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Goetze (India) Ltd. v. Cit
Factual and Procedural Background
The appellant–assessee filed its income-tax return for Assessment Year 1995-96 on 30-11-1995. Nearly two years later, on 12-01-1998, it sought an additional deduction by addressing a letter to the Assessing Officer (AO) instead of filing a revised return. The AO rejected the request, holding that the Income-tax Act, 1961 does not permit modification of a return at the assessment stage except through a formally revised return.
The assessee’s first appeal to the Commissioner (Appeals) succeeded, but the Department’s further appeal to the Income-tax Appellate Tribunal (ITAT) was allowed, restoring the AO’s disallowance. Challenging the ITAT’s decision, the assessee approached this Court by way of civil appeal.
Legal Issues Presented
- Whether an assessee can claim a new deduction during assessment by way of a letter to the Assessing Officer, rather than by filing a revised return under the Income-tax Act, 1961.
Arguments of the Parties
Appellant's Arguments
- The ITAT erred in upholding the AO’s refusal to consider the deduction claim.
- Relied on National Thermal Power Co. Ltd. v. Commissioner of Income Tax (1998) 229 ITR 383 to contend that legal issues can be raised for the first time before the ITAT, implying that procedural rigidity should not defeat a lawful claim.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| National Thermal Power Co. Ltd. v. Commissioner of Income Tax (1998) 229 ITR 383 | ITAT’s power under Section 254 of the Income-tax Act to entertain a point of law raised for the first time on appeal. | The Court held that this precedent concerns only the ITAT’s appellate powers and does not empower an Assessing Officer to admit a new deduction claim without a revised return. |
Court's Reasoning and Analysis
The Court analyzed the narrow statutory question of the Assessing Officer’s competence. It acknowledged that Section 254 confers broad powers on the ITAT to entertain new legal grounds, as recognised in National Thermal Power Co. Ltd. However, that authority is confined to the appellate stage and does not extend to the original assessment proceedings.
Because the Income-tax Act provides a specific mechanism—filing a revised return—for altering or adding claims at the assessment stage, the Court affirmed that an Assessing Officer cannot entertain such a claim through a mere letter. The appellant’s reliance on the National Thermal Power decision was therefore misplaced; it does not override the statutory requirement applicable to the AO.
Holding and Implications
HOLDING: The civil appeal is dismissed.
Immediate Effect: The Assessing Officer’s disallowance, as restored by the ITAT, stands affirmed, and the assessee cannot obtain the claimed deduction without a duly filed revised return.
Broader Implications: The order clarifies that while the ITAT has latitude under Section 254 to entertain fresh legal grounds, an Assessing Officer lacks similar discretion; statutory procedures for revising returns must be strictly followed. No new precedent on ITAT powers is set, as the Court expressly limited its ruling to the powers of the assessing authority.
ORDER Leave granted.
2. The question raised in this appeal relates to whether the appellant assessee could make a claim for deduction other than by filing a revised return. The assessment year in question was 1995-96. The return was filed on 30-11-1995, by the appellant for the assessment year in question. On 12-1-1998, the appellant sought to claim a deduction by way of a letter before the assessing officer. The deduction was disallowed by the assessing officer on the ground that there was no provision under the Income Tax Act to make amendment in the return of income by modifying an application at the assessment stage without revising the return.
2. The question raised in this appeal relates to whether the appellant assessee could make a claim for deduction other than by filing a revised return. The assessment year in question was 1995-96. The return was filed on 30-11-1995, by the appellant for the assessment year in question. On 12-1-1998, the appellant sought to claim a deduction by way of a letter before the assessing officer. The deduction was disallowed by the assessing officer on the ground that there was no provision under the Income Tax Act to make amendment in the return of income by modifying an application at the assessment stage without revising the return.
3. This appellant's appeal before the Commissioner (Appeals) was allowed. However, the order of the further appeal of the department before the Income Tax Appellate Tribunal was allowed. The appellant has approached this court and has submitted that the Tribunal was wrong in upholding the assessing officer's order. He has relied upon the decision of this court in National Thermal Power Co. Ltd. v. Commissioner Of Income Tax. (1998) 229 ITR 383, to contend that it was open to the assessee to raise the points of law even before the Appellate Tribunal.
3. This appellant's appeal before the Commissioner (Appeals) was allowed. However, the order of the further appeal of the department before the Income Tax Appellate Tribunal was allowed. The appellant has approached this court and has submitted that the Tribunal was wrong in upholding the assessing officer's order. He has relied upon the decision of this court in National Thermal Power Co. Ltd. v. Commissioner Of Income Tax. (1998) 229 ITR 383, to contend that it was open to the assessee to raise the points of law even before the Appellate Tribunal.
4. The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, 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.
4. The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, 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.
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