2014 (5) TMI 1230 - HC - Income Tax

Revision u/s 264 - refund claim as exemption u/s 10(10C) and 89 denied but latter on allowed - issue of law as decided in favour of the assessee in another matter by this Court in the year 2008 and by the Apex Court in the year 2009 - assessee filed the application u/s 154 for rectification of the assessment order which was rejected and petitioner filed a revision u/s 264 to the Commissioner of Income Tax, for refund - whether the petitioner is entitled to enforce that remedy in the manner in which she has done? - HELD THAT - In a similar matter, a Division Bench of this Court in the case of Devdas Rama Mangalore 2014 (2) TMI 132 - BOMBAY HIGH COURT granted complete relief, including an order of refund. The only difference between this case and that case is that, in that case, the petitioner had made an application for condonation of delay under Section 119 (2) (b) of the Income Tax Act, which was rejected, in view of the circular issued by the CBDT. In the case before us, the course adopted was under Section 264 of the Act. The course adopted by the petitioner in the facts and circumstances of the present case was valid. We allow the petition by directing the respondent to allow refund due to the petitioner.

Summary

Issues:
1. Denial of exemption under Sections 10(10C) and 89 of the Income Tax Act to a former employee of the Reserve Bank of India.
2. Rejection of application under Section 154 for rectification of assessment order.
3. Commissioner of Income Tax holding that provisions of Section 264 were not attracted for refund.
4. Entitlement of the petitioner to enforce the remedy for refund.
5. Comparison with a similar case where complete relief was granted, including an order of refund.

Analysis:
1. The petitioner, a retired employee of the Reserve Bank of India, claimed an exemption under Sections 10(10C) and 89 of the Income Tax Act in a revised income tax return. The exemption was denied by the Assessing Officer in 2006, despite subsequent judgments in favor of the assessee by the High Court and the Apex Court in 2008 and 2009, respectively.

2. Following the denial of exemption, the petitioner filed an application under Section 154 for rectification of the assessment order, which was rejected. Subsequently, a revision under Section 264 of the Act was filed for a refund. The Commissioner of Income Tax, in the impugned order, held that no mistake was apparent from the record and that Section 264 was not applicable.

3. The key issue in the case was whether the petitioner was entitled to enforce the remedy for refund in the manner she had pursued. A Division Bench of the High Court had previously granted complete relief, including a refund order, in a similar matter. The difference was that the previous case involved an application for condonation of delay under Section 119(2)(b) of the Income Tax Act, which was rejected due to a circular by the CBDT. In the present case, the petitioner followed the course under Section 264 of the Act.

4. Citing a previous judgment of the High Court in Hindustan Diamond Company Pvt Ltd v/s Commissioner of Income Tax, the Court found the course adopted by the petitioner to be valid in the circumstances of the case. Consequently, the petition was allowed, directing the respondent to grant the refund due to the petitioner based on the precedent set by previous decisions of the High Court.

5. In light of the decisions of the High Court in similar matters, the Court ruled in favor of the petitioner, ordering the respondent to allow the refund owed to the petitioner. The comparison with the previous case where complete relief was granted, including a refund, further supported the petitioner's entitlement to the remedy sought in the present case.