2018 (2) TMI 1715 - HC - Income Tax

Petitions for revisions u/s 264 rejected - Held that - This Court is satisfied that the impugned orders under Section 264 of the I.T.Act do not deserve any interference by this Court under Article 226 of the Constitution of India. The said impugned orders rightly reject the prayer of the petitioners on the ground of non- chargeability of the capital gain tax for A.Y.2006-07. Moreover, it cannot be presumed that the petitioners- assessees being ignorant of relevant provisions of the Act, could not prefer the regular appeals before the appellate authorities namely, before the CIT (Appeals) or before the ITAT in due time. The fact that the revision petitions under Section 264 was filed by them within a year of passing of the impugned assessment order on 21.03.2014 namely, on 09.03.2015 and 17.03.2015, shows that the petitioners-assessees were very well guided about the relevant provisions of the Income Tax Act and for the reasons best known to them, they avoided the appellate remedies provided in the Act. Even otherwise, the ignorance of law is no excuse and no such presumption as prayed for, can be drawn in favour of the petitioners-assessees. Therefore, the fact that the assessee - petitioners preferred these Revision petitions under Section 264 of the Act just before the expiry of one year of the impugned assessment orders passed by the Assessing Authority, on the contrary reflects that the petitioners-assessees were very conscious and aware of the legal provision and deliberately avoided the availing of the regular remedy by way of an appeal and at the nick time of the expiry of the time period, preferred the present revision petition under Section 264 of the Act, which for good reasons, came to be dismissed by the learned Prl.Commissioner of Income Tax.

Issues:
Petition under Section 264 of the Income Tax Act, 1961 rejected by Prl. Commissioner of Income Tax - Capital gains tax on sale of agricultural lands - Demand raised by Assessing Authority - Reasons for rejection - Claim for deduction under section 54B - Concealment penalty under section 271(1)(c) - Appeal remedy not availed - Ignorance of law as an excuse - Narrow compass of revision remedy - Time limit for filing revision petitions.

Analysis:

1. Rejection of Petition under Section 264:
The petitioners filed writ petitions aggrieved by the order of the Prl. Commissioner of Income Tax rejecting their petition under Section 264 of the Income Tax Act, 1961. The petition was filed concerning the taxation of long-term capital gains on the sale of agricultural lands under a Joint Development Agreement. The Assessing Authority raised a demand against the petitioner-assessee, including tax and interest under Sections 234A and 234B of the Act.

2. Reasons for Rejection:
The Prl. Commissioner of Income Tax rejected the petition citing reasons related to the transfer of property during the previous year, non-filing of return admitting capital gains, and lack of evidence supporting the claim for deduction under section 54B. The Commissioner also noted defaults by the assessee in compliance with notices and penalties levied under the Act.

3. Concealment Penalty and Relief:
The Commissioner upheld the concealment penalty under section 271(1)(c) but decided to provide another opportunity to the applicant to comply with principles of natural justice. The order under section 271(c) was set aside, directing a hearing before concluding the penalty proceedings.

4. Appeal Remedy and Ignorance of Law:
The petitioners, being illiterate agriculturists, claimed they could not avail the regular remedy of appeal and hence opted for the petition under Section 264. However, the Court emphasized that ignorance of law is not an excuse. The petitioners' timely filing of revision petitions within a year of the assessment order indicated their awareness of legal provisions.

5. Narrow Compass of Revision Remedy:
The Court highlighted that the revision remedy under Section 264 is limited and cannot substitute the regular appeal process. The provision restricts the exercise of powers when the regular appeal remedy has not been exhausted or the assessee waives the right to appeal. The time limit of one year for filing revision petitions was also emphasized.

6. Court's Decision:
After considering the arguments, the Court found no grounds to interfere with the impugned order. It concluded that the revision petitions were filed deliberately before the expiry of the time limit, indicating awareness of the legal provisions. The writ petitions were dismissed for lack of merit.

In conclusion, the Court upheld the rejection of the petition under Section 264, emphasizing the importance of following the prescribed appeal process and the limitations of the revision remedy under the Income Tax Act.

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