2023 (1) TMI 873 - HC - Income Tax

Revision u/s 264 - income in question was exempted from tax and not liable to tax under The Income Tax Act, 1961, which according to the petitioner was included in her return as taxable income due to bonafide mistake - original return u/s 139 (5) was filed beyond the specified date - petitioner is an old lady of advancing age and being unaware of the technicalities of the income tax law, committed mistake in her return by including the exempted income in question relating to dividend and long term capital gain as income payable to tax and such mistake was realised by her only upon receipt of the orders passed under Section 143 (1) - Assessee case that since the filing of original return itself was delayed no revised return could be filed by her under Section 139 (5) for claiming deduction of the income exempted from income tax which was included as taxable income due to bonafide mistake and having no other recourse like filing of revised return or appeal, she filed revision applications u/s 264 before the Commissioner of Income Tax concerned - HELD THAT - Commissioner of Income Tax concerned in the facts and circumstances of the case has committed error in law in dismissing the revision applications of the petitioner filed under section 264 by refusing to consider the claim of the petitioner on merit that the income in question was exempted from tax and not liable to tax under The Income Tax Act, 1961, which according to the petitioner was included in her return as taxable income due to bonafide mistake and which she could not rectify by filing revised return since original return itself was belatedly filed and petitioner had no other remedy except taking recourse to filing of revision application under section 264 of The Income Tax Act, 1961. Commissioner in refusal to consider the aforesaid claim of the petitioner has misinterpreted and misconstrued the judgment of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT as well as the scope of jurisdiction conferred upon him under section 264 of The Income Tax Act, 1961 by equating the same with that of the jurisdiction of the Assessing Officer in considering the claim of any allowance / deduction by an assessee in return or without filing any revised return. The impugned orders u/s 264 are not sustainable in law and accordingly the same set aside and the matters are remanded back to the Commissioner of Income Tax concerned to reconsider and dispose of the applications in question under Section 264.

Summary

Issues Involved:
1. Validity of the Commissioner of Income Tax's rejection of the revision applications under Section 264 of the Income Tax Act, 1961.
2. Interpretation and scope of the powers conferred under Section 264 of the Income Tax Act, 1961.
3. Applicability of the Supreme Court's judgment in Goetze (India) Limited vs. CIT to the present case.

Detailed Analysis:

1. Validity of the Commissioner of Income Tax's Rejection of the Revision Applications:

The petitioner, an elderly woman, included exempted income (dividend and long-term capital gain) in her taxable income due to a mistake and was unable to file a revised return under Section 139(5) of the Income Tax Act, 1961, due to the delay in filing the original return. She sought relief by filing revision applications under Section 264, which were rejected by the Commissioner of Income Tax (CIT) on the grounds that the original returns were filed beyond the specified date and that the orders under Section 143(1) were not erroneous. The CIT also held that the scope of revision is not an alternative to filing a revised return, relying on the Supreme Court's judgment in Goetze (India) Limited vs. CIT.

2. Interpretation and Scope of the Powers Conferred Under Section 264:

The petitioner argued that the CIT's power under Section 264 is broad and intended to prevent miscarriage of justice and provide relief to an assessee. The petitioner cited several judgments to support this view:

- Smt. Phool Lata Somani v. Commissioner of Income-tax (2006 150 TAXMAN 225 (CAL.)): The court held that the CIT should have made an inquiry considering the documents presented by the petitioner and that the power under Section 264 is to prevent miscarriage of justice.

- Sharp Tools v. Principal Commissioner of Income-tax ([2020] 421 ITR 90 (Mad)): The court stated that there is no time restriction under Section 264 for granting relief and that the CIT can exercise this power even if a revised return was not filed within the stipulated time.

- Kewal Krishnan Jain v. Commissioner of Income-tax ([2014] 42 taxman.com 84 (Punjab & Haryana)): The court held that the CIT has the jurisdiction to entertain a revision petition under Section 264 even if a mistake was committed by the assessee and detected after the assessment order.

3. Applicability of the Supreme Court's Judgment in Goetze (India) Limited vs. CIT:

The petitioner contended that the CIT misinterpreted the Supreme Court's judgment in Goetze (India) Limited, which pertains to the power of the Assessing Officer to allow deductions without a revised return, not the power of the CIT under Section 264. The petitioner argued that the Supreme Court's decision does not limit the CIT's power to grant relief in revision applications.

Conclusion:

The court found that the CIT committed an error in law by dismissing the revision applications without considering the merits of the petitioner's claim that the income was exempted from tax. The court held that the CIT misinterpreted the Supreme Court's judgment in Goetze (India) Limited and the scope of jurisdiction under Section 264. The impugned orders dated 24th March 2014 were set aside, and the matters were remanded back to the CIT for reconsideration and disposal of the applications under Section 264, with a reasoned and speaking order within eight weeks, after giving the petitioner an opportunity for a hearing.

The writ petitions were disposed of by allowing the same, with no order as to costs. Urgent certified photocopies of the judgment were to be supplied to the parties upon compliance with requisite formalities.