2018 (2) TMI 514 - HC - Income Tax

Revision u/s 264 in favor of assessee - CIT rejected the application - condonation of delay - period of limitation - Held that - The time taken for prosecuting these matters, some of which, was at the instance of the Department and some at the instance of the petitioner, has to be necessarily excluded while computing limitation for exercise of power under Section 264. This is for, more than one reason, firstly, the petitioner cannot be shut out from placing facts before the Commissioner and Section 264 empowers the Commissioner to cause enquiry and verify the facts. Secondly, if there has been a genuine mistake committed by the assessee, Statute does not bar the assessee from rectifying his mistake though there might have been some statement made by the petitioner that the canadian income has been taxed in the said country which was found to be false and the stand taken by him that he has received certain Gifts were also found to be false cannot be a bar to ascertain the correct status of the petitioner as to whether during the relevant period that he was a resident or a non-resident. The petitioner should not be shut out on technicalities and the facts should not be left unexamined. One more aspect which has to be taken into consideration is with regard to the observations made by the Commissioner while passing the order dated 28.03.2014, wherein the Commissioner himself has stated that the issue pertaining to the status of the petitioner as a resident or a non resident cannot be broached under Section 263 and the assessee could have come u/s 264 separately on the issue. Therefore, the Commissioner was satisfied with the issue raised by the petitioner regarding the status was a matter that could be considered u/s 264. Thus, for all the above reasons, the delay in filing the petition should be computed from the date on which the ITAT dismissed the petition (i.e.,) on 25.06.2015 and if that period is reckoned, revision petition had to be filed within a period of two months from the said date. Therefore, it cannot stated to be either hopelessly time barred and delay remains unexplained. Thus, for the above reasons, the delay in filing the revision petition, if any, requires to be condoned.

Summary

Issues Involved:
1. Justification of the rejection of the petition under Section 264 of the Income Tax Act, 1961, on the grounds of limitation and unexplained delay.
2. Examination of the petitioner's residential status and tax liabilities for the relevant assessment years.
3. Consideration of the powers and duties of the Commissioner under Section 264 of the Income Tax Act, 1961, including the condonation of delay.

Detailed Analysis:

1. Justification of the Rejection of the Petition under Section 264 on Grounds of Limitation and Unexplained Delay:

The petitioner challenged the order passed by the respondent under Section 264 of the Income Tax Act, 1961, which was rejected on the grounds of being barred by limitation and unexplained delay. The writ petition sought to test whether the respondent was justified in rejecting the petition on these grounds. The original assessment order was passed on 29.12.2008, and the petition under Section 264 was filed much later. The respondent computed the delay from the date of the original assessment order, emphasizing the limitation prescribed under Section 264. However, the court noted that the proceedings which followed, including the suo motu revision by the Commissioner in 2011 and subsequent appeals, should be considered while computing the limitation period. The court concluded that the time taken for prosecuting these matters should be excluded, and thus, the delay in filing the revision petition, if any, requires to be condoned.

2. Examination of the Petitioner's Residential Status and Tax Liabilities:

The petitioner claimed to be a non-resident for the relevant assessment years, arguing that he had been permanently living in Canada since 1995 and had stayed in India for only 90 days during the financial year 2000-01. The original assessment order dated 29.12.2008, and subsequent proceedings, including the assessment order dated 14.12.2011, recognized the petitioner as a non-resident. However, the respondent, in exercising suo motu powers under Section 263 of the Act, observed discrepancies in the petitioner's claim of foreign income and tax payments, leading to a reassessment of the petitioner's status as a resident. The court noted that the Commissioner himself had stated that the issue of the petitioner's residential status could be considered under Section 264 separately, indicating that the matter warranted further examination.

3. Consideration of the Powers and Duties of the Commissioner under Section 264:

The court highlighted the wide powers conferred upon the Commissioner under Section 264 of the Income Tax Act, 1961, which include the ability to revise any order passed by a subordinate authority, either suo motu or on an application by the assessee. The court referred to various judicial precedents emphasizing that the Commissioner is bound to consider the merits of the case and not reject petitions solely on technical grounds such as delay. The court also cited a CBDT circular stating that officers must assist taxpayers in securing reliefs and not take advantage of their ignorance. The court concluded that the Commissioner should have considered the merits of the petition and the genuine mistakes committed by the assessee, instead of rejecting it on the grounds of delay.

Conclusion:

The court allowed the writ petition, set aside the impugned order, and condoned the delay in filing the revision petition. The matter was remanded to the respondents to take a decision on the petition filed by the petitioner under Section 264 of the Act on merits and in accordance with law, after affording an opportunity of personal hearing to the authorized representative of the petitioner. No costs were imposed.