2015 (5) TMI 84 - HC - Income Tax

Rectification of mistake - whether the assessee could not point out any apparent mistake in the order passed under Section 264 which could be rectified and therefore, the revision petitions filed were rejected? - Held that - The assessee has raised a legal objection in his communications dated 26.02.2004 and 27.02.2004 before respondent No.1, pertaining to the assessment years 1996-97 and 1997-98 wherein he has raised the objection of jurisdiction under Section 149(1)(b) and specified that the income chargeable would be the income that escaped tax, which is the relevant factor. Thus, the quantum of tax which has escaped assessment was to be kept in mind. Admittedly, the interest income was only ₹ 2,54,659/- which had, supposedly, escaped income and the return had not been filed. The income chargeable to tax on the said amount was, thus, relevant factor which was sought to be agitated but never dealt with by respondent No.1, solely on the ground that the return had not been filed. The objections having not been dealt with solely on the ground that return had not been filed inspite of being asked to, would, thus, violate the mandate of the Apex Court laid down in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & others 2002 (11) TMI 7 - SUPREME Court wherein it has been held that the Assessing Officer is bound to dispose of the objections by passing a speaking order. The petitioner had filed the revision petitions under Section 264 and thereafter, the rectification application was filed under Section 154 of the Act. Admittedly, the rectification application was also within limitation and solely on account of the fact that it was filed just before the limitation coming to an end, would not be a ground for respondent No.2 to deny the relief. Merely on the ground that the amount of demand on conclusion of the reassessment proceedings was more than ₹ 1 lac, on the income which is chargeable and which had escaped assessment would have to be seen at the time of issuing notice under Section 149 of the Act and not at the time of the conclusion of assessment proceedings and therefore, the reasoning arrived at by respondent No.2 is also without any justification. Also there was sufficient material before respondent No.1 regarding the amount of compensation received by the deceased-assessee which had been supplied by the LAC vide letter dated 08.03.2004 and therefore, the respondent No.1 was not justified in coming to the conclusion that the deceased-assessee had not supplied the material facts. It was also the bounden duty of respondent No.1 to take into consideration the fact that the land fell within the notified area of the Panipat Municipality or not. Thus the matter is liable to be remanded to respondent No.1 for fresh decision and to take into consideration the returns filed for each assessment years, separately, and also take into consideration the TDS certificates issued by the banks regarding the interest element. The issue of jurisdiction for the 2 years pertaining to the years 1996-97 and 1997-98, as arising under Section 149(1)(b) also be specifically dealt with. - Decided in favour of assessee.

Summary

Issues:
1. Challenge to order rejecting objections in revision petitions.
2. Assessment of income tax for the year 1996-97.
3. Exemption of compensation amount from Long Term Capital Gain (LTCG).
4. Jurisdiction under Section 149(1)(b) for assessment years 1996-97 and 1997-98.
5. Rectification application under Section 154 of the Income Tax Act.

Analysis:

1. The judgment addresses a bunch of 6 writ petitions involving common questions of law and facts. The primary issue revolves around challenging an order dated 17.02.2006, where the Commissioner of Income Tax rejected objections raised in revision petitions of the deceased assessee. Another challenge was raised against the order dated 12.09.2013, passed under Section 154 of the Income Tax Act, concerning the assessment year 1996-97.

2. The case involves the acquisition of land by the Hindu Undivided Family (HUF) of the deceased assessee. A notice was issued under Section 148 of the Act, asserting that income had escaped assessment for the year 1996-97. Despite objections raised by the assessee, an assessment order was passed on 19.03.2004, leading to disputes over the jurisdiction and taxation of Long Term Capital Gain (LTCG).

3. One of the key issues was the exemption of the compensation amount received from LTCG. The petitioner argued that the land was situated outside the notified area and thus should be exempt. However, the authorities failed to address this contention adequately.

4. The jurisdiction under Section 149(1)(b) for the assessment years 1996-97 and 1997-98 was a crucial point of contention. The petitioner raised objections regarding the jurisdiction, emphasizing the quantum of tax that had escaped assessment, which was not appropriately considered by the authorities.

5. The judgment also delves into the rectification application filed under Section 154 of the Act. The court found errors in the assessment process and ordered a remand to the Assessing Officer for a fresh decision, emphasizing the need to consider returns filed for each assessment year separately and address the jurisdictional issues under Section 149(1)(b) for the relevant years.

In conclusion, the High Court allowed the writ petitions, quashed the impugned orders, and remanded the matter for a fresh decision by the Assessing Officer, emphasizing the importance of addressing jurisdictional issues and considering all relevant factors in the assessment process.