Income Tax Appellate Tribunal - Delhi
Afeef Ur Rehman, , Moradabad vs Department Of Income Tax on 11 April, 1955
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ITA 3912/Del/2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI A.D. JAIN, JUDICIAL MEMBER
ITA NO.3912/DEL/2010
ASSTT. YEAR: 2007-08
Asstt.Commissioner of Income Tax, Vs Sh. Afeef Ur Rehman,
Circle -II, Moradabad. C/o Meba Brass, Pandit Nagla,
By Pass, Moradabad.
(Appellant) (Respondent)
Appellant by: Mrs. Anusha Khurana, Sr. DR
Respondent by: S/Shri K. Sampath, Rajkumar
O R D E R
PER G.D. AGRAWAL, VICE PRESIDENT In this appeal by the revenue, following grounds are raised:-
"1. Under the circumstances of the case whether the CIT(A), Bareilly is justified in law as well as fact of case in not appreciating the fact that even the letter through which claim of benefit u/s 54 of the IT Act 1961 was preferred, was not signed by the assessee himself instead it was signed by some one other than the assessee. Signatures of the assessee can be verified from the signatures as appearing in the verification portion of the return of income filed by the assessee. Such signatures can also be further verified from the copies of other documents filed during the course of the assessment proceedings viz. copy of purchase deed and sale deeds of the property sold and which are available on the case record.
2. Under the circumstances of the case whether the CIT(A), Bareilly is justified in law in allowing the claim of the assessee for deduction which was not made in the original or revised return whereas it has been held by Hon'ble Supreme Court of India in the 2 ITA 3912/Del/2010 case of GOETZE (INDIA) Ltd. Vs CIT 204 CTR 182(SC) wherein Hon'ble Court has held that for deduction not made in the return cannot be entertained by A.O. otherwise than by filing a revised return.
3. Under the circumstances of the case whether the CIT(A) Bareilly is justified in law in not appreciating the fact that inability to file the claim u/s 54 is resting upon the assessee himself which is evident in the light of the facts narrated in the enclosed statement of fact.
4. That the order of the AO may be restored by setting aside the order passed by the CIT(A)."
2. The brief facts of the case are that in the return of income, the assessee had disclosed long term capital loss of Rs. 12,59,747 from the sale of house property. However, the AO worked out the long term capital gain at Rs. 16,77,113/-. He also denied the assessee's claim for exemption for purchase of residential house u/s 54 of the I.T. Act on the ground that the claim was not made in the return of income and, moreover, the assessee has not filed the revised return. The CIT(A) accepted the assessee's contention and directed the AO to allow benefit u/s 54 with the following findings:-
"The decision of the Hon'ble Apex Court relied by the AO is not applicable in the case of the assessee because this claim was not based on any letter filed before the AO to allow deduction during assessment proceedings. The deduction would not have been applicable in the case of the assessee as per computation of income filed in the return of income, if the AO had not worked out the positive capital gains from the nil capital gain as claimed in the return. In such peculiar circumstances, I am of the view that the assessee was eligible to 3 ITA 3912/Del/2010 have the benefit of the provisions of the Act as a lawful claim. Accordingly, the ground of appeal for claim of benefit u/s 54 is allowed."
3. The revenue, aggrieved with the finding of the CIT((A), is in appeal before us.
4. At the time of hearing, it was submitted by the ld. DR that the assessee did not claim any exemption u/s 54 of the I.T. Act in the return of income and, moreover, no revised return was furnished by the assessee. Therefore, in view of the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. Vs CIT (2006) 284 ITR 323 (SC), the assessee is not entitled to make a fresh claim which was not made in the return of income. She, therefore, submitted that the order of the CIT(A) should be reversed that that of the AO may be restored.
5. The ld. Counsel for the assessee stated that as per assessee's working, there was long term capital loss of Rs.12,59,747/- because the Indexed cost of acquisition as per the assessee was Rs.57,59,747/- and the sale consideration was only Rs. 45 lakh. Though the assessee had purchased another residential house by investing sale proceeds of this house, the assessee did not claim any exemption u/s 54 because there was no positive capital gain. Exemption u/s 54 can be claimed only if there is any capital gain. When during the assessment proceedings, the AO proposed to re-work 4 ITA 3912/Del/2010 the long term capital gain and which, according to the AO, was in a positive figure, then only the assessee pointed out that it has already purchased a new residential house for which he is entitled for exemption u/s 54. As it is the duty of the AO to make a correct computation of income and even if the assessee has omitted to make some claim to which it is entitled, the AO is duty bound to allow such claim. In support of this contention, he relied upon the Circular of the CBDT vide No.14(XL-35) of 1955 dated 11.4.1955. He stated that though the Circular is very old, but till date, it has not been withdrawn. In this Circular, the government has taken the view that the officers of the department must not take advantage of ignorance of the assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs. That in this case, the AO, instead of guiding and advising the assessee in the light of above direction of the CBDT, denied the genuine claim made by the assessee without any basis or reason. He, therefore, submitted that the order of ld. CIT(A) should be sustained. In the rejoinder, it is stated by the ld. DR that the Circular referred to by the ld. CIT(A) is more than 55 years old and cannot be applied in the present circumstances, specially after the decision of Hon'ble Apex court in the case of Goetze (India) Ltd. Vs CIT (supra). 5
ITA 3912/Del/2010
6. We have carefully considered the arguments of both the sides and perused the material placed before us. In the return of income, the assessee has worked out the capital gain at a loss of Rs. 12,59,747 as under:-
Sale consideration 45,00,000/-
Less: Cost of acquisition 32,00,000/-
Indexed cost 57,59,747/- 57,59,747/-
Long term capital loss 12,59.747/-
When there was long term capital loss, obviously, the assessee could not have claimed any exemption u/s 54 of the Income Tax Act. During the course of assessment proceedings, the AO raised several objections with regard to cost of acquisition of the asset and also the year of acquisition. When it appeared that as per the working of the AO, there could be capital gain as against the capital loss claimed by the assessee, it was pointed out by the assessee to the AO in a written reply that the assessee has purchased a house on 11.4.2007 for a sum of Rs. 22,00,000 for which he is entitled to exemption u/s 54 of I.T. Act. The AO determined the capital gain from the sale of the house at Rs.17,18,423 as against the loss disclosed by the assessee at Rs.12,59,747. He did not entertain the asssessee's request for allowing exemption u/s 54 on the ground that the assessee did not make the claim in the return of income and also did not file any revised return. On these facts, he applied the decision of Goetze (India) Ltd. Vs CIT (supra). 6
ITA 3912/Del/2010 Considering the arguments of both the sides and the facts of the case, we are of the opinion that on these facts, the decision of Goetze (India) Ltd. Vs CIT does not apply. The issue before the AO was the computation of capital gain. As per the working of the assessee, there was a capital loss but since as per the working of the AO, there was a capital gain, in such circumstances, the asessee was entitled to exemption u/s 54. The assessee could not have claimed exemption u/s 54 in the return of income because according to him, there was a capital loss. In its Circular No. 14 dated 11.4.1955, the CBDT has directed its officer as under:-
"Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessee on whom it is imposed by law, officers should-
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs."7
ITA 3912/Del/2010 Though the above Circular is very old, it has not been pointed out that the above Circular has either been withdrawn or modified. In fact, the above Circular correctly defines what is the duty of the AO. The duty of the AO is to determine the correct assessable income. The Government of India is not supposed to collect the tax at a higher figure than what the citizen is actually liable to pay by taking advantage of the ignorance of the taxpayer. If the taxpayer is ignorant, it is the duty of the AO to assist the taxpayer in a reasonable manner. Considering the above Circular and also the facts of the assessee's case, we do not find any infirmity in the order of the CIT(A). The same is sustained and revenue's appeal is dismissed.
7. In the result, the revenue's appeal is dismissed.
Order pronounced in the open court on 16.2.2012.
Sd/- Sd/-
( A.D. JAIN ) ( G.D. AGRAWAL )
JUDICIAL MEMBER VICE PRESIDENT
DT. 16th FEBRUARY 2012
'GS'
Copy forwarded to:-
1. ACIT, Moradabad.
2. Shri Afeef Ur Rehman, Moradabad.
3. CIT(A)
4. CIT 5. DR By Order
ASSTT. REGISTRAR
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ITA 3912/Del/2010