A Claim not made in Original or Revised Return can be Allowed by Appellate Authorities: Delhi HC [Read Judgment]

Finance Act - Delhi High Court - taxscan

In RITES Ltd v. CIT Delhi, the division bench of the Delhi High Court held that the appellate authorities can invoke their revisional jurisdiction under the Income Tax Act in case if the assessee omitted to make a claim in the original or revised return and subsequently made such a claim during the assessment proceedings.

In the instant case, the appellant-Company, while filing returns for the year 1997-98, claimed deduction in respect of revised salary on the basis of the Notification issued by the Central Government giving effect to the recommendations of the Pay Commission. AO denied the same. On appeal, the first appellate authority held that the assessee can claim the benefit for the next assessment year. However, the assessment proceedings for the year 1998-99 was complete, and in the return filed for the said AY, no claim for provision for arrears of wages was made.

On appeal, both the first appellate authorities and the ITAT held that a claim not made in the original return could not be made subsequently during assessment proceedings by way of letter.

Allowing the appeal, Justices S. Muralidhar and Chander Sekhar held that “the mere fact the Petitioner did not make any claim in the original return and also in its revised return before the passing of the assessment order by the AO would not stand in the way of the CIT exercising revisionary jurisdiction to grant relief. The Supreme Court in its decision in Goetze India Limited v. Commissioner of Income Tax (supra) held that while the AO could not permit a claim to be made after the filing of the return without the Assessee revising it prior to the assessment order, it did not impinge on the scope of the revisionary jurisdiction of the CIT.”

based on settled judicial decision, the bench found that the CIT erred in rejecting the revision application of the Petitioner on the ground of maintainability. The CIT ought to have entertained the revision petition on merits.

Read the full text of the Judgment below.