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2016 (3) TMI 977 - DELHI HIGH COURT

2016 (3) TMI 977 - DELHI HIGH COURT - [2016] 386 ITR 643 - Revision u/s 264 in favor of assessee - Commissioner has rejected the revision petition u/s 264 on the ground of that the Petitioner did not comply with the mandatory requirement of payment of prescribed fees - Held that:- It is an admitted position that the requisite fee was paid during the pendency of the revision petition. The rejection of the application on the technical ground of non payment of would be taking a hyper technical view .....

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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 - 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 share .....

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erm 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 21.02.201 .....

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examined the material in the light of the Circular No. 14(XL-35) of 1955, dated 11.4.1955 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. - Decided in favour of assessee - WP (C) 1572/2013 - Dated:- 23-3-2016 - Badar Durrez Ahmed And Sanjeev Sachdeva, JJ. For the Petitioner : Mr Ajay Vohra, Sr Advocate with Ms Bhavita Kumar, Advocate with petitioner in person For the Res .....

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008-09 paid by the Petitioner. 2. The petitioner is an individual. It is contended that during the period July, 2007 to November, 2007, the petitioner sold 2,98,000 shares out of 3,08,000 shares in DLF Ltd., having face value of ₹ 2 each, on the recognized stock exchange for a total consideration of ₹ 19,78,00,000. It is contended that the said shares in DLF Ltd. were received by the Petitioner as gift from his mother on 30.01.2007. 3. On 31.01.2009, the Petitioner filed his return o .....

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ondent 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 .....

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nce the assessee has paid major part of taxes as self assessment tax hence the assessee plea cannot be accepted as he was not aware about his income from sale of shares. However the assessee has not claimed any refund during the time prescribed in section 139 of the IT Act, 1961, hence the assessee s plea for refund cannot be accepted at this stage. This issue does not fall in the ambit of section 154 of the IT Act, 1961. In the above mentioned circumstances, the assessee s application under sec .....

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on 143(1) dated 27.03.2010 and the rectification order dated 12.07.2011. 10. By the Impugned Order dated 20.11.2012 the application of the petitioner under section 264 has been rejected, first of all, holding that the petition was not filed with the prescribed fee of ₹ 500/- and, secondly, that the order dated 12.11.2011 was proper as the scope of interference under section 154 of the Act was very limited and had to be strictly based on the return filed by the Petitioner/assessee and, thir .....

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under section 10(38) of the Act. It is not in dispute that while filing the return of income the Petitioner had calculated his period of holding 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 Petiti .....

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apital 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 in the case of a share held in a company or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under th .....

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cumstances mentioned in sub-section (1) of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section; ***** ***** ***** (f) in the case of a capital asset, being a financial asset, allotted without any payment and on the basis of holding of any other financial asset, the period shall be reckoned from the date of the allotment of such financial asset; ***** ***** ***** (42B) "short-term capital gain" means capital g .....

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od of holding a capital asset, which becomes the property of the assessee by way of gift or will, the period for which the asset was held by the previous owner shall be included. 16. Therefore, for the purposes of computing capital gains on transfer of shares in DLF Ltd., the Petitioner should have included the period for which the said shares were held by his mother. This, it is contended, was not done when the return of income was filed. Since the period for which the mother had held the share .....

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ain 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 .....

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ITR 310 held that Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. 21. The Bombay High Court in Nirmala L. Mehta v. A. Balasubramaniam, C.I.T. (2004) 269 ITR 1 held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable te .....

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t a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claimi .....

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and aid the assessee in the matter of taxation. They are obliged to advise the assessee and guide them and not to take advantage of any error or mistake committed by the assessee or of their ignorance. The function of the Assessing Officer 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 .....

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t. (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 earlier: Provided that the Commissioner may, if he is satisfied that the assessee was prev .....

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er (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the Deputy Commissioner (Appeals)]; or (c) where the order has been made the subject of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal. (5) Every application by an assessee for revision under this section shall be accompanied by a fee of twenty five rupees Explanation 1-An order by the Commissioner declining to interfere shall, fo .....

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wered to call for the record of any proceeding under this Act in which 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, pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. This power has been conferred on the Commissioner to correct any order passed by a subordinate authority. 26. In Pt. Sheonath Prasad Sharma v. CIT, [1967] 66 ITR 647 (All) while determining the question, whet .....

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led 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 suc .....

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f fact. But whether the receipt can be considered as taxable income is quite another matter, and consideration of that question leads into the realm of law. If the Income-tax Officer assesses an assessee upon a receipt which is not taxable in law, it is always open to the assessee to take the case in appeal or in revision thereafter. It is then for the Appellate Assistant Commissioner or the Commissioner of Income-tax, as the case may be, to examine the matter and determine whether, although the .....

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ssioner has taken a too narrow view of the scope of the revision under Section 264. Though the Income-tax Officer accepted the income as returned by the petitioner and made assessment, its case is that the order of assessment has to be revised in view of the fact that a sum of ₹ 2,30,000 which ought to have been included in the return filed by it was omitted by inadvertence and, consequently, it was deprived of the refund of ₹ 11,500. This aspect of the case has not at all been consi .....

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uld be given the benefit of the refund of the super-tax which was deducted at source before payment of the interim dividend to it. Hence, the impugned order of the Commissioner suffers from a manifest error and has to be quashed. 28. Similar is the view taken by the Gujarat High Court in C. Parikh & Co. v. CIT: [1980] 122 ITR 610 (Guj), wherein it is observed as under: It is clear that under s. 264, the Commissioner is empowered to exercise revisional powers in favour of the assessee. In exe .....

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fied 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 discre .....

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iction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detracts mistakes on account of which he was over-assessed after the assessment was completed. We do not read any such embargo in the Commissioner's power as read by the Commissioner in the present case. It is open to the Commissioner to entertain even a new ground not urged before the lower authorities while exercising revisional powers. Therefore, though the petitioner had not rais .....

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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 I.T. 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 .....

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ner 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 firs .....

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ary one. The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary; Whether in a particular case, on the basis of facts disclosed, the Commissioner will exercise his jurisdiction and interfere in the matter, is a matter of discretion. It is certainly a judicial discretion vested in the Commissioner, to be exercised in accordance with law. We are not called upon to pronounce on the scope and amplitude of the revisional power. The only question mooted .....

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t in Digvijay Cement Co. Ltd. V CIT: 210 ITR 797 has held that the power of revision under section 264 cannot be restricted to such erroneous Orders which have become erroneous as a result of some error committed by the Income-tax Officer while passing the Orders. Independently of any decision or absence of any decision on the part of the Income-tax Officer, the Order of assessment can be challenged as erroneous if, for example, some provision was overlooked not only by the assessee but also by .....

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. The assessee filed revision petition under section 264 of the Act. The Commissioner rejected the contention of the petitioner on the ground that since the return of income filed by the assessee under section 139(1) of the Act had been accepted by the assessing authority, the revisional powers could not be invoked to allow relief not claimed in the return. The assessee filed a Writ Petition impugning the order of the Commissioner. The contention raised by the Department was that a claim was adm .....

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retion 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 t .....

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ssessee the revisional authority rejected the contention of the petitioner only on technical grounds. When the substantive law confers a benefit on the assessee under a statute, it cannot be taken away by the adjudicatory authority on mere technicalities. It is settled proposition of law that no tax can be levied or recovered without authority of law. Article 265 of the Constitution of India and section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the s .....

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of Appeal while exercising the writ jurisdiction, but at the same time where the admitted facts disclosed non-exercise of jurisdiction by an adjudicatory authority and a citizen is subjected to tax not payable by him, interference by this Court is warranted. The respondent No. 2 is directed to reassess the taxable income of the petitioner, by taking into consideration the benefit available to her under section 54F of the Income-tax Act and pass appropriate order. 32. By the impugned order dated .....

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uring the pendency of the revision petition. The rejection of the application on the technical ground of non payment of would 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 t .....

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de. 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 Officer in the processing/rectification under section 143(1)/154 of the Act. 35. From the various judicial pronouncements, it is settled that the powers conferred under section 264 o .....

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he 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 Income-tax Act. There is nothing in s. 264, which places any restriction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detracts mistakes because of which he was over-assessed after the assessment was .....

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tion and collection of tax if the same is without authority of law. 37. The Commissioner further erred in rejecting the application under section 264 holding that intimation under section 143(1) could not be regarded as an order and was thus not amenable to revisionary jurisdiction under section 264 of the Act. The Intimation under section 143(1) is regarded as an order for the purposes of section 264 of the Act. Commissioner Of Income Tax vs K.V. Manakram & Co. [2000] 111 TAXMAN 439 Ker; As .....

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