Appellate Authorities under Income Tax Act have Jurisdiction to Entertain Additional Claim: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate tribunal has held that the appellate authorities under Income Tax Act have jurisdiction to entertain the additional claim raised by the assessee.

The Appellant, Unifrax India Ltd was as a company engaged in the business of manufacturing and sale of ceramic fibre and fibre products, The case of the Appellant was selected for scrutiny and assessment, during the assessment proceedings vide letter the Appellant raised an additional claim in respect of net foreign exchange gain credited to the Profit & Loss Account. But the Assessing Officer (AO) disregarded the same while the CIT(A), in appeal also refused to entertain the claim holding“An assessee cannot make a fresh claim for deduction in the course of the assessment proceedings” referring Hon’ble Supreme Court decision in the case of Goetze India Ltd. Vs. CIT.

Shashank Mehta, on behalf of the assessee submitted that the Commissioner of Income Tax (CIT(A)) had the jurisdiction and power to entertain the additional claim. He also submitted that the net foreign exchange gain pertained to advance given by Appellant to a foreign party for purchase for capital asset was not delivered to the Appellant till the end of the relevant previous year. He also contended that the exchange gain should had been reduced from the cost of acquisition of capital asset.

Nishant Somaiya, on behalf of the revenue submitted that the claim was not made in the return of income and was also raised for the first time during the assessment proceedings vide letter. He further submitted that the return was not revised and the Assessing Officer was correct in not considering the claim and therefore, the CIT(A) was also correct in rejecting the claim of the Appellant.

 The Mumbai Bench of Prashant Maharishi (Accountant Member) and Rahul Chaudhary (Judicial Member) observed that,  “An assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims. The appellate authorities have the discretion whether or not to permit such additional claims to be raised.”. The bench held that the authorities had the jurisdiction to entertain the new claim. 

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