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M/s. Bali Trading Pvt. Ltd. Versus Principal Commissioner of Income-tax, Chennai -1, Income Tax Officer

2017 (9) TMI 584 - MADRAS HIGH COURT

Revision petition u/s 264 - no business activity relatable to the expenses/income claimed - Held that:- The Revisional Authority considering the scope of his power under Section 264 of the Act went a step ahead to examine as to the bonafides of the stand taken by the petitioner alleging that it was an inadvertent keying error. On a comparative analysis of the returns filed for the assessment year 2011-12, with that of the returns filed for the assessment year 2012-13, the first respondent noted .....

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me claiming expenditure on repairs to plant and machinery that too in an increasing in manner, clearly indicates a position otherwise. Further, on facts, the first respondent found that the assessee has not been able to prove with evidence that there has been no business activity during the impugned assessment year. Thus, the first respondent having done a factual exercise, in exercise of his power under Section 264 and on facts, found that the theory as propounded by the petitioner as a keying .....

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assessment year 2012-13. 2. The petitioner's case is that their main source of income is rental income offered under the head income from house property . For the assessment year 2012-13, the petitioner filed e-return on 11.09.2012, declaring an income of ₹ 32,71,620/-. The case was selected for scrutiny by the second respondent under Section 143(2) of the Act. It was pointed out that the petitioner had in the computation of income attached along with the return had only admitted inco .....

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, which was an inadvertent mistake and the same being apparent on record can be rectified. The second respondent completed the scrutiny assessment under Section 143(3) of the Act on 26.02.2015, on the returned income of ₹ 32,71,620/- on the ground that without a revised return under Section 139(4), total income cannot be reduced and that the powers of the Assessing Officer is limited as no alteration in the returned income could be made by him in view of the decision of the Hon'ble Sup .....

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led to consider that there is absolutely no business income earned by the petitioner during the relevant assessment year other than the income from house property and income from other sources and the petitioner has furnished sufficient material to prove the same. Further, the first respondent ought to have appreciated that the second respondent rejected the request on the sole ground that the petitioner had not filed revised return, but for which, the second respondent himself would have allowe .....

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respondent being the revisional authority has vide powers including the power to set aside the assessment, which power had been removed from the Commissioner of Appeals w.e.f., 01.06.2003. In support of his contentions, the learned counsel relied on the decisions in the case of Sri Selvamuthukumar vs. Commissioner of Income-tax, Chennai-VI, reported in [2017] 79 taxmann.com 113 (Madras); Rajesh Kumar Aggarwal vs. Commissioner of Income-tax, Delhi-VIII, reported in [2017] 78 taxmann.com 265 (Del .....

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f return or filing a revised return within the time allowed under Section 139(5) of the Act, the request of the petitioner was not entertained. It is further submitted that as regards the averments in para No.3 of the affidavit, it is submitted that in column No.3, the petitioner mentioned income receipts credited to profit and loss account considered under the heads of income to the tune of ₹ 16,81,399/-, consequently, petitioner also admitted in column No.7 of the BP expenses debited to .....

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is submitted that the case of the petitioner that no business income was earned, is not acceptable. It is further submitted that as per the decision in the case of M/s.Goetze India (supra), an error in a return can be rectified through a revised return only and therefore, the second respondent has no power to make assessment with respect to any figures that are variant with the return filed by the assessee. Further, the claim of the petitioner is on the supposition that it did not earn any busin .....

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furnished by the petitioner to establish that there was no business activity in the context of claims of increased expenditure incurred and additions to fixed assets admitted by the petitioner. Therefore, the first respondent rightly held that the income reported under the head business income could very well be income from business. Thus, in the absence of any material evidence to prove that there was no business activity and the admission of the income under the head 'business' was a .....

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ent for the assessment year 2012-2013 ? (ii) whether the Assessing Officer was right in relying on M/s.Goetze India (supra), to reject the request for rectification? (iii) What are the powers of the Commissioner under Section 264 of the Act ? (iv) Whether, on the grounds canvassed by the petitioner the impugned order passed by the Commissioner under Section 264 of the Act calls for interference? 8. To answer the above questions, it is necessary to note the legal position which have been neatly s .....

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power of the Assessing Authority and does not impinge on the power of Income Tax Appellate Tribunal under Section 254 of the Act. 9. In Sri Selvamuthukumar vs. Commissioner of Income-tax, Chennai-VI,(supra), the Hon'ble Division Bench of this Court discussed the power of the Commissioner under Section 264 of the Act. It was held that the power under Section 264 of the Act is, in fact as wide a power, and one that is intended to prevent miscarriage of justice. Courts have consistently taken .....

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e decision in the case of National Thermal Power Co.Ltd., vs. CIT reported in (2012) 349 ITR 336 (Bom); Goetze (India) Ltd., (supra); National Thermal Power Co.Ltd., vs. CIT reported in (1998) 229 ITR 383; Jute Corpn., of India Ltd., vs. CIT reported in [1991] 187 ITR 688; CIT (Central, Madras vs. Indian Express (Madurai) Pvt., Ltd., reported in (1983) 140 ITR 705; and Mahalakshmi Textile Mills' case reported in [1967] 66 ITR 710(SC), it was held that the Act does not contain any express pro .....

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from the above decisions are:- (i) The Assessing Officer cannot entertain a claim for deduction otherwise than by filing a revised return. This does not impinge upon the power of the ITAT under Section 254 of the Act. (ii) The language of Section 264 provides ample power to the CIT to make or cause such inquiry to be made as he thinks fit in dealing with application for revision under Section 264 of the Act. (iii) Limiting the power of the CIT only to the situation that was existing at the time .....

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ssioner to provide relief to an assessee, where the law permits the same. (vii) The embargo placed on a assessing Officer in considering a new claim would not impinge on the power of the appellate authority or the revisional authority. (viii) The phraseology adopted in Section 264 of the Act is of the widest amplitude, unless there is a direct impediment to the said power. (ix) The Supreme Court in M/s.Goetze India (supra), had no occasion to deal with the power of the Commissioner under Section .....

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er the head house property and other sources , and there is no other income. However, while filing the return, it has been inadvertently filed against business income in addition to income from house property and other sources and hence, the gross total income shown as ₹ 32,71,621/- in the income tax return as against ₹ 16,81,400/- is just a keying error and requested the second respondent to accept the figures as appearing in the income memo and complete the assessment under Section .....

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turn and when the mistake is apparent on the record, the same can be rectified. The petitioner relied upon certain decisions and contended that the mistakes apparent from the record are the patent mistakes where there cannot be two opinions and in their case, the mistakes are apparent and there are no two opinions and requested the second respondent to rectify the same. The second respondent after taking note of the stand taken by the petitioner in the aforementioned communication, passed the as .....

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ing the course of assessment proceedings. In support of such stand, the second respondent relied on the decision of the Hon'ble Supreme Court in the case of M/s.Goetze India (supra). Thus, the total income admitted as per the return of income was determined as ₹ 32,71,620/- and tax payable thereon was intimated to the petitioner in the form of a demand. The reasons assigned by the second respondent is perfect and in order, so also the reliance placed on M/s.Goetze India (supra). On the .....

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ncome has been keyed wrongly and requested the first respondent to exercise his revisional powers. This stand was reiterated in the written submissions made by the Chartered Account of the petitioner, dated 11.06.2015. As noted, power under Section 264 of the Act, exercisable by the Commissioner, is a wide power to provide relief to the assessee wherever law permits. It provides amble power to make or cause such enquiry to be made as he thinks fit. Materials which were not available before the A .....

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asuring 4174 sq.ft., in Bali Towers at Saidapet, Chennai and letting out of a flat at Mumbai and if such is the case, as to why the petitioner has reported the additions to plant and machinery during the year to the tune of ₹ 1,96,469/- in its fixed assets schedule and this is beyond comprehension. Thus, the fact that there has been purchase of new plant and machinery indicates that, the submission that there was no business activity, is not true. To arrive at the factual position, a compa .....

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hich is claiming no business activity with no receipts other than rental receipts and interest income, have claimed expenditure on repairs to plant & machinery and this is in an increasing manner will indicate the factual position otherwise. Thus, on facts, the first respondent found that the nature of the expenses indicates the presence of some business activity during the relevant previous year. 14. Thus, taking note of the contrary stand taken by the petitioner in reporting its return of .....

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That apart, the first respondent noted that the petitioner has come forward with the theory of an error being committed while filing the income tax return only during the scrutiny assessment proceedings, despite the fact that the petitioner undergo statutory financial audit as per the provisions of the Act and having resources to engage the best professionals in the field to handle its mandatory obligations under the Act. Thus, the first respondent has considered the materials, examined the cor .....

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ment proceedings, when a personal hearing was offered, the petitioner for the first time took a stand that an inadvertent error had occurred while filing the income tax returns for the relevant year namely, 2012-13 and that error is a keying error. Such contention was raised by the petitioner stating that except the income from house property and other sources , they have no other income and there is no business income and therefore, it is a keying error. If such is the stand taken by the assess .....

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itioner rightly held that the petitioner had time to file revised returns upto 31.03.2014 and did not do so, and only during the scrutiny assessment proceedings, such a plea was raised which cannot be considered and rightly relied on the decision of the Hon'ble Supreme Court in the case of M/s.Goetze India (supra) stating that he had no jurisdiction to entertain the petitioner's plea. The Revisional Authority considering the scope of his power under Section 264 of the Act went a step ahe .....

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