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TMI Blog2021 (4) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... for making such an appeal has expired then it would be imperative that the Principal Commissioner would exercise his powers of revision under section 264. The other or second situation is when the Petitioner assessee has not waived his right of appeal; even in such a situation the Commissioner cannot exercise his powers of revision under section 264 (4) (a). In clause (a) of section 264 (4), in the language between filing of an appeal and the expiry of such period and the waiver of the assessee to his right of appeal there is an or thereby meaning that there is an option i.e either the assessee should not have filed an appeal and the period of filing the same should have expired or he should have waived such right. Therefore, there are two situations which are contemplated in said sub-section (4) (a) of section 264. The section cannot be interpreted to mean that for the Principal Commissioner to exercise his powers of revision under section 264 not only that the time for filing the appeal should have expired but also that the assessee should have waived his right of appeal. We are afraid that, that is not how the section can be read. In the facts of the case, Petitioner has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from other sources of ₹ 14,35,692/- making the total income to ₹ 27,05,646/- and after claiming deductions and set off on account of TDS and Advance Tax, the refund was determined at ₹ 34,320/-. However, while filing return of income on 20th July 2018 for A.Y 2018 19, the figure of long term capital gains of ₹ 3,07,60,800/was purported to have been wrongly copied by Petitioner s Accountant from the return of income filed for the earlier assessment year i.e. A.Y 2017 18, which had arisen on surrender of tenancy rights by the Petitioner for that year. It is submitted that the assessment for A.Y 2017 18 was completed under section 143 (3) of the Income Tax Act vide Assessment Order dated 24 December 2019. Petitioner submits that she has not transferred any capital asset and there can be no capital gains in the assessment year under consideration and therefore no tax can be imposed on such non-existent capital gains for A. Y. 2018-19. 3. It is submitted that the returns filed by the petitioner for A.Y 2018 19 were processed under section 143 (1) of the Income Tax Act vide order dated 2nd May 2019 and a total income of ₹ 3,34,66,446/including long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability for A.Y 2018 19 after reducing the amount of long-term capital gains from the total income of Petitioner for said year. 7. However, instead of considering the application on merits, vide order dated 12th February, 2021, the Respondent No. 2 Principal Commissioner of Income Tax 19 dismissed the application filed by Petitioner on the ground that, the same was not maintainable on account of alternate effective remedy of appeal and that assessee had also not waived right of appeal before the Commissioner of Income Tax (Appeals) as per provisions of section 264 (4) of the Income Tax Act. 8. Being aggrieved by the order of rejection of the application under section 264 of the Income Tax Act, Petitioner is before us seeking the following reliefs: (a) That this Hon ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction order or a writ including a writ in the nature of Certiorari to call for the records of the application filed by the Petitioner under section 264 and the order passed thereon dated 12.02.2021 and quash the same and direct the Respondent No.2 to decide the application filed under section 264 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi High Court in the case of Vijay Gupta v/s. Commissioner of Income Tax [2016] 386 ITR 643 (Delhi) wherein the Delhi High Court decided the issue of maintainability of revision application against the order passed under section 143 (1) of the Income Tax Act. He has relied upon paragraphs 35 to 40, which are quoted as under: 35:-From the various judicial pronouncements, it is settled that the powers conferred under section 264 of the Act are very wide. The Commissioner is bound to apply his mind to the question whether the petitioner was taxable on that income. Since section 264 uses the expression any order , it would imply that the section does not limit the power to correct errors committed by the subordinate authorities but could even be exercised where errors are committed by assessees. It would even cover situations where the assessee because of an error has not put forth a legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264. 36:- An assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant material was already available on the record of the Assessing Officer, The Commissioner instead of merely examining whether the intimation was correct based on the material then available should have examined the material in the light of the Circular No.14(XL35) of 1955, dated April, 1955 and article 265 of the Constitution of India. The Commissioner has erred in not doing so and in failing to exercise the jurisdiction vested in him on mere technical grounds. 40:- In view of the above, the impugned order dated November 20, 2012 is set aside. The revision application under section 264 of the Act is restored to the file of the Commissioner. The Commissioner is directed to consider the same afresh on merits and dispose the same within a period of eight weeks from today. The writ petition is disposed of leaving the parties to bear their own costs. 11. Mr Gopal also refers to the decision of this court in the case of Universal Packaging and Others v/s. Commissioner of Income Tax [2013] 352 ITR 398 (BOM) to submit that in almost similar circumstances, this court has held that such an order passed by the Commissioner of Income Tax is a non-speaking order as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apers and proceedings in the matter. 15. This is a case where, in the Petitioner s return for the Assessment Year A.Y 2018 19, the figure of long term capital gains of ₹ 3,07,60,800/- on surrender of tenancy rights in respect of earlier A.Y 2017-18 had inadvertently been copied by petitioner s accountant from the return for A. Y. 2017-18. The assessment for A.Y 2017 18 was completed under section 143 (3) of the Income Tax Act vide Assessment Order dated 24th December 2019. In the financial year corresponding to A.Y 2018-19, Petitioner received income from house property of ₹ 12,69,954/- and income from other sources ₹ 14,35,692/- making the total income to ₹ 27,05,646/- and after claiming deductions and set off on account of TDS and advance tax, a refund of ₹ 34,320/- was determined. No capital asset transfer had taken place during A. Y. 201819, therefore no tax on capital gains can be imposed. The error had crept in through inadvertence. There is neither any fraud nor malpractice alleged by the Revenue. The rectification application u/s 154 filed earlier is stated in the Respondent s affidavit to have been rejected. The application under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Commissioner rejected the application stating that the assessing officer had rejected the assessee s application under section 154. The assessee had an option of filing appeal before the Commissioner of Income Tax (Appeals) and therefore there was no reason to revise the order under section 154 passed by the Assessing Officer. Holding the said order to be a nonspeaking order, not considering the petitioner s case on merits by dismissing the same on the ground of alternate remedy of filing appeal, this court quashed and setaside the said order of the Commissioner stating that the same was in violation of the basic principles of natural justice. In the facts of the present case also the Commissioner has not considered Petitioner s case on merits and simply on the ground of alternate remedy of filing appeal has rejected the application under section 264 of the Income Tax Act. Therefore on the basis of this decision also the Commissioner s order is liable to be set-aside. 18. For the sake of convenience section 264 of the Income Tax Act is quoted as under:- 264. Revision of other orders (1) In the case of any order other than an order to which section 263 applies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, the High Court or the Supreme Court. 19. What is relevant for our purposes is section 264 (4)(a) of the Income Tax Act. Under this section, the Principal Commissioner is mandated not to revise any order in two situations: first where an appeal that lies to the Commissioner (Appeals) but has not been made and the time within which such appeal may be made has not expired or second, where the assessee has not waived his right of appeal. What emerges is that in a situation where there is an appeal that lies to the Commissioner appeals and which has not been made and the time to make such an appeal has not expired in that case the Principal Commissioner or Commissioner cannot revise any order in respect of which such appeal lies. The language is quite clear that the two conditions are cumulative viz: there should be an appeal which lies but has not been made and the time for filing such appeal has not expired in such a case the Principal Commissioner cannot revise. However, if the time for making such an appeal has expired then it would be imperative that the Principal Commissioner would exercise his powers of revision under section 264. The other or second situation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in the case of Dwarkanath (supra) has no application to the facts of this case. 21. Before parting, we would also like to observe that in matters like these, where the errors can be rectified by the authorities, the whole idea of relegating or subjecting the assessee to the appeal machinery or even discretionary jurisdiction of high court, in our view, is uncalled for and would be wholly avoidable. The provisions in the Income Tax Act for rectification, revision under section 264 are meant for the benefit of the assessee and not to put him to inconvenience. That cannot and could not have been the object of these provisions. We do not find any statement either in the impugned order or in the reply to state that the case of the Petitioner seeking remedy of the purported error was not bona fide. 22. In the light of the above discussion, we find that the order dated 12th February 2021 passed by the 2nd Respondent- Principal Commissioner is unsustainable and deserves to be set-aside. 23. The order dated 12th February 2021 passed by Respondent No.2 is set aside. We direct Respondent No. 2 to decide the application filed by petitioner under section 264 afresh on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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