Appeal Details
Counselvise Citation
[2021] 109 COUNSELVISE.COM (IT) 9651 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-01-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
C
Assessment Year
2006-2007
Appeal Filed On
27-12-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO. 2650/BANG/2019 ASSESSMENT YEAR: 2006 - 07 SHRI THIMMAREDDY KRISHNAREDDY, NO.1/1, PANATHUR VILLAGE & POST, BENGALURU EAST, BENGALURU 560 087. PAN: ATWPK 3029J VS. THE INCOME TAX OFFICER, WARD 4(2)(4), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : S HRI ANAND BHAT, CA RESPONDENT BY : SHRI PRADEEP KUMAR , C IT(DR)(ITAT ), BENGALUR U. DATE OF HEARING : 21.12.2020 DATE OF PRONOUNCEMENT : 04 . 0 1 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(APPEALS)-2, BENGALURU DATED 18.10.2019 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - THE GROUNDS MENTIONED HEREINAFTER ARE WITHOUT PREJ UDICE TO ONE ANOTHER. 1. THAT THE APPELLATE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2 BANGALORE (HEREINAFTER REFERRED TO AS THE LEARNED COMMISSIONE R) U/S 250 OF INCOME-TAX ACT, 1961 IN APPEAL ITA NO. TR ITA NO.2650/BANG/2019 PAGE 2 OF 12 242/CIT(A)-2/2017-18 DATED 18TH OCTOBER 2019 IS ARBITRARY, ERRONEOUS, BAD IN LAW AND LIABLE TO BE Q UASHED. 2. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX IS WITHOUT APPRECIATING THE FACTUAL POSITION, UNDERLYING DOCUMENTATION AND IS C ONTRARY TO THE PROVISIONS OF INCOME-TAX ACT. 3. THAT THE LEARNED COMMISSIONER HAS ERRED IN CONFIRMING THE ACTION OF AO OF ERRONEOUSLY AND INCORRECTLY COMPUTING LONG TERM CAPITAL GAINS AT INR.13,90,206 AND SHORT TERM CAPITAL GAINS OF INR.37,14,599. 4. THAT THE LEARNED COMMISSIONER HAS ERRED IN NOT CONSIDERING EXEMPTION U/S 54B OF RS.40,95,341 FOR ACQUISITION OF AGRICULTURAL LAND AGAINST SALE OF AG RICULTURAL LANDS BEING SHORT TERM CAPITA! GAINS RS.37,71,014 A S WELL AS AGAINST LONG TERM CAPITAL GAINS OF RS.3,24,327. 5. THAT THE LEARNED COMMISSIONER IS NOT JUSTIFIED I N REJECTING THE CLAIM OF THE APPELLANT ON THE GROUND THAT THE EXEMPTION U/S 54B IS NOT CLAIMED IN THE ORIGINAL RE TURN AND IN ORIGINAL GROUNDS OF APPEAL BEFORE THE LEARNE D COMMISSIONER THOUGH THE REVISED GROUNDS OF APPEAL A RE DULY CONSIDERED AND NOT EXPRESSLY REJECTED BY THE L EARNED COMMISSIONER. 6. THAT THE LEARNED COMMISSIONER IS NOT JUSTIFIED I N INCORRECTLY APPLYING THE SUPREME COURT DECISION IN GOETZE (INDIA) LTD V. CIT [2006] 284 ITR 323(SC) AN D INCORRECTLY HOLDING THE IF THE POWER OF CIT (APPEAL S) ARE COTERMINOUS WITH ASSESSING OFFICER, THE HON'BLE SUP REME COURT'S DECISION RENDERED IN THE CASE OF GOETZE IND IA LIMITED IS APPLICABLE AS WELL. 7. THAT THE LEARNED COMMISSIONER IS NOT JUSTIFIED I N NOT FOLLOWING THE ORDER OF JURISDICTIONAL INCOME-TA X APPELLATE TRIBUNAL BANGALORE DECISION IN RAKESH SIN GH V. ACIT [2012] 26 TAXMANN.COM 240 (BANG) AND THE LEARN ED COMMISSIONER IS NOT JUSTIFIED IN NOT ADMITTING AND ITA NO.2650/BANG/2019 PAGE 3 OF 12 ADJUDICATING THE CLAIMS MADE BY THE APPELLANT BEFOR E THE LEARNED COMMISSIONER U/S 54B AND 5F. 8. THAT THE LEARNED COMMISSIONER HAS ERRED IN NOT CONSIDERING EXEMPTION U/S 54F WITH RESPECT TO CONSTRUCTION OF HOUSE PROPERTY AMOUNTING TO RS.43,5 4,152 OUT OF THE TOTAL INVESTMENT IN RESIDENTIAL PROPERTY OF RS.65,00,000. 9. THAT THE LEARNED COMMISSIONER HAS ERRED IN DIRECTING THE AO TO LEVY TAX AND INTEREST. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND/ OR TO ALTER, AMEND, RESCIND, MODIFY, THE GROUNDS ABOVE PRODUCE FURTHER DOCUMENTS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE C LAIMED THAT HE HAS SOLD AN AGRICULTURAL LAND IN MARCH, 2006 FOR A CONSIDERA TION OF RS.61 LAKHS AND AFTER DEDUCTING THE COST OF ACQUISITION, THE LONG T ERM CAPITAL GAIN WAS WORKED OUT @ RS.52,85,489. AGAINST THIS, CLAIM FOR DEDUCTION U/S. 54F OF THE ACT IS THAT THE SALE PROCEEDS ARE INVESTED IN R ESIDENTIAL BUILDING CONSTRUCTED AT PANATHUR VILLAGE, BANGALORE AT AN ES TIMATED COST OF RS.65 LAKHS. THE ASSESSEE FILED SUPPORTING EVIDENCES OF C OST OF CONSTRUCTION. THE AO GRANTED DEDUCTION U/S. 54F OF RS.38,95,283 A ND BROUGHT THE BALANCE AMOUNT OF RS.13,90,206 AS TAXABLE LONG TERM CAPITAL GAIN. 4. FURTHER, THE ASSESSEE OFFERED SHORT TERM CAPI TAL GAIN AT RS.36,88,161. HOWEVER, THE AO WORKED IT OUT AT RS. 37,14,599. BEFORE THE CIT(APPEALS), THE ASSESSEE CLAIMED DEDUCTION U/S. 5 4B ON THE REASONING THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTIO N U/S. 54B OF THE ACT AT RS.37,71,014 IN RESPECT OF SHORT TERM CAPITAL GAIN AND RS.3,24,327 WITH REGARD TO LONG TERM CAPITAL GAIN. THE CIT(APPEALS) REJECTED THE CLAIM OF ASSESSEE ON THE REASONING THAT ASSESSEE HAS NOT FIL ED THE NECESSARY ITA NO.2650/BANG/2019 PAGE 4 OF 12 REVISED RETURN BEFORE THE AO. AGGRIEVED, THE ASSES SEE IS IN APPEAL BEFORE US. 5. REGARDING EXEMPTION U/S. 54F, WE ARE OF THE OP INION THAT THE ASSESSEE HAS TO PLACE NECESSARY EVIDENCE IN SUPPORT OF THE SAME SINCE THE ORDER OF THE CIT(APPEALS) IS CRYPTIC ON THE ISS UE. WE THEREFORE DIRECT THE ASSESSEE TO PLACE NECESSARY EVIDENCE BEFORE THE AO AND THE AO SHALL EXAMINE THE ISSUE, WHETHER THE ASSESSEE IS ENTITLED FOR ADDITIONAL DEDUCTION OF RS.13,90,206 U/S. 54F WITH REGARD TO L ONG TERM CAPITAL GAIN. 6. WITH REGARD TO EXEMPTION U/S. 54B OF THE ACT, WE FIND THAT THE REASON FOR REJECTION BY THE CITA IS THAT ASSESSEE HAS NOT FILED REVISED RETURN OF INCOME BEFORE THE AO. THE ASSESSEE RELIED ON THE O RDER OF TRIBUNAL IN THE CASE OF RAKESH SINGH V. ACIT, 139 ITD 128 (BANG) WHEREIN IT WAS HELD THAT THE FIRST APPELLATE AUTHORITY COULD ENTERTAIN NEW C LAIM OF ASSESSEE, THOUGH THERE IS NO REVISED RETURN FILED BY THE ASSESSEE BE FORE THE AO. 7. NOW THE QUESTION BEFORE US IS, WHETHER THE FIR ST APPELLATE AUTHORITY COULD HAVE EXAMINED THE CLAIM OF ASSESSEE U/S. 54B OF THE ACT, THOUGH THERE WAS NO REVISED RETURN FILED BY THE ASSESSEE. IN OUR OPINION, AT THIS STAGE IT IS PROPER TO GO THROUGH CERTAIN CASE LAWS ON THIS ISSUE:- 8. THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPN. OF INDIA LTD. V. CIT [1991] 187 ITR 688/[1990] 53 TAXMAN 85 WAS CONSIDERING THE FOLLOWING FACTS:- FOR THE ASSESSMENT YEAR 1974-75, THE APPELLANT DID NOT CLAIM ANY DEDUCTION OF ITS LIABILITY TOWARDS PURCHASE TAX UND ER THE PROVISIONS OF THE BENGAL RAW JUTE TAXATION ACT, 1941, AS IT ENTERTAIN ED A BELIEF THAT IT WAS NOT LIABLE TO PAY PURCHASE TAX UNDER THAT ACT. SUBS EQUENTLY, THE APPELLANT WAS ASSESSED TO PURCHASE TAX AND THE ORDER OF ASSES SMENT WAS RECEIVED BY IT ON 23RD NOVEMBER, 1973. THE APPELLANT CHALLEN GED THE SAME AND ITA NO.2650/BANG/2019 PAGE 5 OF 12 OBTAINED A STAY ORDER. THE APPELLANT ALSO FILED AN APPEAL FROM THE ASSESSMENT ORDER UNDER THE INCOME TAX ACT. IT WAS O NLY DURING THE HEARING OF THE APPEAL THAT THE ASSESSEE CLAIMED AN ADDITION AL DEDUCTION IN RESPECT OF ITS LIABILITY TO PURCHASE TAX. THE APPELLATE ASS ISTANT COMMISSIONER (AAC) PERMITTED IT TO RAISE THE CLAIM AND ALLOWED THE DED UCTION. THE TRIBUNAL HELD THAT THE AAC HAD NO JURISDICTION TO ENTERTAIN THE A DDITIONAL GROUND OR TO GRANT RELIEF ON A GROUND WHICH HAD NOT BEEN RAISED BEFORE 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 CAS E. IT IS IN THESE CIRCUMSTANCES THAT THE APPELLANT FILED THE APPEAL B EFORE THE SUPREME COURT. 9. THE SUPREME COURT HELD AS UNDER:- '5. IN CIT V KANPUR COAL SYNDICATE, A THREE JUDGE B ENCH OF THIS COURT DISCUSSED THE SCOPE OF SECTION 31(3)(A) OF TH E 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 S UCH AN APPEAL. UNDER SECTION 31(3)(A) IN DISPOSING OF S UCH AN APPEAL THE AAC MAY, IN THE CASE OF AN ORDER OF ASSESSMENT, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; UNDER CLAUSE (B) THEREOF HE MAY SET ASI DE THE ASSESSMENT AND DIRECT THE INCOME TAX OFFICER TO MAK E A FRESH ASSESSMENT, THE AAC HAS, THEREFORE, PLENARY P OWERS IN DISPOSING OF AN APPEAL. THE SCOPE OF HIS POWER I S CO- TERMINUS WITH THAT OF THE ITO. HE CAN DO WHAT THE I TO CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO'. 6. THE ABOVE OBSERVATIONS ARE SQUARELY APPLICABLE T O THE INTERPRETATION OF SECTION 251(1)(A) OF THE ACT. THE DECLARATION OF LAW IS CLEAR THAT THE POWER OF THE APPELLATE ASSIST ANT COMMISSIONER IS CO-TERMINUS WITH THAT OF THE ITO, I F THAT BE SO, THERE APPEARS TO BE NO REASON AS TO WHY THE APPELLA TE AUTHORITY ITA NO.2650/BANG/2019 PAGE 6 OF 12 CANNOT MODIFY THE ASSESSMENT ORDER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE ITO . NO EXCEPTION COULD BE TAKEN TO THIS VIEW AS THE ACT DOES NOT PLACE ANY RESTRICTION OR L IMITATION ON THE EXERCISE OF APPELLATE POWER. EVEN OTHERWISE AN APPE LLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF A SUBORDINATE AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS IF ANY PRESCRIBED BY TH E STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISI ON THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHI CH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE APPEARS TO BE NO GOOD REASON AND NONE WAS PLACED BEFORE US TO JUS TIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PAS SED BY THE ITO'. [EMPHASIS SUPPLIED]. 10. IT IS CLEAR, THEREFORE, THAT AN ASSESSEE IS EN TITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE A UTHORITIES, BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. TH E APPELLATE AUTHORITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH A DDITIONAL CLAIMS TO BE RAISED. IT CANNOT, HOWEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THEY HAVE THE JURISDICTION TO ENTERTAIN T HE NEW CLAIM. THAT THEY MAY CHOOSE NOT TO EXERCISE THEIR JURISDICTION IN A GIVEN CASE IS ANOTHER MATTER. THE EXERCISE OF DISCRETION IS ENTIRELY DIFF ERENT FROM THE EXISTENCE OF JURISDICTION. 11. THE FULL BENCH OF THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. V CIT [1993] 199 ITR 351/66 TAXMAN 27 CONSIDERED A SIMILAR SITUATION. IN THAT CASE, THE A PPELLANT/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 ASSISTAN T COMMISSIONER IN APPEAL. SUBSEQUENTLY, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ITA NO.2650/BANG/2019 PAGE 7 OF 12 AMALGAMATED ELECTRICITY CO. LTD. V. CIT [1974] 97 I TR 334 , HELD THAT SUCH AMOUNTS REPRESENTED ALLOWABLE DEDUCTIONS ON REVENUE ACCOUNT. THE APPELLANT, THEREFORE, RAISED A NEW CLAIM AND ADDITI ONAL GROUNDS BEFORE THE TRIBUNAL IN THAT CONNECTION. THE TRIBUNAL REJECTED THE SAME. THE SECOND QUESTION WHICH WAS RAISED IN THE REFERENCE BEFORE T HE HON'BLE DIVISION BENCH OF MUMBAI HIGH COURT WAS AS UNDER:- '(2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL ERRED IN NOT ALLOWING THE ASSESSEE LEA VE TO RAISE IN ITS OWN APPEALS ADDITIONAL GROUNDS AND IN THE DEPARTMEN TAL APPEALS CROSS OBJECTIONS REGARDING THE DEDUCTIBILITY OF THE SUMS TRANSFERRED TO CONTINGENCY RESERVE AND TARIFF AND D IVIDEND CONTROL RESERVE? 12. THE DIVISION BENCH WHICH HEARD THE REFERENC E, FINDING THAT THERE WAS A CONFLICT OF DECISIONS, PLACED THE PAPERS BEFO RE THE HON'BLE CHIEF JUSTICE FOR CONSTITUTING 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 VER Y WIDE POWERS WHILE CONSIDERING AN APPEAL WHICH MAY BE FIL ED BY THE ASSESSEE. HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT OR REMAND THE CASE TO THE ASSESSING OFFI CER. THIS IS BECAUSE, UNLIKE AN ORDINARY APPEAL, THE BASIC PURPO SE 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 EXPLANATION TO SUB-SECTION (2), HOWEVER, MAKES IT C LEAR THAT FOR THE PURPOSE OF ENHANCEMENT, THE APPELLATE ASSISTANT COMMISSIONER CANNOT TRAVEL BEYOND THE PROCEEDINGS W HICH WERE ORIGINALLY BEFORE THE INCOME TAX OFFICER OR REFER T O NEW SOURCES OF INCOME WHICH WERE NOT BEFORE THE INCOME TAX OFFI CER AT ALL. FOR THIS PURPOSE, THERE ARE OTHER SEPARATE REMEDIES PROVIDED UNDER THE INCOME-TAX ACT'. ITA NO.2650/BANG/2019 PAGE 8 OF 12 13. THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 WAS CONSIDERING A CASE WHERE THE ASSESSEE HAD DEPOSITED ITS FUNDS NOT IMMEDIATELY RE QUIRED BY IT ON SHORT TERM DEPOSITS WITH BANKS. THE INTEREST RECEIVED ON SUCH DEPOSITS WAS OFFERED BY THE ASSESSEE ITSELF FOR TAX AND THE ASSE SSMENT WAS COMPLETED ON THAT BASIS. EVEN BEFORE THE COMMISSIONER OF INCO ME-TAX (APPEALS), THE INCLUSION OF THIS AMOUNT WAS NEITHER CHALLENGED BY THE ASSESSEE NOR CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEA LS). THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE INCLUSION OF THE AMOUNT WAS NOT OBJECTED TO EVEN IN THE GROUNDS OF APPEAL AS ORIGIN ALLY FILED BEFORE THE TRIBUNAL. SUBSEQUENTLY, THE ASSESSEE BY A LETTER RA ISED ADDITIONAL GROUNDS TO THE EFFECT THAT THE SAID SUM COULD NOT BE INCLUD ED IN THE TOTAL INCOME. THE ASSESSEE CONTENDED THAT ON AN ERRONEOUS ADMISSI ON, NO INCOME CAN BE INCLUDED IN THE TOTAL INCOME. IT WAS FURTHER CON TENDED THAT THE ITO AND THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD ERRED AND FAILED IN THEIR DUTY IN ADJUDICATING THE MATTER CORRECTLY AND BY ME CHANICALLY 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 FU RTHER STATED THAT IT HAD RAISED THESE ADDITIONAL GROUNDS ON LEARNING ABOUT T HE LEGAL POSITION SUBSEQUENTLY. THE TRIBUNAL DECLINED TO ENTERTAIN TH ESE ADDITIONAL GROUNDS. THE SUPREME COURT DID NOT ANSWER THE QUESTION ON ME RITS, BUT FRAMED THE FOLLOWING QUESTION AND HELD AS UNDER:- '4. THE TRIBUNAL HAS FRAMED AS MANY AS FIVE QUESTIO NS WHILE MAKING A REFERENCE TO US. SINCE THE TRIBUNAL HAS NO T EXAMINED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON ME RIT, WE DO NOT PROPOSE TO ANSWER THE QUESTIONS RELATING TO THE MER IT OF THOSE CONTENTIONS. WE REFRAME THE QUESTION WHICH ARISES F OR OUR CONSIDERATION IN ORDER TO BRING OUT THE POINT WHICH REQUIRES DETERMINATION MORE CLEARLY. IT IS AS FOLLOWS: ITA NO.2650/BANG/2019 PAGE 9 OF 12 'WHERE ON THE FACTS FOUND BY THE AUTHORITIES BELOW A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE TH E AUTHORITIES) WHICH BEARS ON THE TAX LIABILITY OF TH E ASSESSEE, WHETHER THE TRIBUNAL HAS JURISDICTION TO EXAMINE THE SAME.' 14. UNDER SECTION 254 OF THE INCOME TAX ACT, THE A PPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. T HE POWER OF THE TRIBUNAL IN DEALING WITH THE APPEALS IS THUS EXPRESSED IN TH E WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE TH E TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSE E 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 QUES TION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVAN T FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. WE DO NOT SEE ANY REASON TO R ESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUN DS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAS A RIGHT TO FILE AN APPEA L/CROSS OBJECTIONS BEFORE THE TRIBUNAL. WE FAIL TO SEE WHY THE TRIBUNAL SHOUL D BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 15. THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) RELIED ON BY THE CIT IS DISTINGUISHABLE ON THE FAC TS. THE QUESTION BEFORE THE COURT WAS WHETHER THE APPELLANT-ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION, OTHER THAN BY FILING A REVISED RETUR N. 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 BE FORE THE APPELLATE AUTHORITIES. THE DEDUCTION WAS DISALLOWED BY THE AS SESSING OFFICER ON THE ITA NO.2650/BANG/2019 PAGE 10 OF 12 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 CIT(APPEALS) ALLOW ED THE ASSESSEE'S APPEAL. THE TRIBUNAL, HOWEVER, ALLOWED THE DEPARTME NT'S APPEAL. IN THE SUPREME COURT, THE ASSESSEE RELIED UPON THE JUDGMEN T IN NATIONAL THERMAL POWER CO. LTD. (SUPRA) CONTENDING THAT IT WAS OPEN TO THE ASSESSEE TO RAISE THE POINTS OF LAW EVEN BEFORE THE TRIBUNAL. THE SUPREME COURT HELD :- '4. THE DECISION IN QUESTION IS THAT THE POWER OF T HE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS T O 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 TRI BUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWIS E 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 THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TR IBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961 . THERE SHALL BE NO ORDER AS TO COSTS.' [EMPHASIS SUPPLIED] 16. THE HON'BLE SUPREME COURT DID NOT HOLD ANYTHIN G CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT TH AT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSING OFFICER, IT CAN BE MADE B EFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTH ORITIES 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 T HE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE J UDGMENT DOES NOT IMPINGE ON THE POWER OF THE APPELLATE AUTHORITIES. ITA NO.2650/BANG/2019 PAGE 11 OF 12 17. A DIVISION BENCH OF THE HON'BLE DELHI HIGH COU RT IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS LTD. [2008] 306 ITR 42/172 TAXMAN 258 HAD DISTINGUISHED THE HON'BLE APEX COURT JUDGEMENT IN T HE CASE OF GOETZE (INDIA) LTD. (SUPRA) . THE HON'BLE DELHI HIGH COURT, 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 A SSESSING AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. IN PARAG RAPH 19, THE HON'BLE HIGH COURT HELD THAT THERE WAS NO PROHIBITION ON TH E 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. 18. IN THE PRESENT CASE ALSO, WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54B OR NOT, SHOULD HAVE BEEN EXAMINE D BY THE CIT(APPEALS). HOWEVER, HE REJECTED THE CLAIM OF CAP ITAL GAIN ON THE REASON THAT THE ASSESSEE HAS NOT FILED REVISED RETURN OF I NCOME BY PLACING RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CAS E OF GOETZE (INDIA) LTD. V. CIT [2006] 284 ITR 323 (SC) . IN OUR OPINION, THIS JUDGMENT IS APPLICABLE WITH REGARD TO CLAIM BEFORE THE AO, AND NOT BEFORE THE FIRST APPELLATE AUTHORITY OR THE APPELLATE TRIBUNAL. EVE N IF THERE IS NO REVISED RETURN, THE ASSESSEE CAN CLAIM EXEMPTION BEFORE THE APPELLATE AUTHORITIES. IT BEING SO, WE SET ASIDE THE ORDER OF THE CIT(APPE ALS) ON THIS ISSUE AND REMAND THE SAME TO THE AO WITH A DIRECTION TO CONSI DER THE CLAIM OF ASSESSEE U/S. 54B OF THE ACT AND DECISION AFRESH ON MERITS. THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN RESPECT OF THE CL AIM OF DEDUCTION U/S. 54B OF THE ACT AND THE SAME SHALL BE EXAMINED BY TH E AO ON MERITS IN ACCORDANCE WITH LAW. ITA NO.2650/BANG/2019 PAGE 12 OF 12 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH JANUARY, 2021. SD/- SD/- ( N V VASUDEVAN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 04 TH JANUARY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.
