2017 (7) TMI 1012 - HC - Income Tax

Revision u/s 264 in favor of assessee - condonation of delay in filing an application - Held that - When Section 264(3) uses the expression to the date on which he otherwise came to know of it , it refers to the date on which the Petitioner actually had a copy of the intimation. He could either get it from the Department or get it from any other source. In other words, it would not be sufficient that the Petitioner came to know of the fact that his return had been processed. Till such time the Petitioner had a copy of the intimation under Section 143(1) of the Act, the limitation period under Section 264 (3) of the Act would not begin to run. Considering that Section 264 is a provision intended to benefit the Assessee, no other interpretation is possible on a plain reading of it. Thus PCIT was in error in holding that the revision petition was time barred. The Court would also like to observe that where in a given case, the PCIT is of the view that a certain petition is time barred, then in terms of the proviso to Section 264 (3), the PCIT should also examine whether there was any justifiable reason for such delay. He need not wait for an application to be filed by an Assessee for that purpose. He may put the Assessee on notice of this fact and require the Assessee to show sufficient cause for the delay. This may avoid needless multiplicity of the proceedings, particularly, when the delay is not substantial and can be explained by the Assessee. Since the PCIT has declined to examine the issue on merits, the Court sets aside the impugned order dated 21st December, 2016 passed by the PCIT and restores the Petitioner s revision application to his file for disposal on merits in accordance with law. The Petitioner s aforementioned revision application shall be placed before the PCIT on 4th September, 2017 for this purpose.

Summary

Issues:
Challenge to order rejecting application under Section 264 of the Income Tax Act, 1961 on the ground of limitation.

Analysis:
The petitioner, a proprietor and director of two separate entities, filed returns for the Assessment Year 2012-13, with one entity showing a loss without including interest on Fixed Deposit Receipts (FDRs) transferred from the other entity. The assessing officer added the interest as unaccounted income for the entity with the loss, prompting the petitioner to seek revision of the intimation under Section 143(1) to avoid double taxation. The Principal Commissioner of Income Tax (PCIT) dismissed the revision petition as time-barred, citing the date of refund encashment as the starting point for the limitation period.

During the hearing, the Court noted discrepancies in the PCIT's calculation of the limitation period, highlighting that the petitioner received the intimation well after the date of refund encashment. The Revenue's counsel argued that the revision application was delayed by 45 days, starting from the refund date. However, the petitioner's counsel contended that the limitation period should begin upon receiving the intimation, not just the knowledge of return processing.

The Court agreed with the petitioner's interpretation, emphasizing that the limitation period under Section 264(3) starts when the assessee actually receives a copy of the intimation, not merely when aware of return processing. Referring to a previous case, the Court clarified that the revisional power of the CIT allows correcting mistakes leading to over-assessment, without being restricted by technicalities. Consequently, the Court found the PCIT's decision to be erroneous in deeming the revision petition time-barred.

Furthermore, the Court suggested that the PCIT should proactively assess justifiable reasons for any delay in petitions, avoiding unnecessary proceedings. As the PCIT failed to consider the revision application on merits, the Court set aside the order and directed the PCIT to review the petitioner's application in accordance with the law. The petitioner's revision application was scheduled for review on a specified date.

In conclusion, the Court disposed of the petition by overturning the PCIT's decision and reinstating the petitioner's revision application for further consideration on its merits.