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TMI Blog2004 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... A., MS. H. N. DEVANI. JUDGMENT The judgment of the court was delivered by D.A. Mehta J.- Rule. Mrs. M.M. Bhatt, the learned standing counsel for the respondent, waives service of rule. When the notice was issued on August 23, 2004, the court had issued the notice for final disposal. Hence, in the light of the peculiar facts of the case, the petition is taken up for final hearing and disposal. The petitioner, an individual, challenges, by way of this petition under articles 226 and 227 of the Constitution of India, the orders made by the Commissioner of Income-tax, Ahmedabad-VII, Ahmedabad, under sections 263 and 264 of the Income-tax Act, 1961 ("the Act"), on March 29, 2004. The petitioner was working as assistant manager with the Industrial Financial Corporation of India Ltd. (the employer). On an offer being made by the employer, the petitioner opted under the voluntary retirement scheme and received a compensation of Rs. 7,50,000. Admittedly, when the payment of the said amount was made by the employer, the employer did not inform the petitioner regarding the exemption from tax that the petitioner would be entitled to and accordingly, in the absence of the necessary c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer framed an order under section 154 of the Act rectifying the mistake apparent on the record and granting credit for prepaid taxes to the tune of Rs. 3,18,195. The Assessing Officer also directed to grant interest under section 244A of the Act. The order was made on March 27, 2003. It appears that the order was forwarded to the Additional Commissioner of Income-tax for the purpose of approval, but the Additional Commissioner of Income-tax did not approve the same. Subsequently, the respondent-Commissioner took action under section 263 of the Act to revise the order made under section 154 of the Act. Rejecting the contention raised by the petitioner in his reply, the impugned order dated March 29, 2004, came to be made by the respondent. He held that the order dated March 27, 2003, made under section 154 of the Act was erroneous and prejudicial to the interests of the Revenue and as such, cancelled the same. As a result, the order under section 143(1) of the Act, accepting the returned income at Rs. 9,98,182 was held to prevail on the basis of the original return of income dated July 31, 2001. In the meantime, the petitioner preferred an application under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the taxable income earned by the petitioner during the year and shown in Form No. 16 by the employer. According to the respondent, the original return filed on July 31, 2001, was processed under section 143(1) of the Act on March 28, 2002, and hence, the revised return ought to have been submitted by March 28, 2002, or March 31, 2003, whichever was earlier. It is necessary to note that, in para. 4 of the affidavit-in-reply, the respondent states that the refund of Rs. 12,290 was issued on May 13, 2002. Therefore, there is no question of applying the first terminus, namely, March 28, 2002, which is the date worked out by the respondent as being the date of expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The assessment year being 2001-02 and the return having been filed on July 31, 2001, the expiry of one year from the end of the relevant assessment year would be March 31, 2003. Admittedly, the revised return has been filed on September 24, 2002, i.e., before March 31, 2003. Therefore, the emphasis by the respondent on the order under section 143(1), dated March 28, 2002. It is an admitted fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was non est in law, cannot be sustained and is accordingly held to be bad in law. The next limb of the order of the Commissioner proceeds on the footing that the order made on March 27, 2003, under section 154 of the Act is prejudicial to the interests of the Revenue. However, the position in law is well-settled and in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the apex court has held that, every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. When an Assessing Officer has adopted one of the courses permissible in law, and which has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view, with which the Commissioner does not agree, the order cannot be treated to be erroneous and prejudicial to the interests of the Revenue, unless the view taken by the Assessing Officer is unsustainable in law. As already noticed hereinbefore, the Assessing Officer was not only right in law, but was fully justified in passing the order under section 154 of the Act after entertaining the revised return which was filed within the time-limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, is well-settled by a decision of this court in C. Parikh and Co. v. CIT [1980] 122 ITR 610. In the said case, the petitioner was assessed under section 143(3) of the Act on the basis of the return of income submitted by the petitioner. The returned income was accepted along with a lump sum addition. However, subsequently, it was found by the assessee that, in the balance-sheet submitted along with the return, there was a discrepancy on the basis of which the petitioner was over-assessed when the assessment order was passed. The petitioner, therefore, undertook close examination of the books of account and detected mistakes and ultimately, moved the Commissioner under section 264 of the Act, seeking relief to the extent of Rs. 20,000. The Commissioner was of the view that his revisionary powers did not extend to giving relief to an assessee on account of the assessee's own mistake which the assessee detects after the assessment is completed, and thus, rejected the petition. This court, on an analysis of the powers of the Commissioner under section 264 of the Act, has observed thus at pages 613 and 614 of the Report: "It is clear that under section 264, the Commissioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Once the petitioner was able to satisfy that there was a mistake in totalling purchases and that there was under-totalling of purchases to the tune of Rs. 20,000, it is obvious that there was over-assessment. In other words, the assessment of the total income of the assessee is not correctly made in the assessment order and it has resulted in over-assessment. The Commissioner would not be acting de hors the Income-tax Act, if he gives relief to the assessee in a case where it is proved to his satisfaction that there is over-assessment, whether such over-assessment is due to a mistake detected by the assessee after completion of assessment or otherwise. In our opinion, the Commissioner has misconstrued the words 'subject to the provisions of this Act' in section 264(1) and read a restriction on his revisional power which does not exist. The Commissioner was, therefore, not right in holding that it was not open to him to give relief to the petitioner on account of the petitioner's own mistake which it detected after the assessment was completed. Once it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under section 264(1). In our o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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