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Issues involved: Challenge to validity of order u/s 264 of the Income-tax Act, 1961 regarding under-totalling of purchases leading to over-assessment.
Summary: The petitioner, a firm, challenged the Commissioner's order dated January 18, 1979, which refused relief in respect of under-totalling of purchases by Rs. 20,000. The petitioner's return of income for the assessment year 1966-67 showed a total income of Rs. 58,353 with total sales of Rs. 17,29,051 and disclosed gross profit of Rs. 1,79,761. The ITO made a lump sum addition of Rs. 1,000 to the book results due to incomplete details, assessing total income at Rs. 60,508. After detecting a mistake in totalling purchases by Rs. 20,000, the petitioner sought relief u/s 264 from the Commissioner, who accepted the book results but denied relief for the under-totalling. The main issue was whether the Commissioner, u/s 264, could grant relief for the under-totalling of purchases by Rs. 20,000. The Court held that the Commissioner's revisional powers were wide and not restricted to cases where mistakes were detected after assessment. The Commissioner erred in not granting relief for over-assessment due to the under-totalling, as it fell within his power to correct such mistakes u/s 264(1). The Court found no restriction in the Act preventing relief in cases of over-assessment, whether detected post-assessment or not. Consequently, the Rule was made absolute, with the respondent ordered to pay costs to the petitioner.
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