THE SECOND CATEGORY VIZ. WHERE 'THE GROUND BEC AME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW.' 14. THE FACTS IN JUTE CORPORATION OF INDIA LTD., VARIOUS JUDGMENTS REFERRED TO THEREIN AS WELL AS IN SUBSEQUENT CASES, WHICH WE WILL REFER TO, ESTABLISHES THIS BEYOND DOUBT. IN MANY OF THE CASES , THE GROUNDS WERE, IN FACT, AVAILABLE WHEN THE RETURN WAS FILED AND/OR THE ASSESSMENT ORDER WAS MADE. IN JUTE CORPORATION OF INDIA LTD., THE GROUND WAS AVAILABLE WHEN THE RETURN WAS FILED. THE ASSESSEE DID NOT CLAIM ANY DEDUCTION OF ITS LIABILITY TO PAY P URCHASE TAX AS 'IT ENTERTAINED A BELIEF THAT IT WAS NOT LIABLE TO PAY PURCHASE TAX UNDER THE BENGAL RAW JUTE TAXATION ACT, 1941'. THUS, THE GROUND EXISTED WHEN THE RETURN WAS FILED. THE ASSESSMENT ORDER WAS EVEN MADE AND RECEIVED BY THE ASSESSEE. IT IS ONL Y AFTER THE APPEAL WAS FILED THAT THE ASSESSEE CLAIMED A DEDUCTION IN RESPECT OF THE AMOUNT PAID TOWARDS THE PURCHASE TAX UNDER THE SAID ACT. IT IS ALSO SIGNIFICANT TO NOTE THAT THE ASSESSEE'S ENTITLEMENT TO CLAIM DEDUCTION HAD BEEN HELD TO BE VALID IN VIE W OF AN EARLIER JUDGMENT OF THE SUPREME COURT IN KEDARNATH JUTE MANUFACTURING COMPANY LIMITED V. COMMISSIONER OF INCOME - TAX, (1971) 82 ITR 363. THIS BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 12 WAS, THEREFORE, A CASE OF ERROR IN PERCEPTION/JUDGMENT. DESPITE THE SAME, THE SUPREME COURT UPHELD THE DECI SION OF THE APPELLATE ASSISTANT COMMISSIONER IN ALLOWING THE DEDUCTION. THE WORDS 'COULD NOT HAVE BEEN RAISED' MUST, THEREFORE, BE CONSTRUED LIBERALLY AND NOT STRICTLY. 15. IT IS INDEED A QUESTION OF EXERCISE OF DISCRETION WHETHER OR NOT TO ALLOW AN ASSES SEE TO RAISE A CLAIM WHICH WAS NOT RAISED WHEN THE RETURN WAS FILED OR THE ASSESSMENT ORDER WAS MADE. AS HELD BY THE SUPREME COURT THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN APPEAL AND EACH CASE MUST BE CONSIDERED ON ITS OWN FACTS . HOWEVER, SUCH CASES INCLUDE THOSE, WHERE THE GROUND THOUGH AVAILABLE WHEN THE RETURN WAS FILED OR THE ASSESSMENT ORDER WAS MADE, WAS NOT TAKEN OR RAISED FOR REASONS WHICH THE APPELLATE AUTHORITIES MAY CONSIDER VALID. IN OTHER WORDS, THE JURISDICTION OF T HE APPELLATE AUTHORITIES TO CONSIDER A FRESH OR NEW GROUND OR CLAIM IS NOT RESTRICTED TO CASES WHERE SUCH A GROUND DID NOT EXIST WHEN THE RETURN WAS FILED AND THE ASSESSMENT ORDER WAS MADE. 16(A). A FULL BENCH OF THIS COURT IN AHMEDABAD ELECTRICITY LIMIT ED V. COMMISSIONER OF INCOME - TAX, (1993) 199 ITR 351 CONSIDERED A SIMILAR SITUATION. IN THAT CASE, THE APPELLANT/ASSESSEE DID NOT CLAIM A DEDUCTION IN RESPECT OF THE AMOUNTS IT WAS REQUIRED TO TRANSFER TO CONTINGENCIES RESERVE AND DIVIDEND AND TARIFF RESER VE EITHER BEFORE THE INCOME TAX OFFICER OR BEFORE THE APPELLATE ASSISTANT COMMISSIONER IN APPEAL. SUBSEQUENTLY, THIS COURT HAD, IN AMALGAMATED ELECTRICITY COMPANY LIMITED V. COMMISSIONER OF INCOME - TAX, (1974) 97 ITR 334, HELD THAT SUCH AMOUNTS REPRESENTED ALLOWABLE DEDUCTIONS ON REVENUE ACCOUNT. THE APPELLANT, THEREFORE, RAISED A NEW CLAIM AND ADDITIONAL GROUNDS BEFORE THE TRIBUNAL IN THAT CONNECTION. THE TRIBUNAL REJECTED THE SAME. THE SECOND QUESTION WHICH WAS RAISED IN THE REFERENCE BEFORE THE DIVISION B ENCH WAS AS UNDER : - '(2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL ERRED IN NOT ALLOWING THE ASSESSEE LEAVE TO RAISE IN ITS OWN APPEALS ADDITIONAL GROUNDS AND IN THE DEPARTMENTAL APPEALS CROSS OBJECTIONS REGARDING THE DEDUCT IBILITY OF THE SUMS TRANSFERRED TO CONTINGENCY RESERVE AND TARIFF AND DIVIDEND CONTROL RESERVE?' (B). THE DIVISION BENCH WHICH HEARD THE REFERENCE, FINDING THAT THERE WAS A CONFLICT OF DECISIONS, PLACED THE PAPERS BEFORE THE HON'BLE CHIEF JUSTICE FOR CONS TITUTING A LARGER BENCH TO RESOLVE THE CONTROVERSY. THE FULL BENCH ANSWERED THE REFERENCE IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. THE FULL BENCH HELD : - 'THUS, THE APPELLATE ASSISTANT COMMISSIONER HAS VERY WIDE POWERS WHILE CONSIDERING AN APPEAL WHICH MAY BE FILED BY THE ASSESSEE. HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT OR REMAND THE CASE TO THE ASSESSING OFFICER. THIS IS BECAUSE, UNLIKE AN ORDINARY APPEAL, THE BASIC PURPOSE OF A TAX APPEAL IS TO ASCERTAIN THE CORRECT TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. HENCE AN APPELLATE ASSISTANT COMMISSIONER ALSO HAS THE POWER TO ENHANCE THE TAX LIABILITY OF THE ASSESSEE ALTHOUGH THE DEPARTMENT DOES NOT HAVE A RIGHT OF APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER. THE EXPLA NATION TO SUBSECTION (2), HOWEVER, MAKES IT CLEAR THAT FOR THE PURPOSE OF ENHANCEMENT, THE BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 13 APPELLATE ASSISTANT COMMISSIONER CANNOT TRAVEL BEYOND THE PROCEEDINGS WHICH WERE ORIGINALLY BEFORE THE INCOME - TAX OFFICER OR REFER TO NEW SOURCES OF INCOME WHICH WER E NOT BEFORE THE INCOME - TAX OFFICER AT ALL. FOR THIS PURPOSE, THERE ARE OTHER SEPARATE REMEDIES PROVIDED UNDER THE INCOME - TAX ACT.' (C). IT IS UNNECESSARY TO REFER TO ALL THE JUDGMENTS THAT THE FULL BENCH REFERRED TO WHILE ANSWERING THE REFERENCE. THE FUL L BENCH REFERRED TO THE OBSERVATIONS OF THE SUPREME COURT IN JUTE CORPORATION OF INDIA LIMITED V. COMMISSIONER OF INCOME - TAX (SUPRA) SET OUT ABOVE. IT IS IMPORTANT TO NOTE THAT EVEN IN THIS CASE, THEREFORE, THE GROUND EXISTED WHEN THE RETURN WAS FILED. THE MERE FACT THAT A DECISION OF A COURT IS RENDERED SUBSEQUENTLY DOES NOT INDICATE THAT THE GROUND DID NOT EXIST WHEN THE LAW WAS ENACTED. JUDGMENTS ARE ONLY A DECLARATION OF THE LAW. THE ASSESSEE COULD HAVE RAISED THE GROUND IN ITS RETURN ITSELF. IT DID NOT HAVE TO AWAIT A DECISION OF A COURT IN THAT REGARD. INDEED, EVEN IF A JUDGMENT IS AGAINST AN ASSESSEE, IT IS ALWAYS OPEN TO THE ASSESSEE TO CLAIM THE DEDUCTION AND CARRY THE MATTER HIGHER. THE WORDS 'COULD NOT HAVE BEEN RAISED', THEREFORE, CANNOT BE READ STRICTLY. NEITHER THE SUPREME COURT NOR THE FULL BENCH OF THIS COURT MEANT THEM TO BE READ STRICTLY. THEY INCLUDE CASES WHERE THE ASSESSEE DID NOT RAISE THE CLAIM FOR A REASON FOUND TO BE REASONABLE OR VALID BY THE APPELLATE AUTHORITIES IN THE FACTS AND CI RCUMSTANCES OF A CASE. 17. THE NEXT JUDGMENT TO WHICH OUR ATTENTION WAS INVITED BY MR. MISTRI IS THE JUDGMENT OF A BENCH OF THREE LEARNED JUDGES OF THE SUPREME COURT IN NATIONAL THERMAL POWER COMPANY LIMITED V. COMMISSIONER OF INCOME - TAX, (1997) 7 SCC 489 = (1998) 229 ITR 383. IN THAT CASE, THE ASSESSEE HAD DEPOSITED ITS FUNDS NOT IMMEDIATELY REQUIRED BY IT ON SHORT TERM DEPOSITS WITH BANKS. THE INTEREST RECEIVED ON SUCH DEPOSITS WAS OFFERED BY THE ASSESSEE ITSELF FOR TAX AND THE ASSESSMENT WAS COMPLETED ON THAT BASIS. EVEN BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS), THE INCLUSION OF THIS AMOUNT WAS NEITHER CHALLENGED BY THE ASSESSEE NOR CONSIDERED BY THE COMMISSIONER OF INCOME - TAX (APPEALS). THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE INCLUSI ON OF THE AMOUNT WAS NOT OBJECTED TO EVEN IN THE GROUNDS OF APPEAL AS ORIGINALLY FILED BEFORE THE TRIBUNAL. SUBSEQUENTLY, THE ASSESSEE BY A LETTER, RAISED ADDITIONAL GROUNDS TO THE EFFECT THAT THE SAID SUM COULD NOT BE INCLUDED IN THE TOTAL INCOME. THE ASS ESSEE CONTENDED THAT ON A ERRONEOUS ADMISSION, NO INCOME CAN BE INCLUDED IN THE TOTAL INCOME. IT WAS FURTHER CONTENDED THAT THE ITO AND THE COMMISSIONER OF INCOME - TAX (APPEALS) HAD ERRED AND FAILED IN THEIR DUTY IN ADJUDICATING THE MATTER CORRECTLY AND BY MECHANICALLY INCLUDING THE AMOUNT IN THE TOTAL INCOME. IT IS PERTINENT TO NOTE THAT THE ASSESSEE CONTENDED THAT IT WAS ENTITLED TO THE DEDUCTION IN VIEW OF TWO ORDERS OF THE SPECIAL BENCHES OF THE TRIBUNAL AND THE ASSESSEE FURTHER STATED THAT IT HAD RAISED THESE ADDITIONAL GROUNDS ON LEARNING ABOUT THE LEGAL POSITION SUBSEQUENTLY. THE TRIBUNAL DECLINED TO ENTERTAIN THESE ADDITIONAL GROUNDS. THE SUPREME COURT DID NOT ANSWER THE QUESTION ON MERITS, BUT FRAMED THE FOLLOWING QUESTION AND HELD AS UNDER : - '4. THE TRIBUNAL HAS FRAMED AS MANY AS FIVE QUESTIONS WHILE MAKING A REFERENCE TO US. SINCE THE TRIBUNAL HAS NOT EXAMINED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON MERIT, WE DO NOT PROPOSE TO ANSWER THE QUESTIONS RELATING TO THE MERIT OF THOSE CONTE NTIONS. WE REFRAME THE QUESTION WHICH ARISES FOR OUR BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 14 CONSIDERATION IN ORDER TO BRING OUT THE POINT WHICH REQUIRES DETERMINATION MORE CLEARLY. IT IS AS FOLLOWS: 'WHERE ON THE FACTS FOUND BY THE AUTHORITIES BELOW A QUESTION OF LAW ARISES (THOUGH NOT RAISED B EFORE THE AUTHORITIES) WHICH BEARS ON THE TAX LIABILITY OF THE ASSESSEE, WHETHER THE TRIBUNAL HAS JURISDICTION TO EXAMINE THE SAME.' UNDER SECTION 254 OF THE INCOME TAX ACT THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUN ITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH THE APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORREC TLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON - TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. WE DO NOT SEE ANY REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEA1/CROSS - OBJECTIONS BEFORE THE TRIBUNAL. WE FAIL TO SEE WHY THE TR IBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER.' 18. IN THE CASE BEFORE US, THE CIT(A) AND THE TRIBUNAL HAVE HELD THE OMISSION TO CLAIM THE DEDUCTION OF RS.40,00,000/ - TO BE INADV ERTENT. BOTH THE APPELLATE AUTHORITIES HELD, AFTER CONSIDERING ALL THE FACTS, THAT THE ASSESSEE HAD INADVERTENTLY CLAIMED A DEDUCTION OF RS.20,00,000/ - PAID AFTER THE END OF THE YEAR IN QUESTION. WE SEE NO REASON TO INTERFERE WITH THIS FINDING. WE SEE LESS REASON TO INTERFERE WITH THE EXERCISE OF DISCRETION BY THE APPELLATE AUTHORITIES IN PERMITTING THE RESPONDENT TO RAISE THIS CLAIM. THAT THE RESPONDENT IS ENTITLED TO THE DEDUCTION IN LAW IS ADMITTED AND, IN ANY EVENT, CLEARLY ESTABLISHED. IN THE CIRCUMSTA NCES, THE RESPONDENT OUGHT NOT BE PREJUDICED. 19. THE ORDERS OF THE CIT(A) AND THE TRIBUNAL CLEARLY INDICATE THAT BOTH THE APPELLATE AUTHORITIES HAD EXERCISED THEIR JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM AS THEY WERE ENTITLED TO IN VIEW OF THE VARI OUS JUDGMENTS ON THE ISSUE, INCLUDING THE JUDGMENT OF THE SUPREME COURT IN NATIONAL THERMAL POWER CORPORATION LIMITED. THIS IS CLEAR FROM THE FACT THAT THESE JUDGMENTS HAVE BEEN EXPRESSLY REFERRED TO IN DETAIL BY THE CIT(A) AND BY THE TRIBUNAL. 20. WE WIS H TO CLARIFY THAT BOTH THE APPELLATE AUTHORITIES HAVE THEMSELVES CONSIDERED THE ADDITIONAL CLAIM AND ALLOWED IT. THEY HAVE NOT REMANDED THE MATTER TO THE ASSESSING OFFICER TO CONSIDER THE SAME. BOTH THE ORDERS EXPRESSLY DIRECT THE ASSESSING OFFICER TO ALLO W THE DEDUCTION OF RS.40,00,000/ - UNDER SECTION 43B OF THE ACT. THE ASSESSING OFFICER IS, THEREFORE, NOW ONLY TO COMPUTE THE RESPONDENT'S TAX LIABILITY WHICH HE MUST DO IN ACCORDANCE WITH THE ORDERS ALLOWING THE RESPONDENT A DEDUCTION OF RS.40,00,000/ - UND ER SECTION 43B OF THE ACT. 21. THE CONCLUSION THAT THE ERROR IN NOT CLAIMING THE DEDUCTION IN THE RETURN OF INCOME WAS INADVERTENT CANNOT BE FAULTED FOR MORE THAN ONE REASON. IT IS A FINDING OF FACT WHICH CANNOT BE TERMED PERVERSE. THERE IS NOTHING ON REC ORD THAT MILITATES AGAINST THE FINDING. BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 15 THE APPELLANT HAS NOT SUGGESTED, MUCH LESS ESTABLISHED THAT THE OMISSION WAS DELIBERATE, MALA - FIDE OR EVEN OTHERWISE. THE INFERENCE THAT THE OMISSION WAS INADVERTENT IS, THEREFORE, IRRESISTIBLE. 22. IT WAS THEN SUBM ITTED BY MR. GUPTA THAT THE SUPREME COURT HAD TAKEN A DIFFERENT VIEW IN GOETZE (INDIA) LIMITED V. COMMISSIONER OF INCOME - TAX. WE ARE UNABLE TO AGREE. THE DECISION WAS RENDERED BY A BENCH OF TWO LEARNED JUDGES AND EXPRESSLY REFERS TO THE JUDGMENT OF THE BEN CH OF THREE LEARNED JUDGES IN NATIONAL THERMAL POWER COMPANY LIMITED VS. COMMISSIONER OF INCOME - TAX (SUPRA). THE QUESTION BEFORE THE COURT WAS WHETHER THE APPELLANT - ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION, OTHER THAN BY FILING A REVISED RETURN. AFTER THE RETURN WAS FILED, THE APPELLANT SOUGHT TO CLAIM A DEDUCTION BY WAY OF A LETTER BEFORE THE ASSESSING OFFICER. THE CLAIM, THEREFORE, WAS NOT BEFORE THE APPELLATE AUTHORITIES. THE DEDUCTION WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE WAS NO PROVISION UNDER THE ACT TO MAKE AN AMENDMENT IN THE RETURN OF INCOME BY MODIFYING AN APPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISING THE RETURN. THE COMMISSIONER OF INCOME - TAX (APPEALS) ALLOWED THE ASSESSEE'S APPEAL. THE TRIBUNAL, HOWEVER, ALLOWED THE DEPARTMENT'S APPEAL. IN THE SUPREME COURT, THE ASSESSEE RELIED UPON THE JUDGMENT IN NATIONAL THERMAL POWER COMPANY LIMITED CONTENDING THAT IT WAS OPEN TO THE ASSESSEE TO RAISE THE POINTS OF LAW EVEN BEFORE THE TRIBUNAL. THE SUPREME COURT HELD : - '4. T HE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME - TAX ACT, 1961, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECIS ION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN TH IS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME - TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME - TAX ACT, 1961. THERE SHALL BE NO ORDER AS TO COSTS.' [EMPHASIS SUPPLIED] 23. IT IS CLEAR TO US THAT THE SUPREME COURT DID NOT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPEL LATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IM PINGE ON THE POWER OF THE TRIBUNAL UNDER SECTION 254. 24. A DIVISION BENCH OF THE DELHI HIGH COURT DEALT WITH A SIMILAR SUBMISSION IN COMMISSIONER OF INCOME - TAX V. JAI PARABOLIC SPRINGS LIMITED, (2008) 306 ITR 42. THE DIVISION BENCH, IN PARAGRAPH 17 OF THE JUDGMENT HELD THAT THE SUPREME COURT DISMISSED THE APPEAL MAKING IT CLEAR THAT THE DECISION WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. IN PARAGRAPH 19, THE DIVISION BENCH HELD THAT THERE WAS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH, ACCORDING TO THE TRIBUNAL, ARISES IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 16 I N THE AFORESAID CASE OF PRUTHVI BROKER & SHAREHOLDERS (PVT.) LTD. (SUPRA) , THE FACTS BEFORE THE HONBLE JURISDICTIONAL HIGH COURT WERE THAT THE ASSESSEE COMPANY HAD MADE A PAYMENT OF SEBI FEES OF RS.40 LAC ON 09.5.2003 (PERTAINING TO F.Y. 2001 - 02) THAT WAS ALLOWABLE AS A DEDUCTION ON PAYMENT BASIS U/S 43B OF THE ACT. HOWEVER, DURING THE ASSESSMENT YEAR 2004 - 05, BY WAY OF AN INADVERTE N CE THE ASSESSEE COMPANY IN ITS RETURN OF INCOME HAD CLAIMED A DEDUCTION OF RS.20 LAC ONLY AS AGAINST THE CORRECT CLAIM OF DEDUCTION OF RS.40 LAC . THE ASSESSEES CLAIM FOR DEDUCTION U/S 43B OF AN AMOUNT OF RS. 40 LAC WAS REJECTED BY THE A.O ON THE GROUND THAT HE HAD NO AUTHORITY TO ALLOW ANY RELIEF OR DEDUCTION WHICH HAD NOT BEEN CLAIMED IN THE RETURN. ON APPEAL, THE CIT(A) AND THE TRIBUNAL HELD THE OMISSION TO CLAIM THE DEDUCTION OF RS.40 LAC TO BE INADVERTENT, AND AFTER CONSIDERING THE FACT THAT THE ASSESSEE HAD BY WAY OF A BONAFIDE MISTAKE WRONGLY RESTRICTED ITS CLAIM FOR DEDUCTION AT RS.20 LAC , THEREIN ALLOWED ITS CLAIM OF DEDUCTION OF RS. 40 LAC . ON FURTHER APPEAL BY THE REVENUE, THE HIGH COURT WHILE UPHOLDING THE RELIEF ALLOWED BY THE LOWER AUTHORITIES OBSERVED, THAT EVEN ASSUMING THAT THE ASSESSING OFFICER WAS NOT ENTITLED TO GRANT A DEDUCTION ON THE BASIS OF A LETTER REQUESTING AN AMENDMEN T TO THE RETURN FILED, THE APPELLATE AUTHORITIES WERE ENTITLED TO CONSIDER THE CLAIM AND TO ADJUDICATE THE SAME. IT WAS FURTHER OBSERVED BY THE HONBLE HIGH COURT THAT AN ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS NOT MERELY IN TERMS OF LEGAL SUBMISS IONS, BUT ALSO ADDITIONAL CLAIMS TO WIT CLAIMS NOT MADE IN THE RETURN FILED BY IT . THE HONBLE HIGH COURT WHILE CONCLUDING AS HEREINABOVE, HAD OBSERVED, THAT THE ERROR IN NOT CLAIMING THE DEDUCTION IN THE RETURN OF INCOME WAS INADVERTENT AND COULD NOT BE I NTER ALIA FAULTED , AS THERE WAS NOTHING ON RECORD THAT WOULD SUGGEST THAT THE OMISSION ON THE PART OF THE ASSESSEE AS REGARDS RAISING OF THE CORRECT CLAIM OF DEDUCTION U/S 43B WAS DELIBERATE, MALA - FIDE OR OTHERWISE. ACCORDINGLY, THE HONBLE HIGH COURT OBSERVING THAT THE OMISSION WAS INADVERTENT UPHELD THE ORDER OF THE TRIBUNAL THAT HAD ALLOWED THE ASSESSEES CLAIM OF DEDUCTION. INSOFAR THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED V. COMMISSIONER OF BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 17 INCOME - T AX (2006) 284 ITR 323 (SC) WAS CONCERNED, THE HONBLE HIGH COURT IN ITS AFORESAID ORDER HAD OBSERVED , THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. AS REGARDS THE JURISDICTION OF THE APPELLA TE AUTHORITIES TO ENTERTAIN A CLAIM THAT WAS NOT RAISED BY THE ASSESSEE IN ITS RETURN OF INCOME, THE HONBLE HIGH COURT AFTER REFERRING TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED (SUPRA) , HAD MADE IT CLEAR THAT THE I SSUE IN TH E CASE BEFORE THE HONBLE APEX COURT WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY IN ENTERTAINING A F RESH CLAIM RAISED BY AN ASSESSEE OTHERWISE THAN BY FILING OF A REVISED RETURN OF INCOME , AND THE SAME DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. IN THE CASE BEFORE THE FULL BENCH OF THE HONBLE HIGH COURT OF BOMBAY IN AHMEDABAD ELECTRICITY LIMITED V. COMMISSIONER OF INCOME - TAX, (1993) 199 ITR 351 ( BOM ) (FB) , THE ASSESSEE HAD NOT CLAIMED DEDUCTION IN RESPECT OF THE AMOUNTS IT WAS REQUIRED TO TRANSFER TO CONTINGENCIES RESERVE AND DIVIDEND AND TARIFF RESERVE EITHER BEFORE THE INCOME TAX OFFICER OR BEFORE THE APPELLATE ASSISTANT COMMISSIONER . ON FURTHER APPEAL, THE ASSESSEE RAISED A NEW CLAIM AND ADDITIONAL GROUNDS BEFORE THE TRIBUNAL, WHICH H OWEVER DECLINED TO ADMIT THE SAME . ON FURTHER APPEAL, THE FULL BENCH OF THE HONBLE HIGH COURT OBSERVED, THAT THE T RIBUNAL HAD JURISDICTION TO PERMIT ADDITIONAL GROUNDS TO BE RAISED BEFORE IT EVEN THOUGH THESE MAY NOT ARISE FROM THE ORDER OF AAC SO LONG A S THESE GROUNDS ARE IN RESPECT OF THE SUBJECT - MATTER OF THE ENTIRE TAX PROCEEDINGS . WHILE CONCLUDING AS HEREINABOVE, IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT UNLIKE AN ORDINARY APPEAL, THE BASIC PURPOSE OF A TAX APPEAL IS TO ASCERTAIN THE CORRECT TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW . FURTHER, SUPPORT IS DRAWN FROM THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. PRABHU STEEL INDUSTRIES PVT. LTD. (1988) 171 ITR 530 (BOM) . IN THE CASE BEFORE THE HONBLE JURISDICTION AL HIGH COURT, THE ITO HAD REJECTED THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER S. 80J, INTER ALIA, ON THE GROUND THAT THE ASSESSEE HAD NOT CLAIMED IT IN ITS RETURN OF INCOME . ON APPEAL, THE AAC HELD THAT SINCE THE CLAIM WAS MADE BY THE ASSESSEE DURING THE BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 18 CO URSE OF THE ASSESSMENT PROCEEDINGS, THE ITO SHOULD NOT HAVE REJECTED IT. ON FURTHER APPEAL BY THE REVENUE, THE TRIBUNAL HELD THAT THE AAC WAS FULLY JUSTIFIED IN ENTERTAINING THE CLAIM FOR DEDUCTION UNDER SEC. 80J BECAUSE THE CLAIM WAS MADE BY THE ASSESSEE BEFORE THE ASSESSMENT WAS COMPLETED, I.E., DURING THE ASSESSMENT PROCEEDINGS. ON FURTHER APPEAL BY THE REVENUE, THE HONBLE HIGH COURT WHILE UPHOLDING THE VIEW TAKEN BY THE AAC AND THE TRIBUNAL OBSERVED, THAT AS THE CLAIM FOR DEDUCTION WAS RAISED BY THE AS SESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ITO WAS OBLIGED TO ENTERTAIN IT AND CONSIDER THE SAME ON MERITS. IN THE CASE BEFORE THE HON B LE HIGH COURT OF MADHYA PRADES H IN THE CASE OF STEEL INGOTS (P) LTD. VS. CIT (1996) 86 TAXMAN 440 (MP) , THE HIGH COURT WHILE SETTING ASIDE THE ORDER OF THE TRIBUNAL WHICH HAD DECLINED TO CONSIDER THE GROUNDS RAISED BY THE ASSESSEE ON THE LINCHPIN THAT THE SAME WERE NOT RAISED BEFORE THE CIT(A) AND HAD DISMISSED THE APPEAL OBSERVED, THAT THOUGH THE QUESTION WAS NOT RAISED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY, BUT THEN, THE QUESTION WAS ONE OF LAW AND HAD MATERIAL BEARING ON THE ORDER OF ASSESSMENT. IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT AS THE EVENTUAL DESTINATION OF EVERY LITIGATION I S JUSTICE, THEREFORE, TECHNICALITY SHOULD NOT BE PERMITTED TO PREVAIL AS SPEED BREAKER IN THE COURSE OF DISPENSATION OF JUSTICE . 1 1 . ON THE BASIS OF THE AFORESAID JUDICIAL PRONOUNCEMENTS , WE ARE OF THE CONSIDERED VIEW , THAT IN THE CASE BEFORE US THE CIT(A) WAS NOT JUSTIFIED IN DECLINING TO CONSIDER THE ASSESSEES CLAIM THAT AS THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - WAS DISALLOWED/ADDED BACK BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH IT WAS CREATED I.E A.Y 2013 - 14, THE SAME THUS COULD NOT HAVE BEEN INCLUDED IN ITS INCOME FOR THE YEAR IN QUESTION I.E A.Y 2017 - 18 IN WHICH IT WAS REVERSED. AS OBSERVED BY US HEREINABOVE, WE ARE OF A STRONG CONVICTION THAT AS NO DEDUCTION FOR THE AFORESAID PROVISION WAS CLAIMED BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH IT WAS CREATED I.E A.Y 2013 - 14, THE INCLUSION OF THE SAME ON ITS REVERSAL IN BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 19 THE BOOKS OF ACCOUNT DURING THE YEAR IN QUESTION I.E A.Y 2017 - 18 WOULD UNDOUBTEDLY LEAD TO A DOUBLE TAXATION IN ITS HANDS. SUCH EXTRACTION OF TAX FROM AN ASSESSEE WITHOUT THE AUTHORITY OF LAW IS PROHIBITED AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE CONSTITUTIONAL BENCH OF THE HONBL E SUPREME COURT IN THE CASE OF COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI VS. M/S DILIP KUMAR AND COMPANY & ORS. [CIVIL APPEAL NO. 3327 OF 2007; DATED 30.07.2018, WHEREIN THE HONBLE APEX COURT HAD OBSERVED THAT I NSOFAR THE TAXATION STATUTES ARE CONCERNED, ARTICLE 265 OF THE CONSTITUTION PROHIBITS THE STATE FROM EXTRACTING TAX FROM THE CITIZENS WITHOUT AUTHORITY OF LAW. ALSO, AS OBSERVED BY THE ITAT, RAJKOT BENCH IN THE CASE OF ACIT, CIRCLE 1, JAMNAGAR VS. RUPAM IMPEX. (2016) 157 ITD 360 (RAJKOT) , TAX CANNOT BE LEVIED ON AN ASSESSEE AT A HIGHER AMOUNT OR AT A HIGHER RATE MERELY BECAUSE ASSESSEE, UNDER A MISTAKEN BELIEF OR DUE TO AN ERROR HAD OFFERED INCOME FOR TAXATION AT THAT AMOUNT OR THAT RATE. IN FACT, WE FIND THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DATTATRAYA GOPAL BHOTTE VS. CI T (1984) 150 ITR 460 (BOM) , BY REFERRING TO THE CB R CIRCULAR NO. 14 (XL - 35) OF 1955 , HA S HELD, THAT THE OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS, AND ARE UNDER AN OBLIGATION TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS. IT WAS OBSERVED BY THE HONBLE HIGH COURT, AS UNDER: THE CENTRAL BOARD OF REVENUE, HOWEVER, HAS ISSUED A CIRCULAR DATED APRIL 11, 1955, BEING CIRCULAR NO. 14 (XL - 35) OF 1955. UNDER THIS CIRCULAR IT IS STATED AS FOLLOWS: '1 . ............ 2 . ............ 3. OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 20 FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH ASSESSEES ON WHOM IT IS IMPOSED BY LAW, OFFICERS SHOULD (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR R ELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED FOR CLAIMING REFUNDS AND RELIEFS. 4. THE FOLLOWING EXAMPLES (WHICH ARE BY NO MEANS EXHAUSTIVE) INDICATE THE ATTITUDE WHICH OFFICERS SHOULD ADOPT: ...... (D) SEC. 26A THE BENEFIT TO BE OBTAINED BY REGISTRATION SHOULD BE EXPLAINED IN, APPROPRIATE CASES. WHERE AN APPLICATION FOR REGISTRATION PRESENTED BY A FIRM IS FOUND DEFECTIVE, THE OFFICER SHOULD POINT OUT THE DEFECT TO IT AND GIVE IT AN OPPORTUNIT Y TO PRESENT A PROPER APPLICATION ..... 6. THE INTENTION OF THIS CIRCULAR IS NOT THAT TAX DUE SHOULD NOT BE CHARGED OR THAT ANY FAVOUR SHOULD BE SHOWN TO ANYBODY IN THE MATTER OF ASSESSMENT, OR THAT WHERE INVESTIGATIONS ARE CALLED FOR, THEY SHOULD NOT BE M ADE. WHATEVER BE THE LEGITIMATE TAX, IT MUST BE ASSESSED AND MUST BE COLLECTED. THE PURPOSE OF THIS CIRCULAR IS MERELY TO EMPHASISE THAT WE SHOULD NOT TAKE ADVANTAGE OF AN ASSESSEE'S IGNORANCE TO COLLECT MORE TAX OUT OF HIM THAN IS LEGITIMATELY DUE FROM HI M.' 9. IT IS NOW WELL - SETTLED THAT EVEN IF THE CONTENTS OF A CIRCULAR MAY AMOUNT TO A DEVIATION ON A POINT OF LAW, A CIRCULAR OF THE CENTRAL BOARD OF REVENUE WHICH CONFERS SOME BENEFIT ON THE ASSESSEE IS BINDING ON ALL OFFICERS CONCERNED WITH THE EXECUTIO N OF THE I. T. ACT; AND THEY MUST CARRY OUT THEIR DUTIES IN THE LIGHT OF THE CIRCULAR. IN THE PRESENT CASE, THEREFORE, IT WAS, IN THE FIRST PLACE, THE DUTY OF THE ITO TO HAVE DRAWN THE ATTENTION OF THE ASSESSEE - FIRM TO THE DEFECT IN THE APPLICATION FOR REN EWAL OF REGISTRATION. THE ITO, HOWEVER, GRANTED REGISTRATION TO THE FIRM. IN SUCH A SITUATION IT WAS EQUALLY THE DUTY OF THE CIT TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE - FIRM TO REMEDY THE DEFECT IN THEIR APPLICATION. THE CIT, IN VIEW OF THIS CIRCULAR, CLEARLY SHOULD NOT HAVE CANCELLED THE RENEWAL OF REGISTRATION OF THE ASSESSEE - FIRM WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE - FIRM TO REMEDY THE DEFECT IN THE APPLICATION. ACCORDINGLY, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CLAIM OF THE ASSESSEE THAT AS THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS OF RS. 81,72,24,557/ - WAS DISALLOWED/ADDED BACK BY THE ASSESSEE WHILE COMPUTING ITS INCOME FOR THE YEAR IN WHICH IT WAS CREATED I.E A.Y 201 3 - 14, THE SAME THUS COULD NOT HAVE BEEN INCLUDED IN ITS INCOME FOR THE YEAR UNDER CONSIDERATION I.E A.Y 2017 - 18 IN WHICH IT WAS REVERSED. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A) WHO AS OBSERVED BY US HEREINABOVE HAD DECLINED TO DEAL WITH THE AFORESAID CLAIM OF THE BNP PARIBAS INDIA HOLDING P. LTD. VS. ACIT - 14(1)(1), MUMBAI. A.Y 2017 - 18 ITA NO. 1496/MUM/2020 21 ASSESSEE, AND DIRECT THE A.O TO VACATE THE IMPUGNED ADDITION OF RS. 81,72,24,557/ - MADE IN THE HANDS OF THE ASSESSEE. THE GROUNDS OF APPEAL NOS. 1 TO 4 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 2 . RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/ - SD/ - ( PRAMOD KUMAR ) ( RAVISH SOOD ) VICE - PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 12 .10 .2020 SK C OPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI