CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd (Bombay High Court)

DATE: (Date of pronouncement)
DATE: July 3, 2012 (Date of publication)

Click here to download the judgement (Pruthvi_brokers_claim_ROI_appellate.pdf)

Assessee entitled to raise claims not made in ROI before appellate authorities

The assessee filed a ROI in which it omitted to make a claim for payment of SEBI fees. The claim was made by a letter during the assessment proceedings. The AO rejected the claim on the ground that he had no authority to allow any deduction which had not been claimed in the ROI. The assessee raised the claim before the CIT (A) who allowed and this was confirmed by the Tribunal. The department filed an appeal to the High Court claiming that as per Goetze 284 ITR 323 (SC), the assessee was not entitled to make an additional claim for deduction other than by filing a revised return. HELD by the High Court dismissing the appeal:

It is well settled 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. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. Goetze was confined to a case where the claim was made only before the AO and not before the appellate authorities. The Court did not lay down that a claim not made before the AO cannot 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. On facts, there was nothing to show that the claim entertained by the CIT (A)/ ITAT was improper (Jai Parabolic 306 ITR 42 (Del) referred).

For a thorough discussion on Goetze 284 ITR 323 (SC) see Article & Eversmile Construction. In some cases it has been held that the AO ought to have himself entertained the claim in view of Circular No. 14 (XL-35) of 1955 dated 11th April 1955 (dept cannot take advantage of assessee’s ignorance).

4 comments on “CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd (Bombay High Court)

    The decision in case of Goetze 284 ITR 323 (SC) needs a reconsideration because the AO is duty bound to make computation as per law, even if assessee has not preferred a claim, the AO must allow the claim, otherwise there will be excessive assessment.

    Due to complexity and uncertainty of law, added with risk of penalty for wrong claim many times assessee has to adopt approach of play safe and avoid making claims in ROI. In case of physical return assessee could have mentioned about additional claims for consideration of the AO, however in case of e-filing of return that possibility is also not available becasue any space or sheet is not provided for explanations and additional claims for consideration of the AO.

    Therefore, assessee must be permitted to prefer additional claims for consideration of the AO by way of notes below computation or separate letter.

    In the form of return space must be provided for making clarifications about contentious claims and also making additional claims (over and above amount of income or loss as per computation given in ROI) so that assessee can make his stand clear and can also request the AO to consider further claims.

  2. Hitesh Bansal says:

    Dear Sir

    So do it means that AO is duty bound to make allowance for deductions
    which were not even claimed in revised return.

  3. Vinit Jain says:

    Superb judgement solnving many tiny issues of the assessee regarding filing claims which were left out of genuine ignorance. 🙂

  4. ca a.mahedra reddy says:

    assessee omitted to claim 80IB (sixth year) relief in return,in the meantime 143(1) has been received. AO-154 and CIT -263 have rejected provide me with latest case laws

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