2018 (2) TMI 765 - HC - Income Tax

Revision petition u/s 264 in favor of assessee - amount taxed twice - Held that - The revisional powers of the Commissioner under section 264 of the Act are very wide and empowers the Commissioner to take any order of his subordinate authority into revision and further make necessary inquiry to pass such order as he thinks fit. These powers are subject to two main restrictions viz. that the order would be subject to the provisions of the Act and in any case, cannot be an order prejudicial to the assessee. In case of National Thermal Power Co. Ltd.v. Commissioner of Income Tax 1996 (12) TMI 7 - SUPREME Court has held that there is no reason to restrict the power of the Tribunal under section 264 of the Act to entertain any question for the first time so long as the relevant facts are on record. The Court referred to the judgment in case of Jute Corporation of India Ltd. v. CIT 1990 (9) TMI 6 - SUPREME Court and noted the observations with approval that an appellate authority is vested with all the plenary powers which the subordinate authority may have and there is no reason to justify curtailment of the power of the appellate Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Assessing Officer. The question of double taxation was very much appearing before the Assessing Officer during the assessment for the assessment year 2013-14. It was this issue which the assessee had carried before the Commissioner in revision petition. Thus, this issue arose out of the order of assessment and all necessary facts to entertain such a question were any way on record. It is by now well settled that assessment proceedings are not adversarial and the Revenue can tax only the real income. Thus order of the Commissioner is set aside - AO is directed to modify the order of assessment by deleting sum of ₹ 44,80,302/from the total income of the assessee with consequential tax implication.- Decided in favour of assessee

Summary

Issues:
1. Whether the assessee's income was taxed twice due to an oversight by the Assessing Officer.
2. Whether the Commissioner was justified in dismissing the Revision Petition on the ground of not filing a revised return.
3. Whether the Commissioner correctly interpreted the provisions of the Income Tax Act regarding the Assessing Officer's authority to determine income lower than the returned income.

Analysis:
Issue 1: The petitioner challenged an order passed by the Commissioner on a revision filed under section 264 of the Income Tax Act, claiming that the income of ?44.80 lakhs was taxed twice. The Assessing Officer had added this amount to the petitioner's total income for the assessment year 2012-13, but later refused to reduce the same amount from the income for the assessment year 2013-14. The Commissioner dismissed the Revision Petition based on the ground that the assessee did not file a revised return, despite the Assessing Officer's acknowledgment of the double taxation issue. The High Court held that taxing the same income twice goes against the basic principles of taxation and that the Commissioner should have corrected this injustice using his revisional powers.

Issue 2: The Commissioner's decision to dismiss the Revision Petition due to the non-filing of a revised return was found to be unjustified. The High Court emphasized that the Commissioner's revisional powers under section 264 of the Act are broad and allow for correction of errors or injustices, as long as they are not prejudicial to the assessee. The court cited precedents to support the view that the Commissioner could have addressed the double taxation issue and rectified the Assessing Officer's oversight.

Issue 3: The High Court found that the Commissioner's interpretation of the Act, which led to the dismissal of the Revision Petition, was incorrect. The court highlighted that the Assessing Officer had the authority to consider the assessee's request to reduce the income for the assessment year 2013-14, even without a revised return. The court clarified that the assessment proceedings are not adversarial, and the Revenue should tax only the real income. Therefore, the High Court set aside the Commissioner's order and directed the Assessing Officer to modify the assessment by deleting the amount of ?44.80 lakhs from the total income of the assessee for the relevant year.