2024 (6) TMI 885 - HC - Income Tax

Revision u/s 264 - CIT rejected the application on the ground of delay and finding that the intimation u/s 143 (1) could not be treated as an order that was amenable to revision u/s 264 - Condonation of delay on filing revision application - HELD THAT - On a consideration of the rival submissions while we were initially inclined to accept the submissions of the appellant that the aspect of uniformity and fairness in taxation should outweigh the delay occasioned in preferring the revision petitions we find ourselves unable to ignore the submissions for the Income Tax Department that it was the same aspect of delay/limitation that prevented the Department also from re-assessing the income of the appellant for the assessment years 2004-2005 and 2005-2006 respectively. We find that during the said years the appellant had declared the profit on the sale of shares as capital gains and had obtained the benefit of a lower rate of tax on the said income and the revenue was unable to reassess the said income as business income solely on account of the limitation provisions under the statute. As far as the appellant assessee is concerned he too did not choose to file the Revision Petitions immediately after coming to know of the assessment order for the assessment years 2006-2007 and 2008-2009 when the revenue had changed its stand and insisted on the assessment of the profits on sale of shares as business income. Had the appellant filed the revision petitions immediately on noting the changed stand of the revenue perhaps the view taken by us in this appeal might have been different. We find however that the appellant assessee chose to wait till the order of the Appellate Authority that confirmed the stand of the AO with regard to the changed treatment of the income for the purposes of taxation and only then chose to approach the revision authority through Exts. P6 and P7 Revision Petitions. The delay in approaching the revision authority cannot therefore be condoned as rightly held by the revision authority as also by the Single Judge in the judgment impugned in this appeal. To condone the delay and permit the appellant to re-visit the concluded assessment for the assessment years 2006-07 and 2008-09 would tantamount to conferring an unfair advantage to the appellant whilst denying such an advantage to the revenue. Thus for the reasons stated in the judgment of Single Judge as supplemented by the reasons in this judgment the Writ Appeal fails and is accordingly dismissed.

Summary

Issues:
1. Revision of assessments for the years 2007-2008 and 2009-2010 under the Income Tax Act.
2. Treatment of profits and losses on the sale of shares as business income for taxation purposes.
3. Delay in filing Revision Petitions and its impact on the case.
4. Uniformity and fairness in taxation.

Analysis:
1. The appellant, a SEBI registered Portfolio Manager, challenged the rejection of Revision Petitions for revising assessments for the years 2007-2008 and 2009-2010 under the Income Tax Act. The Department had treated profits as business income for some years and losses as capital losses for others, leading to inconsistency in taxation treatment.

2. The appellant contended that uniformity in taxation was essential, urging that losses on the sale of shares should be treated as business losses for consistency. However, the revision authority dismissed the Revision Petitions primarily due to delay in filing and the intimation under Section 143 (1) not being revisable under Section 264 of the Income Tax Act.

3. The learned Single Judge upheld the rejection of Revision Petitions citing the lack of explanation for the delay in filing. The appellant's argument for uniformity in taxation was considered but deemed insufficient to overlook the delay, leading to the dismissal of the Writ Petition.

4. In the appeal, the appellant's counsel argued for uniformity in taxation, emphasizing the unfairness of allowing the Department to vacillate between income treatments based on profit or loss. On the other hand, the Income Tax Department's counsel highlighted the statutory limitation preventing reassessment of earlier years, suggesting that granting revision for the appellant would be unjust.

5. The Court considered the balance between uniformity in taxation and the delay in filing Revision Petitions. While initially inclined to prioritize fairness, the Court acknowledged the limitation provisions that prevented reassessment for earlier years due to the appellant's delay in challenging the changed income treatment.

6. Ultimately, the Court found that condoning the delay and permitting revision would unfairly advantage the appellant while denying the same to the revenue. The delay in approaching the revision authority was not justified, leading to the dismissal of the Writ Appeal to maintain fairness and consistency in taxation treatment.

This comprehensive analysis of the judgment delves into the issues raised, the arguments presented by both parties, and the Court's reasoning for dismissing the Writ Appeal.