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2016 (9) TMI 608 - GUJARAT HIGH COURT

2016 (9) TMI 608 - GUJARAT HIGH COURT - TMI - Refund of excess taxes paid - Condonation of delay - rectification of mistake - revision petition - Held that:- Even without the service of intimation, the petitioner had sufficient knowledge about the acceptance of return as far back as in May 2005. The first attempt to file revision petition, made in December 2008, was thus merely grossly belated. The only explanation that the petitioner offered was that since the intimation was served much later, .....

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he petitioner had failed to show sufficient cause for condoning the delay. - As during the period when under subsection( 1) of section 143, the Assessing Officer had the power of making prima facie adjustments, the legislature provided for an explanation that an intimation sent to the assessee under subsection( 1) would be deemed to be an order for the purposes of section 264 with effect from 1.6.1999. Such explanation has been deleted giving a clear indication that such deeming fiction woul .....

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sponding change was therefore, made by deleting the explanation and withdrawing the deeming fiction. We therefore, accept the view of the Commissioner that against the intimation under section 143(1) of the Act, the revision petition was not maintainable. - In terms of section 154 of the Act, it may have been possible for the assessee to seek rectification of intimation under section 143(1) of the Act but when the assessee rather belatedly sought revision which was not maintainable, it canno .....

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o verification by Assessing Officer during the assessment before the same can be granted in terms of section 37 of the Act. If the assessee was following mercantile system of accounting, such claim could be processed on the basis of accrual. These aspects had to be examined before such claim could have been allowed. The assessee itself harbored an opinion that since the expenditure is still under the process of negotiation, the liability had not accrued during the previous year relevant to the a .....

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es would not shake the credibility of the department. - SPECIAL CIVIL APPLICATION NO. 2514 of 2011 - Dated:- 7-9-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 3.12.2010 passed by the respondent Commissioner of Income tax in the following background. 2. The petitioner is a company registered un .....

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ct, 1961( the Act for short), the same was debited to Profit and Loss account and the business profit was accordingly computed. According to the petitioner, however, while computing the profit and loss of the business, due to misunderstanding, these amounts totalling to ₹ 1.87 crores (rounded off) were added back while computing total income. According to the petitioner, thus the returned income of ₹ 3.31 crores (rounded off) included this sum of ₹ 1.87 crores erroneously added .....

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as the company is still in the process of negotiating the same. 3. Case of the petitioner further is that these amounts were payable to one BG Energy Holdings Ltd. in accordance with the agreement between the parties and the expenditure was thus allowable deduction which the petitioner wrongly did not claim. In fact, such amount of ₹ 1.87 crores was paid by the petitioner for the subsequent year but was not claimed since the petitioner followed the mercantile system of accounting. 4. The r .....

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the petitioner and was credited in the petitioner's bank account on 11.5.2005. 5. The petitioner having realised the error in not claiming the deduction of expenditure on accrual basis while filing the return, filed a petition before the Commissioner under section 264 of the Income Tax Act on 29.12.2008 seeking revision of the intimation/order under section 143(1) of the Act. The Commissioner under a communication dated 1.4.2009 conveyed to the petitioner that if the intimation under section .....

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n order dated 3.12.2009 interalia, on the ground that the revision petition was filed after a lapse of about six years. The petitioner thereupon approached the High Court by filing Special Civil Application No.3760/2010. The petition came to be disposed of by the judgement dated 13.7.2010. The Court was of the opinion that if the Commissioner desired to dismiss the revision petition on the ground of delay, petitioner should have been put to notice thereof. In the process, the petitioner had no o .....

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ty of hearing. If the Commissioner is of the view that the application under section 264 of the Act is barred on the ground of delay, the Commissioner shall decide the same as a preliminary issue after putting the petitioner to notice and giving it an opportunity of hearing. Rule is made absolute accordingly. 7. The Commissioner thereupon issued a show cause notice dated 6.10.2010 in which he pointed out to the petitioner that the refund order dated 31.3.2005 was dispatched along with intimation .....

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onveying to the petitioner that against intimation under section 143(1) of the Act, the revision petition would not be maintainable. With these tentative findings, the Commissioner called upon the petitioner to appear for personal hearing. 8. The petitioner replied to such notice under a letter dated 12.11.2010 and contended that though the petitioner received the refund order, had never received the intimation under section 143(1) of the Act at the relevant time. The company had written a lette .....

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ed order dated 3.12.2010 rejected the revision petition on the ground of delay as well as maintainability. On the ground of delay, the Commissioner relied on a report of the Assessing Officer which showed that along with refund order dated 31.3.2005, intimation under section 143(1) of the Act was also dispatched as would be evident from the issue stamp on the office copy of the intimation. Commissioner noted that refund was duly credited in the account of the petitioner on 11.5.2005; that there .....

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rnataka High Court in case of Avasaraja Automation Ltd. v. Deputy Commissioner of Incometax reported in (2004) 269 ITR 163, in which referring to deletion of explanation to section 143 with effect from 1.6.1999, it was held that petition under section 264 of the Act against intimation in respect of assessment year 2003-2004 is not maintainable but the rights already vested for earlier years would not be taken away by amendment. 11. It is this order, the petitioner has challenged in the present p .....

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show sufficient cause in late filing of the revision petition. In this context, the counsel relied on the decision of the Supreme Court in case of N. Balakrishnan v. M. Krishnamurthy reported (1998) 7 Supreme Court Cases 123. 2) Counsel further submitted that against the order accepting the return under section 143(1) of the Act, revision was maintainable before the Commissioner under section 264 of the Act. Even acceptance of assessment without scrutiny and intimation thereof in terms of sectio .....

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issioner of Incometax reported in (2014) 43 taxmann.com 316 (Gauhati) 3) Ramdev Exports v. Commissioner of Incometax reported in (2001) 251 ITR 873 4) Vijay Gupta v. Commissioner of Incometax, DelhiIII reported in (2016) 68 taxmann.com 131 (Delhi) 3) Counsel further submitted that in any view of the matter, department can tax only the real income. The department cannot capitalise out of a mistake committed by the assessee and retain the amount not due to the department in form of tax. In this co .....

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on section 237 of the Act to contend that whenever the assessee satisfies the Assessing Officer that amount of tax paid by him exceeds the amount with which he is properly chargeable under the Act, for a particular year, he would be entitled to refund of the excess. Referring to the decision of Division Bench of this Court in case of Taiyabji Lukmanji v. Commissioner of Income Tax, GujaratV reported in (1981) 131 ITR 643, counsel submitted that the action of the department in retaining the exce .....

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satisfactory. The Commissioner therefore, correctly dismissed the revision petition on the ground of limitation. 2) The revision petition was otherwise also not maintainable. The intimation under section 143(1) of the Act is neither an order of assessment nor an order which in terms of section 264 of the Act is revisable. It is a mere administrative action of intimating to an assessee that his return is accepted. This would be clear from the legislative changes made in section 143(1) of the Act .....

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aram and Co. reported in (2000) 245 IR 353. 2) Decision of Karnataka High Court in case of Avasaraja Automation Ltd. (supra) 3) The petitioner cannot claim refund without change in the assessment. The petitioner did not file any revised return within the time permitted under the statute nor sought for rectification of the order under section 143(1) of the Act. The petitioner cannot straightway claim refund on the ground that the return did not contain the correct disclosure and corresponding tax .....

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ative, would the petitioner be still entitled to refund of the tax which the petitioner claims to have paid in excess? 15. Our consideration of these questions is as follows : Question (1) 16. Regarding question (1), we will briefly record the facts relevant to this issue. For the assessment year 2003-2004, the petitioner having filed the return, the same was processed under section 143(1) of the Act. Since the petitioner did not receive any refund, the petitioner wrote a letter to the Assessing .....

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revision petition is filed. If the petitioner had not received intimation under section 143(1) of the Act, would such petition not be premature? Instead of replying to said notice from the Commissioner, the petitioner filed a fresh on 13.4.2009. Such petition at one stage was dismissed by the Commissioner as delayed. The High Court however, asked the Commissioner to put the petitioner to notice and then decide the question of limitation. Thereupon, the petitioner elaborated the grounds of delay .....

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good and sufficient cause. The Commissioner has power to condone such delay. 18. From the above it can be seen that after the petitioner received the refund order which obviously would have been done before 11.5.2005, since the petitioner had credited the refund amount in its account on such date, the first attempt to seek revision of such order was made only on 29.12.2008. Section 264 of the Act pertains to the Commissioner's power of revision. Under subsection( 1) of section 264, the Comm .....

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s earlier. Under proviso to subsection( 3), the Commissioner has power to condone delay, if he is satisfied that assessee was prevented by sufficient cause from making the application within such period. 19. Two things thus become clear. One is that the period of limitation would commence from the date on which the order under revision was communicated to the assessee or the date on which he otherwise came to know of it, whichever is earlier. Second aspect is that the Commissioner has the power .....

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e refund order but also the intimation under section 143(1) of the Act was dispatched for service to the petitioner. He noted that the practice of the department invariably is to accompany the order of refund with intimation. He therefore, found it difficult to believe the version of the petitioner that only the order of refund was served and not intimation under section 143(1) of the Act. There is nothing on record to overrule these findings of fact. In any case, even without the service of int .....

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xplanation at all. The petitioner merely referred to the power of the Commissioner to condone the delay for good and sufficient cause being shown, but did not elaborate, in the present case, what such good and sufficient cause was. The Commissioner in our opinion therefore, committed no error in holding that the petitioner had failed to show sufficient cause for condoning the delay. Question (2) 20. Regarding question no.2, this issue pertains to maintainability of the revision petition. As note .....

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order passed by an authority subordinate to the Commissioner. Thus clearly the revisional power of the Commissioner under subsection( 1) of section 263 are not confined to the orders of assessment. However, when subsection( 1) uses the term any order , surely, it is not meant to cover even mere administrative orders, without there being any element of deciding any rights of the parties. In this context, we may examine the nature of order under section 143(1) of the Act. 21.Division Bench of Kera .....

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r order is contemplated under section 143(1)(a). Under section 246 also a clear distinction is made between an intimation and an order of assessment. 22. In case of Assistant Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500 (SC), the Supreme Court observed that acknowledgment under section 143(1) is not done by an Assessing Officer, but mostly by ministerial staff. It cannot be stated that by such intimation, assessment is done. 23.Learned Single J .....

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Finance Act 2 of 1991 with effect from 1.10.1991 which reads as under : Explanation : An intimation sent to the assessee under subsection( 1) or subsection (1B) shall be deemed to be an order for the purposes of section 264. 25. This explanation came to be deleted with effect from 1.6.2009 when section 143 itself underwent major changes. It can thus be seen that during the period when under subsection( 1) of section 143, the Assessing Officer had the power of making prima facie adjustments, the .....

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s considered as an order for the purpose of section 264 of the Act and, therefore, revisable. Once with amendment of section 143, such powers were rescinded, it was thereafter, no longer necessary to provide for any refund against a mere intimation under section 143(1) and a corresponding change was therefore, made by deleting the explanation and withdrawing the deeming fiction. We therefore, accept the view of the Commissioner that against the intimation under section 143(1) of the Act, the rev .....

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had increased but, nevertheless, in absence of complete quantity details and check on closing stock, made a lumpsum addition of ₹ 1000/to the book results disclosed by the petitioner. After the order of assessment was passed, the petitioner upon examination of books of accounts found that there was difference in the balancesheet. The assessee detected a mistake in totalling of the purchases which led to an error of ₹ 20,000/. The petitioner therefore, made an application to the Commi .....

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cantly, this decision focuses on the question whether whose mistake it was, of the assessee or of the Assessing Officer, which can be corrected by the Commissioner in revisional powers and did not concern the question whether an intimation under section 143(1) of the Act was open to revision under section 264 of the Act. 27. In case of Ramdev Exports (supra), brief facts were that for two assessment years, 1996-1997 and 1997-1998, the petitioner had filed returns of income. The return for the as .....

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issioner refused, the assessee filed the petition. In such background, the Division Bench of this Court referring to and relying upon the decision in case of C. Parikh & Co. (supra) and other similar decisions, held that the Commissioner ought to have examined the claim of the petitioner, even though no such claim was made before the Assessing Officer. In this case, once again the question of maintainability of a revision petition against a mere intimation under section 143(1) of the Act, di .....

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come to such a conclusion, however, the Court relied solely upon the decision of this Court in case of C. Parikh & Co. (supra) which, as noted, pertained to a question whether a claim not made by the assessee in the return and not processed before the Assessing Officer, could be granted in a revision petition by the Commissioner. The decision of this Court in case of C. Parikh & Co. (supra) did not concern the question of maintainability of revision petition against an intimation under s .....

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f S.R. Koshti (supra) which did not concern this question at all. The Delhi High Court in this case of Vijay Gupta (supra) also noted that before the Commissioner, the petitioner had challenged not only the intimation under section 143(1) of the Act but also rejection of application under section 154. Thus this decision is clearly distinguishable. 30. For such reasons, we hold that even on question (2), the Commissioner did not commit any error. Question (3) 31. This brings us to the last issue, .....

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ng Officer that the amount of tax paid by him or on his behalf, or treated as paid by him or on his behalf, exceeds the amount which he is properly chargeable under the Act, he would be entitled to refund of excess. This provision however, would not mean that at any point of time, the assessee can approach the Assessing Officer and claim to have paid excess tax. A return filed by the assessee goes through the process of assessment. Such assessment could be after scrutiny or the return can be acc .....

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tion 237 is also included, it shall not be open for the assessee to question the correctness of any assessment or other matter decided which has become final and conclusive or ask for a review of the same and the assessee shall not be entitled to any relief on such claim, except refund of tax wrongly paid or paid in excess. Against the return filed by an assessee, before 1.6.1999, a revision petition was maintainable. If a claim which was not made, had to be raised, it was possible for the asses .....

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