Appellate Authorities can allow Additional Claims made by Assessee during the Proceedings: Madras HC [Read Judgment]

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In CIT v. M/s Abhinitha Foundation Pvt Ltd, the division bench of the Madras High Court held that the appellate authorities, including the Commissioner of Income Tax (Appeals) and the appellate Tribunal can consider a new or additional claim made by the assessee during the course proceedings under the Income Tax Act.

Assessee-Company, in the instant case, omitted to claim deduction under Section 80IB (10) of the Income Tax Act. During the course of scrutiny of returns, they claimed the above deduction and furnished the details of project executed in the prescribed format, based on which, it claimed deduction under Section 80IB (10) of the Act.

However, AO denied the claim while passing the assessing officer on ground that the claim with respect to deduction under Section 80IB (10) of the Income Tax Act did not form part of the original return filed by the assessee company.

The first appellate authority noted that assessee-company’s claim for deduction under Section 80IB (10) of the Act had been accepted by the Department both in the preceding and succeeding years. However, it dismissed the appeal on the ground that the claim was not made in the original return.

The ITAT, on second appeal, allowed the plea of the assessee by holding that the appellate authorities had the power to consider the revised claim by the assessee company, if, it was otherwise entitled to, even though no claim qua the same had been lodged by it in the return as originally filed.

The Department, aggrieved by the above order, approached the High Court contending that the claim of the assessee cannot be allowed since they did not made the claim even at the time of filing original return or revised return.

Citing a plethora of decisions, the bench aligned with the findings of the Tribunal and clarified that the appellate authorities are empowered to consider a new or additional claim based on the facts and circumstances of the case. “The power of the appellate authorities to consider claims made based on material already on record is co-terminus with the power of the Assessing Officer. The failure to advert to the claim in the original return or the revised return cannot denude the appellate authorities of their power to consider the claim, if, the relevant material is available on record and is otherwise tenable in law. Any other view, in our opinion, will set at naught the plenary powers of appellate authorities.”

Read the full text of the Judgment below.

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