TMI Blog2012 (11) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. As decided in CIT v Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME COURT] the declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the ITO, 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 ITO. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. Thus CIT (A) has not examined the issue in correct perspective taking into consideration the Explanation 5 to section 32(1) and the Board's Circular mentioned supra. The CIT (A) is empowered to consider additional claim made before him, though not made in the return filed. Therefore, in the interest of justice and equity, the case is restored to the file of the CIT (A) to consider the issues afresh and to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Short-term Capital gain Rs.22,66,195/- (iii) Income from Other Sources Rs. 1,031/- The assessment was taken up for scrutiny by issuance of notice under section 143(2) of the Act. During the course of assessment proceedings, the assessee filed a revised return of income on 28/7/2009 declaring a total income of Rs. 27,75,550/- after claiming some variations in the deductions, computation of short term capital gains and making fresh claim of depreciation on car. The scrutiny assessment was completed vide order dated 31/12/2009 accepting the income declared in the original return filed on 29/2/2008. The assessee's plea to consider the revised return and the revised balance sheet was not accepted by the Assessing Officer for the reasons mentioned at para 3 of the assessment order. 4.1 The assessee being aggrieved carried the matter in appeal before the first appellate authority. 5. It was submitted before the first appellate authority that in the course of assessment proceedings, it was discovered that the assessee had omitted to claim certain legitimate deduction and therefore, the revised return was filed on 28/7/2009. It was submitted that if from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not claimed deductions of Rs. 15,567/-and Rs. 6,167/- towards interest on car loan on Zen and Ford Fiesta respectively and depreciation of Rs. 95,665/- in the original return of income on a wrong notion that no deduction was allowable in the absence of any income from this head. - that the cars were used only for the purpose of business. It was contended that the depreciation is a specific relief and allowance be given to the assessee under section 32 of the Act for the use of the asset in the business. Drawing reference to Explanation 5 to section 32(1), it was contended that whether the assessee claimed depreciation or not, the Assessing Officer is duty bound to grant depreciation. The learned AR also strongly relied on the Board's Circular No.14 (XI-35) of 1955 dated April 11, 1955, which is reproduced at para 3.2 of the impugned order of the CIT (A). (iii) that there was variation in short-term capital gains too. The assessee was the owner of a property at Mahadevapura which was acquired by the assessee and one Sri Ramakrishna Gupta and that the assessee had made the investment in the purchase of the property and Shri Gupta had agreed to reimburse a part of the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 139(5) of the Act going by the ratio laid down by the Hon'ble Apex Court in the case of Kumar Jagdish Chandra Sinha (supra). However, the depreciation allowance under Explanation 5 of section 32 of the Act is mandatory allowable if the said asset is used for the purpose of business of the assessee. In other words, whether the assessee makes a claim of depreciation or not in his return of income, the Assessing Officer is duty bound to grant depreciation allowance by virtue of Explanation 5 to section 32(1) of the Act (Inserted by Finance Act, 2001 w.e.f. 1/4/2002). 10.1. Circular No.14 (XI-35) of 1955, dated April 11, 1955 provides that the officers of the department must not take advantage of the ignorance of an assessee as to his rights and that although the responsibility for claiming refunds and reliefs rests with the assessee on whom it is imposed by law, yet (a) the officers should draw the attention of the assessees to any refund or relief to which they are entitled to but which they have omitted to claim for some reason or other, and (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973. The appellant challenged 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 purchase 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 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 case. It is in these circumstances that the appellant filed the appeal before the Supreme Court. The Supreme Court held as under:- "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 Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Mumbai High Court in the case of Ahmedabad Electricity Co. Ltd. v CIT [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 reserve either before the Income Tax Officer or before the Appellate Assistant Commissioner in appeal. Subsequently, the Hon'ble Bombay High Court in the case of Amalgamated Electricity Co. Ltd. v. CIT [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 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 leave to raise in its own appeals additional grounds and in the departmental appeals cross objections regarding the deductibility of the sums transferred to contingency reserve and tariff and dividend control reserve? The Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter 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 contentions. We reframe the question which arises for our 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 before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same." Under Section 254 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decision 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 this 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] 10.7 The Hon'ble 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 appellate 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 impinge on the power of the appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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