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TMI Blog2016 (3) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... he requisite fee, though belatedly and thus cured the irregularity. The finding returned by the commissioner that the application was not maintainable on this account cannot be sustained and is accordingly set aside The other ground for rejection was that the assessing officer was not at fault as there was no material on the basis of which period of holding shares by the petitioner could be calculated, by taking the date of acquisition as the year 1987 or 2005 and no fault could be found with the action of the Assessing Officer in the processing/rectification under section 143(1)/154 of the Act. Tax gains arising on sale of shares - STCG OR LTCG - Held that:- In the present case, as per the Petitioner, in his return of income, he has erroneously offered to tax gains arising on sale of shares as short term capital gains instead of same being long term capital gains exempt from tax. Subsequently, the petitioner on 14.01.2011 filed the application under section 154 of the Act. The assessing officer on 21.02.2011 partly rectified the intimation and computed the tax on capital gains @ 10% as against 30% computed in the intimation issued under section 143(1) of the Act. The assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains arising on sale of shares in the DLF Ltd. as short term capital gains . The gains were computed as under: Sale consideration of 2,98,000 shares : Rs.19,78,00,000 Less: Proportionate cost of acquisition : ₹ 74,500 Short term capital gains : Rs.19,77,25,500 4. The Assessing Officer (Respondent No. 2) on 27.03.2010 issued intimation under section 143(1) of the Act accepting the returned income. The Assessing Officer, however levied tax @ 30% instead of 10% as computed by the Petitioner. 5. On 14.01.2011 the Petitioner filed an application under section 154 of the Act before the Respondent No. 2 contending that the capital gains on transfer of shares in DLF Ltd., were actually in the nature of long term capital gains and since the shares were sold on the recognized stock exchange, the entire gains were exempt from tax under section 10(38) of the Act. 6. The assessing Officer by order dated 21.02.2011, passed under section 154, of the Act partly rectifying the intimation and computed the tax on capital gains @ 10% as against 30% computed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the shares in DLF Ltd. from the date on which the said shares were received by him as gift from his mother. Shares in DLF Ltd were acquired by the mother partly in the year 1987 and partly consequent to conversion of secured convertible debentures issued by the said company in December, 2005. Thus computing the period as less than 12 months, the Petitioner declared income from transfer of such shares as taxable short term capital gains. Reliance is also placed on Circular No. 14(XL-35) of 1955, dated 11.4.1955 of the Central Board of Direct Taxes. 12. To settle the controversy that arises in the present petition, we need to examine the scheme of the Act. 13. The Relevant provisions of Section 2 of the Act read as under: 2. Definitions ***** ***** ***** (29A) long-term capital asset means a capital asset which is not a short-term capital asset; (29B) long-term capital gain means capital gain arising from the transfer of a long-term capital asset; ***** ***** ***** (42A) short-term capital asset means a capital asset held by an Petitioner for not more than thirty-six months immediately preceding the date of its transfer: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were exempt from tax under section 10(38) of the Act. 17. Article 265 of the Constitution of India reads that No tax shall be levied or collected except by the authority of law. In terms of the Article 265 of the Constitution, tax can be levied only if it is authorized by law. The taxing authority cannot collect or retain tax that is not authorized. Any retention of tax collected, which is not otherwise payable, would be illegal and unconstitutional. 18. The Supreme Court of India in CIT v. Shelly Products and another 261 ITR 367 held that if the assessee has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax or is not income within the contemplation of law, the assessee may bring the same to the notice of the assessing officer, which if satisfied, may grant the assessee necessary relief and refund the tax paid in excess, if any. 19. In CIT v. Bharat General Reinsurance Co. Ltd. 81 ITR 303 (Del), this court held that merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is to administer the statute with solicitude for public exchequer with an inbuilt idea of fairness to taxpayers. CIT V. Rajesh Jhaveri Stock Brokers (P) Limited: 291 ITR 500 (SC). 24. Section 264 of the Act read as under: 264. Revision of other orders (1) In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. (2) The Commissioner shall not of his own motion revise any order under this section if the order has been made more than one year previously. (3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, on the mere ground that the petitioner had shown the income in his return, is erroneous. The Commissioner was bound to apply his mind to the question whether the petitioner was taxable on that income. The Income-tax Officer is entitled under Section 23(1) to make an assessment on the basis of the return if he is satisfied, without requiring the presence of the assessee or the production of evidence in support of the return, that the return is correct and complete. But it may be that the assessee may have committed a mistake in treating a certain receipt as taxable. The mere circumstance that he has shown that receipt as income in his return does not make him liable to tax thereon. An assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the Income-tax Act. The law empowers the Income-tax Officer to assess the income of an assessee and determine the tax payable thereon. In doing so, he may proceed on the basis that, where an assessee discloses that a certain sum of money has been deceived by him, the fact of that receipt may be accepted without anything more as constituting an admission on the part of the assessee. That wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as under: It is clear that under s. 264, the Commissioner is empowered to exercise revisional powers in favour of the assessee. In exercise of this power, the Commissioner may, either of his own motion or on an application by the assessee, call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee, as the thinks fit. Sub-sections (2) and (3) of s. 264 provide for limitation of one year for the exercise of this revisional power, whether suo motu, or at the instance of the assessee. Power is also conferred on the Commissioner to condone delay in case he is satisfied that the assessee was prevented by sufficient cause from making the application within the prescribed period. Sub-section (4) provides that the Commissioner has no power to revise any order under s. 264(1) : (i) while an appeal against the order is pending before the AAC, and (ii) when the order has been subject to an appeal to the Income-tax Appellate Tribunal. Subject to the above limitation, the revisional powers conferred on the Commissioner under s. 264 are very wide. He has the discretion to grant or refuse relief and the power to pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our opinion, therefore, the Commissioner was wrong in not giving relief to the petitioner in respect of over-assessment as a result of under-totalling of the purchases to the extent of ₹ 20,000. (underlining supplied) 29. Relying upon the above decisions, the Kerala High Court in the case of Parekh Brothers v. CIT: 150 ITR 105 (Ker) held as under: In the light of the above discussions, we have no hesitation to hold that the Commissioner of Income-tax committed an error of law in holding that it is not open to him for the first time to entertain a relief of the kind pleaded by the assessee and in denying jurisdiction. We hold, that even though a mistake was committed by the assessee and it was detected by him after the order of assessment, and the order of assessment is not erroneous, none the less it is open to the assessee to file a revision before the Commissioner under Section 264 of the Act and claim appropriate relief. But it should not be forgotten that the power to be exercised under Section 264 is a revisionary one. The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary; Whether in a particular case, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the return of income and not when the petitioner did not make any such claim in her return. Relying upon the decisions of the Gujarat High Court in Digvijay Cement Co. Ltd. (Supra) which in turn relied upon the decisions in the cases of C. Parikh Co (Supra), Parekh Brothers (Supra), and Pt. Sheo Nath Prasad Sharma (Supra) the High Court held as under: A bare reading of section makes it abundantly clear that the Commissioner has discretion to invoke the revisional jurisdiction. However, once he entertains a revision he has the power to call for the record of any proceedings under this Act and is also entitled to make any inquiry himself or cause any inquiry to be made and pass such order as he thinks fit. The only impediment on the power of the revisional authority is that he will not pass any order prejudicial to the assessee. The respondent No. 1 has much wider power under section 264. It does not circumvent and confine the power of the revisional authority in any manner......... ***** ***** ***** Though the assessing authority was not aware of the purchase of the property by the petitioner and proceeded on the basis of the admitted facts disclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taking a hyper technical view. The condition requiring the payment of fees prior to the filing of the revision application would be directory in nature. From a reading of the provisions of Section 264 of the Act, it cannot be gathered that the non payment of the prescribed fee prior to the institution of the application for revision would be fatal. The non payment of the requisite fee would be a mere irregularity which could be cured at a later stage. The applicant can always be called upon to pay the requisite fee and make good the deficiency. If the deficiency is cured, the irregularity would be rectified. In the present case, the petitioner paid the requisite fee, though belatedly and thus cured the irregularity. The finding returned by the commissioner that the application was not maintainable on this account cannot be sustained and is accordingly set aside. 34. The other ground for rejection was that the assessing officer was not at fault as there was no material on the basis of which period of holding shares by the petitioner could be calculated, by taking the date of acquisition as the year 1987 or 2005 and no fault could be found with the action of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 143(1) but also the rejection of the application under section 154 of the Act. 38. In the present case, as per the Petitioner, in his return of income, he has erroneously offered to tax gains arising on sale of shares as short term capital gains instead of same being long term capital gains exempt from tax. Subsequently, the petitioner on 14.01.2011 filed the application under section 154 of the Act. The assessing officer on 21.02.2011 partly rectified the intimation and computed the tax on capital gains @ 10% as against 30% computed in the intimation issued under section 143(1) of the Act. The assessing officer, however refused to accept the application under section 154 filed by the petitioner. When the assessing officer could rectify the intimation on 21.02.2011, he could also consider the prayer of the petitioner made in the rectification application under section 154 of the Act, which was already pending before him on that date. 39. When the commissioner was called upon to examine the revision application under section 264 of the Act, all the relevant material was already available on the record of the assessing officer. The commissioner instead of mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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