2014 (12) TMI 980 - HC - Income Tax

Revision of order of AO u/s 264 - Retrospective amendment to be considered or not - Whether the Commissioner, while revising an order of the AO u/s 264, could take into account a retrospective amendment made after the order of the AO Held that - In Commissioner of Income-Tax vs. Kamla S. Asrani 1990 (8) TMI 53 - BOMBAY High Court it has been held that when the law is amended with retrospective effect, the court, when it decides any proceeding, has to apply such retrospectively amended law as if it were in force at all material times - The application of the relevant law to the problem raised in the reference before the High Court normally is not excluded merely because at the date when the Tribunal decided the question, the relevant law was not or could not be brought to its notice the discussion also applies to the powers of revision of the Commissioner u/s 264 - as in the case of Sections 256(1) and 256(2), the revenue is seeking to draw an artificial distinction between Sections 263 and 264, in relation to the applicability of the retrospectively amended law, which would not be permissible. If one has regard to the applicable law (applicable by virtue of a retrospective amendment), there is clearly an over-assessment of the assessee - assessee has been charged more tax than what is due and payable by him - The Commissioner is not only entitled but is duty bound to correct the assessment in revision thus, the order is set aside and the revenue is directed to consider the assessee s claim of deduction u/s 80 HHC Decided in favour of assessee.

Issues Involved:
1. Whether the Commissioner of Income Tax, while revising an order under Section 264 of the Income Tax Act, 1961, can take into account a retrospective amendment made after the original assessment order.
2. The distinction between the powers of the Commissioner under Sections 263 and 264 of the Income Tax Act.
3. The applicability of retrospectively amended laws in revisional proceedings under Section 264.

Issue-wise Detailed Analysis:

1. Retrospective Amendment Consideration under Section 264:
The central issue in this case is whether the Commissioner of Income Tax, while revising an order under Section 264, can consider a retrospective amendment made after the original assessment order. The petitioner filed a revised return for the A.Y. 2003-2004, reducing export incentives of DEPB due to a Supreme Court decision and a CBDT Circular. Subsequently, the Taxation Laws Amendment Act, 2005, amended Sections 28 and 80HHC with retrospective effect from 1 April 1998, which would benefit the petitioner. The petitioner filed a revision application under Section 264, but the Commissioner rejected it, stating that the assessment order was correct as per the law prevailing at the time of the assessment.

2. Distinction Between Sections 263 and 264:
The Revenue argued that while the assessing officer could amend an order under Section 154, the revisional authority could not do so under Section 264. The distinction was made between Sections 263 and 264, where Section 263 explicitly includes all records available at the time of examination by the Commissioner, whereas Section 264 does not. The Revenue contended that the Commissioner under Section 264 could only consider the record available at the time of the original order.

3. Applicability of Retrospective Laws:
The court clarified that there is no restriction in Section 264 that prevents the Commissioner from considering retrospectively amended laws. The Supreme Court in CIT vs. Amritlal Bhogilal & Co. held that the revisional power must be determined solely by the terms of the section itself, without imposing additional limitations. The court emphasized that the retrospective amendment to the Act makes the amended provisions part of the record on the date when the order sought to be revised is passed. Therefore, any error apparent on the face of the record due to retrospective amendments can be corrected by the Commissioner under Section 264.

Conclusion:
The court concluded that the Commissioner is not only entitled but duty-bound to correct the assessment in revision if there is an overassessment due to retrospective amendments. The impugned order of the Commissioner dated 23 February 2007 was set aside, and the Commissioner was directed to consider the petitioner's claim of deduction under Section 80HHC on merits and in accordance with the amended law.

Judgment:
The court made the rule absolute and set aside the impugned order of the Commissioner. The Commissioner was directed to reconsider the petitioner's claim of deduction under Section 80HHC of the Income Tax Act, in light of the retrospective amendments.

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