Revised Return Not Mandatory For Raising Fresh Claims Before Appellate Authorities
Background of the Dispute
In Narayan Namdeo Kadam Vs ITO, the Mumbai Bench of the Income Tax Appellate Tribunal examined a recurring controversy: can an assessee put forward a fresh claim at the appellate stage without filing a revised return, merely by furnishing a revised computation of income?
The matter arose for A.Y. 2017-18, where the assessee had originally filed a return of income on 19.07.2017, declaring a total income of ₹23,32,600. The Centralised Processing Centre processed this return under Section 143(1) on **15.09.2018` and, after making an adjustment of ₹17,67,640, determined the total income at ₹41,00,240.
The assessee considered this adjustment to be erroneous and led to double taxation of the same income. This dispute ultimately reached the ITAT, which had to decide:
- Whether appellate authorities (CIT(A) and ITAT) can entertain an additional claim based on a revised computation of income; and
- Whether the absence of a revised return bars such a claim.
Facts and Proceedings Before Lower Authorities
Original Return and Processing Under Section 143(1)
- The assessee filed a return on 19.07.2017 declaring income of ₹23,32,600.
- CPC processed the return under
Section 143(1)on **15.09.2018`. - An adjustment of ₹17,67,640 was made, increasing the assessed income to ₹41,00,240.
The assessee asserted that this increase arose from double taxation of the same income component—business income was allegedly considered again while computing salary income.
Appeal Before CIT(A) and Delay Condonation
- The assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
- This appeal reached the appellate authority after a delay of more than three years.
- The CIT(A), after considering the reasons, exercised discretion to condone the delay and admitted the appeal for adjudication on merits.
Claim of Double Taxation and Revised Computation
Before the CIT(A), the assessee argued:
- The impugned amount of approximately
₹17,67,642was taxed twice. - In the original return, the assessee had separately disclosed:
- Salary income of
₹12,41,801; and - Business income of
₹12,59,311.
- Salary income of
- According to the assessee, while processing under
Section 143(1), the business income had not been properly reduced from salary income (or had been brought to tax again), leading to duplication.
By the time this was realised, the statutory window for filing a revised return had already lapsed. Therefore, instead of a revised return, the assessee filed a revised computation of income before the CIT(A), which showed:
- Salary income:
₹30,09,440 - Business income:
₹Nil
The revised computation led to higher tax liability as compared to the original return:
- Tax as per original return:
₹5,40,523 - Tax as per revised computation:
₹6,81,172
Thus, the assessee’s revised computation did not seek a lower tax liability overall; it aimed to correct the character and duplication of income.
Findings of CIT(A)
The CIT(A) rejected the assessee’s claim substantially on technical grounds, holding:
- A revised computation lodged during appellate proceedings, without support of a validly filed revised return, cannot be entertained.
- The error leading to the adjustment under
Section 143(1)had its origin in the figures disclosed by the assessee in the original return. - In the absence of a revised return, the assessee could not be permitted to alter or recast the computation through appellate proceedings.