Ita/466/2016 Of The Pr Commissioner Of Income-Tax v. M/S Karnataka State Co Operative

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 3 DAY OF MARCH 27071 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE ASHOK S. KINAGLILT.A. NO.466 OF 2016 BETWEEN: 1.|THE PR. COMMISSIONER OF INCOME-TAX| 5TH FLOOR, BMTC BUILDING| 80 FEET ROAD, KORMANGALA| BENGALURU-560095. 2 |THE INCOME-TAX OFFICER. WARD-6(2), PRESENT ADDRESS ACIT, C-1(2)(1), 2ND FLOOR| BMTC BUILDING, 80 FEET ROAD. KORMANGALA, BENGALURU-560095. (BY SRI. ARAVIND K.V. ADV.,) .., APPELLANTS~ AND* M/S. KARNATAKA STATE CO-OPERATIVEFEDERATION LITD.,NO.32, 53RD FLOOR D. DEVRAJ URS ROAD, RACE COURSE ROAD|BENGALURU-56000 1PAN: AAAJKO4/ 1H .., RESPONDENT (BY SRI. A. SHANKAR, SR. COUNSEL FOR.SRI. JAYACHANDRAN, ADV.) THIS I.T.A. IS FILED UNDER SEC. J6O0-A OF INCOME TAXACT 1961, ARISING OUT OF ORDER DATED 29.04.2016 PASSED IN ITA NO.922/BANG/2014 FOR THE ASSESSMENT YEAR 2010-11,PRAYING TO: |(i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW,STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS.PASSED BY THE ITAT, BENGALURU IN ITA NO.922/BANG/2014DATED 29-04-2016 CONFIRMING THE ORDER OF THE APPELLATE.COMMISSIONER AND CONFIRM THE ORDER PASSED BY THEINCOME TAX OFFICER, WARD-6(2), BENGALURU & ETC. THIS I.7T.A. COMING ON FOR’ HEARING, THIS’ DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)nas been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 2010-11.The appeal was admitted by a bench of this Court videorder dated 29.11.2017 on the following substantialquestion of law: WhetherOf)thefactsand|circumstances of the case, the Tribunal Isright in law in holding that the assessee'sfresn claim before CIT(A) is entertain ableeven when the same Is not claimed in|original return of income nor the assessee had filed revised return of [ncome to makesuch claim? 2 |Facts leading to filing of this appeal brieflystated are that the assessee is a Co-operative Societyestablished by the Government of Karnataka andregistered with the Registrar of Co-operative Societies|under the Karnataka Co-operative Societies Registration|Act, 1959. The assessee filed its return of income for the.Assessment Year 2010-11 on 28.03.2011. The return|was processed under Section 143(1)(a)(ii) of the Actvide intimation dated 10.05.2011. In the intimation, theCentral Processing Centre (hereinafter referred to as ‘theCPCt for snort) processed the income under Section.143(1) of the Act and added a sum of RsS.2,95,98,463/-Under the head income from ‘Business or Profession and.assessed|thetotalincomeat Rs.6,17,46,120/-.ConsequentCO theaddition,ademandofRs.2,35,69,278/- was raised. Aggrieved by the saidintimation issued by CPC under Section 143(1) of the Act, assessee filed an appeal before the Commissioner.of Income Tax (Appeals) on the ground that there was a.typographical error with respect to the entries with|regard to entries made in the Schedule BP, the figure is wrongly at part-Al was wrongly mentioned as ‘NIL’,|whereas, the same ought to have been mentioned as.Rs.2,52,18,534/-. The Commissioner of Income Tax)(Appeals) by an order dated 03.03.2014 directeddeletion of the addition and allowed the appeal. Being:aggrieved, the revenue approached the Income Tax.Appellate Tribunal (hereinafter referred to as ‘thetribunal for short). The tribunal vide order dated29.04.2016 tInter alia nela tnat the Commissioner otIncome Tax (Appeals) nas already issued a remandOrder giving opportunity to the Assessing Officer forexamination of the claim. The tribunal further held that|in the absence of any claim of the revenue that assesseeis not entitled for the exemption under Section 8OP andSection 23C of tne Act. It was furtner neld tnat no' ground is made out to interfere with the order passed bythe Commissioner of Income Tax (Appeals). Accordinglydismissed the appeal of the revenue. In the aforesaidfactual background, the revenue Nas filed this appeal. 3Learned counsel for the revenue submittedthat the assessee is not entitled to raise an additional|claim in appeal other than by way of filing the revised|return of income as provided in Section 138(5) of theAct. It is further submitted that without prejudice to the|aforesaidSubmMiSsSIONSif.ItIS|held that|theCommissioner of Income Tax (Appeals) and the tribunalnave power to entertain additional claim in appeal, theappellate autnority as well as the tridDunal ought to haveexamined question the applicability of taxing provision.instead of drawing an inference, it is also urged that the|assessee is not eligible for deduction under Section 80P|of the Act as well as under Section 10(23C)(iiib) of theAct. It is further pointed out that tnere is no sucnprovision in the Act sucn as Section 10(23C)(iiib) of the: Act. The order passed by the Commissioner of IncomeTax (Appeals) as well as the tribunal suffers from thevice of non application of mind. Therefore, the same.deserves to be set aside. It is also pointed out that thefinding of the Commissioner of Income Tax (Appeals) inallowing the claim and thereafter permitting the|Assessing Officer to take action in accordance with lawis |an exercise in futility as the Assessing Officer is bound|py the order passed by the Commissioner of Income Tax(Appeals). Alternatively it is submitted that the mater be.remanded to the Assessing Officer or Commissioner of Income Tax (Appeals) to consider the claim afresh on.merits. In Support of his submissions, learned counselNas placed reliance on decision inKVAVERNER JOHNBROWN ENGG. (INDIA) (P.)LTD. VS. ASSISTANTCOMMISSIONER OF INCOME-TAX, BANGALORE,(2008) 170 TAXMAN 304 (SC), ‘GOETZE (INIDA)LTD. VS. CIT’, (2006) 284 ITR 323 (SC), 4On the other hand, learned Senior counsel for the assessee submitted that the assessee filed the'Original return of income on 28.03.2011 which containedcertaintypographicalerro;ysInSchedule-BP.Theassessee had entered ‘NIL’ In ttem No.1 Instead otfRs.2,52,18,534/-. It is further submitted that against|this item, the assessee was eligible to claim exemption|under Section 10 (23C)(iiib) of the Act or deductionunder Section 80P of the Act and the exemption was to.pe filled in item No.5 of Scnedule-BP. It ts furtner.submitted that the CPC while processing the return of.income made an addition of Rs.2,95,98,463/- under the|head ‘income from business or profession. — 5.|It is also pointed out that the CPC has onlyconsidered tne item tn Jieu of NIL’ In ttem No.1 ot!Schedule BP and has not considered the exemption.under Section 10(23C)(iiib) or deduction under Section.SOP, for which the assessee is eligible. It is further |Submitted tnat for the first time, the revenue Nas raised.a contention with regard to eligibility of the assessee to. claim exemption/deduction as the same was not claimedin the original return of income and assessee had notfiled a revised return of income to make such a claim. It!is also argued that the addition was made by the CPCand not by the Assessing Officer during the course of.assessment proceeding. It is also pointed out that the|processis automated and assessee was not providedwith any opportunity to make a fresh claim by way of.revised return before CPC. Therefore, the assessee)claimed the same in an appeal and contended that there.was a typographical error in the return of income. It is submitted that without prejudice to the aforesaid|submissions, the assessee is eligible to make a claim.before the appellate authority even if the same is notclaimed in the original return of income or a revisedreturn of Income. 6.|It is also contended that the error committedin filing in the columns in the return of income cannotdeny the right of the assessee to be assessed on correct 6.|It is also contended that the error committedin filing in the columns in the return of income cannotdeny the right of the assessee to be assessed on correct taxable income on which it is actually eligible to pay tax|and tax can be collected only in consonance with Article|265 of the Constitution of India. It is also contended|that revenue in fact is Supposed to assist the taxpayer in.computing the income of the assessee and not take!advantage of the errors committed by the assessee. In Support of his submissions, reliance has been placed on.decisions In"GOETZE (INIDA) LTD. VS. CIT’, (2006)|284 ITR 323 (SC), SANCHIT SOFTWARE ANDSOLUTIONS P. LTD. VS. CIT’, (2021) 349 ITR 404.(BOM. ),"'NIRMALAL_.MEHTAVS,A.BALASUBRAMANIAM, CIT AND OTHERS’, (2004).269 ITR 1 (BOM.), ‘CIT VS. PRUTHV BROKERS ANDSHAREHOLDESLTD.,(2012)349ITR336)(BOMBAY), CIT VS. JAI PARABOLIC SPRINGSLTD.', (2008) 306 ITR 42 (DEL), ‘CIT VS. JINDALSAW PIPES LTD.', (2010) 328 ITR 338 (DEL.), ‘CITVS. SAM GLOBAL SECURITIES LTD., (2014) 360ITR 682 (DEL.), NATIONAL THERMAL POWER CO. LTD.VS,CIT’,(1998)229ITR383(SC),'RAJESHWARI COTTON GINNING & PRESSING|INDUSTRIES VS. ACIT’, (2017) 88 TAXMANN.COM463 (KAR.). J.|We have considered the submissions made.by learned counsel for the parties and have perused therecord. The Supreme Court in-"GOETZE (INIDA) LTD.Supra has held that even if a claim is not made beforethe Assessing Officer it can be made before the|Appellate Authority. A division bench of High Court of.Bombay in|PRUTHVI BROKERS AND SHAREHOLDES|LTDSupra, has dealt with the powers of the Appellate|Authorities. The division bench of the High Court afternoticingthedecisionOf theSupreme.Court|InNATIONAL THERMAL POWER CO. LTD vs. CIT, 299ITR 383 (SC)has held that in the aforesaid decision|the Supreme Court has not held anything contrary towhat was held inGoetze (India) Ltd~ and hasreaffirmed the legal position that even if the claim is not. made before the Assessing Officer, it can be made|before the Appellate Authorities and jurisdiction of theAppellate Authorities to entertain such a claim has notbeen negatived inNATIONAL THERMAL POWER CQO.LTD.supra. A division bench of Delhi High Court inCIT|VS. JAI PARABOLIC SPRINGS LTD., 306 ITR 42)(DEL)has held that there was no prohibition on the.powers of tribunal to entertain an additional ground,|which according to the tribunal arises in the matter andis necessary for just decision of the case. | 8 _In the backdrop of aforesaid well settledprinciples, the facts of the case in nand may beexamined. In the instant case, the claim for eligibilitywith regard to deduction under Section 80P of the Actwas entertained by the Commissioner of Income Tax.(Appeals) as the assessee did not have the opportunityto raise the contention before the Assessing Officer as.the order of assessment was passed by the CPC andtherefore, the assessee had no opportunity to make a fresh claim by way of revised return before the CPC as.the process is automated. The claim of the assessee was.allowed by the Assessing Officer by placing reliance on|the assessee's own case for the Assessment Year 2Z00506. It is pertinent to note that in the instant case, we.are not required to examine the validity of the claim of.the assessee with regard to relief under Section 80P of the Act on merits as the substantial question of law only.pertains to power of the Appellate Autnority to entertain.such a claim in the absence of such a claim being made|in the original return or in the revised return. In view of the aforesaid well settled legal principles, which have|been referred to in preceding paragraph, we answer the.substantial question of law in the affirmative and againstthe revenue. ������������������������������������������������������������������������������������������������ ��� ����������������������