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2015 (4) TMI 1275 - AT - Income TaxRevision u/s 263 - Deduction u/s 54F filled in revised return - AO's order except a reference about a letter of revised computation there is no discussion or observation about the merits of allow ability of the claim u/s 54F qua acquisition of house property - HELD THAT:- It is a settled law that income tax assessment shall be fair and reasonable; the valid claim which are due to the assessee should be allowed to it. In Goetz case [2006 (3) TMI 75 - SUPREME COURT] , the claim of the assessee was refused to be entertained by the AO as no revised return was filed. Hon'ble Supreme Court held that the AO may refuse to entertain the claim in the absence of revised return. The appellate authorities i.e. ITAT can entertain the same as they have the vested power provided by the statute. Various CBDT circulars and other judicial precedents also enjoin a duty on the AO to consider lawful claims of the assessee though they may not have been claimed in the return. The legal position which emerges from the above is to the extent that AO may refuse to entertain the claim by way of revised return. However, if this claim is valid then there is no bar on his power to allow any claim in terms of above judgments and CBDT circulars . In this case what we find is that the AO has allowed the claim without commenting on the merits of the claim of the assessee and there is no observation in this behalf and what facts were filed along with return of income. AO should have made proper observation about the validity of the claim and eligibility of the assessee which is totally missing. Thus we are inclined to hold that the AO’s order is erroneous and prejudicial to the interest of the Revenue. CIT looking at the lack of inquiries, instead of disallowing the claim outright should have set aside the erroneous issue back to the file of the AO to properly conduct inquiries and decide the merits of the claim. Consequently, we uphold the order of the ld. CIT but we modify the order by a direction of setting aside the issue to the file of the AO to decide it afresh after conducting proper inquiries in accordance with law by providing reasonable opportunity of being heard to the assessee. Thus the appeal of the assessee is partly allowed.
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