If the assessing officer is going to make good an omission on the part of the assessee, he must be expressly authorised by law to do so lest he is hauled over coals for cosying up to the assessee.
The recent Supreme Court verdict in Goetz (India) Ltd vs CIT (284 ITR 323), tersely dismissing the appeal of the assessee against the order of the assessing officer (AO) not allowing a deduction which it was admittedly entitled to under Chapter VI-A of the Income-tax Act, 1961 but which it had not claimed by even filing the revised return, is unexceptionable though it has come in for criticism from some quarters.
Section 139(5) allows one to file a revised return to make good any honest omission in the original return within a year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.
This is a fair regime and should be made use of in appropriate cases. The assessee, in the instant case, admittedly did not utilise it but nevertheless expected the AO to grant the deduction anyway on the ground that in the course of the assessment proceedings, the omission was brought to his notice. But this contention missed the point: How can the AO suo motu offer a relief not claimed by the assessee himself in his return? Citing the CBDT Circular 35 dated April 11, 1955 which exhorts the AOs to be helpful to the assessees and not take advantage of their ignorance to bolster the claim that a benefit should be granted even without a claim being made in the return, is stretching things a bit too far.
In the first place, the circular travels beyond the mandate of law which is that the assessment must be done on the basis of the returns submitted. Be that as it may.
Maybe the CBDT did not want to be harsh on green-horn or rookie assessees. But then a company which gets its accounts audited twice over, one under the company law and again under the income-tax law cannot be heard to proffer this apology for its slackness.
The role of AO
The Supreme Court in this case was not impressed by the parallel sought to be established between the powers of the Appellate Tribunal and the AO. In the NTPC Ltd (1998 229 ITR 383) case, the apex court had held that additional grounds not mentioned in the grounds of appeal can be raised before the tribunal. The Supreme Court rightly pointed out that the two situations are not on all fours. It is one thing to condone an omission to raise a matter that is on record and allow it to be entertained by the Appellate Tribunal but quite another to expect the AO to fill in the void left by the assessee out of sheer apathy or negligence or may be even oversight.
Under the income-tax law, self-assessment is normally accepted as correct in vast majority of cases with scrutiny assessment being resorted to in select cases, which include no doubt company assessments. It may be possible to contend that when scrutiny is done, the AO would stumble upon the omission and there is no reason why he cannot correct it. It may further be contended that when the omission to claim a deduction is pointed out in the course of the assessment, shouldnt the AO in all fairness grant the same? The point is if the AO is going to make good an omission on the part of the assessee, he must be expressly authorised by law to do so lest he is hauled over coals by the departmental and C&AG audit for cosying up to the assessee.
The CBDT circular of 1955 pressed in by the appellant in this case by itself should not be considered to be sufficient for supplying the requisite thaw to the rigid requirement requiring filing of revised return as a prerequisite for granting the benefit not claimed in the original return.
It is always better that extra-statutory concessions are sanctified by the makers of the substantive law rather than by the makers of subordinate legislation. And while expressly providing for this thaw, Parliament would do well not to prescribe a one-size-fits-all norm in this regard men must be separated from the boys. Those required to get their accounts tax-audited do not deserve the assessing officers indulgence.
S. Murlidharan (The author is a Delhi-based chartered accountant.)