2014 (2) TMI 1116 - HC - Income Tax

Maintainability of Revision petition u/s 264 of the Act Held that - The decision in C. Parikh & Co. vs. Commissioner of Income Tax, Baroda 1979 (7) TMI 50 - GUJARAT High Court followed - scope of revision under Section 264 is wider and different than the scope of revisionary powers exercised by the Commissioner under Section 263 - an order/ intimation passed under Section 143(1) passed by the Assessing Authority is equally an order, which can be questioned and be made subject matter of revision under Section 264 before the commissioner for deciding the issues raised by the assessee on merits. Indeed the expression In the case of any order other than an order to which Section 263 apply , occurring in Section 264, would include an order/intimation passed under Section 143(1) and hence, it can be made subject matter of challenge in Revision by the assessee before Commissioner under Section 264 of the Act - In order to raise any kind of grievance after the issue is dealt with by the Assessing Authority, one of the remedies available to the assessee in such circumstances, apart from any other remedy as may be available under the Act, is to invoke the revisionary powers of Commissioner under Section 264 of the Act against such grievance to call upon the Commissioner to examine the same on merits in its revisionary jurisdiction in accordance with law thus, the order of the Commissioner set aside the matter remitted back to the Commissioner to decide the revision on merits Decided in favour of Assessee.

Issues Involved:
1. Maintainability of the revision petition under Section 264 of the Income Tax Act.
2. Scope of the Commissioner's revisional powers under Section 264.
3. Entitlement of the petitioner to relief for mistakes in the income tax return.

Detailed Analysis:

1. Maintainability of the Revision Petition under Section 264 of the Income Tax Act:
The petitioner, a public limited company engaged in manufacturing and selling asbestos cement sheets and galvanized iron sheets, filed their income tax return for the assessment year 2002-2003. The return was accepted by the Assistant Commissioner of Income Tax, and a refund was granted. The petitioner later discovered two mistakes in the return: an incorrect disallowance under Section 43(b) and a misclassification of an expenditure. They filed a revision petition under Section 264, which the Commissioner dismissed as not maintainable, reasoning that since the return was accepted in toto and the refund was granted, the petitioner had no right to raise any grievance against its own return or file a revision.

2. Scope of the Commissioner's Revisional Powers under Section 264:
The judgment delves into the scope of Section 264, citing the Gujarat High Court's decision in C. Parikh & Co. vs. Commissioner of Income Tax, Baroda, which held that the Commissioner's revisional powers are broad and include the authority to correct mistakes detected by the assessee post-assessment. The High Court emphasized that the Commissioner's discretion under Section 264 should be exercised judicially and not arbitrarily, and there is no restriction preventing the Commissioner from giving relief to the assessee for mistakes resulting in over-assessment. The judgment clarified that the expression "In the case of any order other than an order to which Section 263 apply" in Section 264 includes orders passed under Section 143(1), making them subject to revision.

3. Entitlement of the Petitioner to Relief for Mistakes in the Income Tax Return:
The court found merit in the petitioner's argument, supported by various precedents, that the Commissioner erred in rejecting the revision petition. The High Court held that the Commissioner has the power to correct mistakes in the assessment under Section 264, even if these mistakes were initially made by the assessee. The court noted that denying the petitioner the right to seek revision would unjustly deprive them of a remedy to correct errors and raise grievances against the Assessing Authority's order.

Conclusion:
The High Court quashed the Commissioner's order dated 20.2.2003 and held that the revision petition under Section 264 was maintainable. The case was remanded to the Commissioner of Income Tax, Guwahati, for a decision on the merits within six months. The Commissioner was directed to examine whether the petitioner's grievances were acceptable and to provide a reasoned decision after affording the petitioner an opportunity to be heard. The court's decision ensures that the petitioner has a fair chance to rectify the mistakes in their tax return and seek appropriate relief.

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