2017 (8) TMI 420 - HC - Income Tax

Revision u/s 264 - petitioner and his grandmother are co-owners of property sold - joint ownership - petitioner filed an application under Section 264 of the Act requesting that the petitioner s income in respect of the aforesaid transaction pertaining to the said property, be determined in accordance with the decision of the High Court in the petitioner s grandmother s case. Held that - when the petitioner s assessment was completed on 31.03.1981 based on the decision rendered by the Tribunal in the petitioner s grandmother s case, the respondents themselves should have revised the petitioner s assessment in tune with the said order. Having not done so, the Department cannot reject the petition filed by the petitioner under Section 264 of the Act. Thus, for all the practical purposes, the limitation in filing the petition had to be reckoned only after the judgment in the Tax Cases. The Assessing Officer had given effect to the order passed by the Division Bench dated 21.02.2001 and if that date is reckoned, there is no inordinate delay for the 1st respondent to reject the petition filed by the petitioner under Section 264 of the Act. As decided in case of Commissioner of Income Tax Vs S.Muthukarupan 2006 (9) TMI 140 - MADRAS High Court wherein, the Court held that if during the same assessment year the same quantity of wealth in possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. - AO directed to re-do the assessment.

Summary

Issues:
Challenge to order under Section 264 of the Income Tax Act, 1961 for Assessment Years 1980-1981 to 1986-1987.

Analysis:
The petitioner challenged the order passed by the 1st respondent under Section 264 of the Income Tax Act, 1961, for the Assessment Years 1980-1981 to 1986-1987. The dispute centered around the ownership of an immovable property in Chennai between the petitioner and his grandmother. The property was sold, and the co-owners were entitled to interest on the unpaid balance of the sale proceeds. The petitioner and his grandmother had shown income from the property and claimed deductions. The assessment for the grandmother was challenged and accepted by the Income Tax Appellate Tribunal. Subsequently, the petitioner voluntarily requested the Assessing Officer to issue a notice under Section 148 of the Act, leading to a revised assessment in line with the grandmother's case. The Department challenged the grandmother's case, resulting in a judgment that clarified the taxation of interest on the unpaid purchase price and rental income from the property.

The petitioner then sought a similar assessment based on the grandmother's case under Section 264 of the Act, citing his young age at the relevant time. The request was rejected on the grounds of alleged double taxation and delay. The court found that the rejection was based on misinterpretation, as the petitioner's actions did not fall under a Voluntary Disclosure Scheme. The rejection citing delay was deemed incorrect as the assessment was completed based on the grandmother's case, and the Department should have revised the petitioner's assessment accordingly. The court referenced previous judgments emphasizing equality in taxation among co-sharers and noted that the petitioner did not claim double taxation in the petition.

The court concluded that the rejection of the petitioner's request under Section 264 was unwarranted. The impugned order was set aside, and the matter was remanded to the Assessing Officer to redo the assessment in line with the directions given in the grandmother's case judgment. The Assessing Officer was instructed to comply within four weeks from the date of the order. No costs were awarded, and connected Miscellaneous Petitions were closed.