Facts of the case:
Assessee had claimed in his return for A.Y. 2004-05 a deduction under section 43B in respect of payment of SEBI fees of Rs. 10,00,000 each paid on 16th July, 2004 and 29th April, 2004 i.e. during the financial year 2004-05. Thus, admittedly, for the relevant assessment year viz. 2004-05, the assessee was not entitled to a deduction in respect of the said payments. In the course of assessment proceedings before the AO, the assessee stated that the claim was made inadvertently. The respondent, however, made a claim of Rs. 40,00,000 under section 43B in respect of payment of the SEBI fees on 9th May, 2003 i.e. in the assessment year 2004-05.
The AO rejected the claim on the ground that he had no authority to allow any relief or deduction which had not been claimed in the return. CIT(A) and ITAT ruled in assessee’s favour and allowed the deduction. Hence, the instant Departmental appeal.
- Even assuming that the Assessing Officer is not entitled to grant a deduction on the basis of a letter requesting an amendment to the return filed, the appellate authorities are entitled to consider the claim and to adjudicate the same.
- A long line of authorities establish clearly that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims.
- 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. They have the jurisdiction to entertain the new claim. However 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.
- The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed.
- In the result, Revenue’s appeal dismissed and appellate authorities’ orders upheld.