M/S ASSAM ROOFING LTD V. THE COMMISSIONER OF INCOME TAX and ANR

WP(C)/3660/2006

AI Insights

The case involves a public limited company challenging the order of the Commissioner of Income Tax, Guwahati - II, which dismissed their revision petition as not maintainable. The company had initially filed an income tax return for the assessment year 2002-2003, which was accepted by the Assistant Commissioner, leading to a refund. Subsequently, the company noticed errors in their return regarding disallowances under Section 43(b) and misclassification of a revenue receipt. The Commissioner dismissed their revision petition, stating the company could not raise grievances against its own return post-acceptance. The High Court, referencing a similar case from the Gujarat High Court, found that the Commissioner erred in not entertaining the revision and directed that the revision be considered on its merits.

• Counselvise Citation: [2006] 140 COUNSELVISE.COM (IT) 748169 (HC-GUWAHATI)
• Appeal Type: Others
• Pronouncement Date: 01-12-2006
• Assessment Year: misc
• Other Referred Cases: C. Parikh & Co. vs. Commissioner of Income Tax, Baroda
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: LEARNED STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT
• Assessee Lawyers: G K JOSHI
• Keywords: Assessment Year; Income Tax; Maintainability; Mistake in return; Revision petition
• Section: 143(1); 264; 226; 227

Judgement Text

"WP(C) 3660/2006 BEFORE HON’BLE THE CHIEF JUSTICE MR. A.M. SAPRE HON’BLE MR. JUSTICE A.K. GOSWAMI (A.M.Sapre,CJ) By filing this writ petition under Article 226/227 of the Constitution o f India, the writ petitioner (an income tax assessee) seeks to challenge the ord er dated 20.2.2003 (Annexure - VI) passed by the Commissioner of Income Tax, Guw ahati - II under Section 264 of the Income Tax Act (for short hereinafter called - the Act ). Facts of the case are short. They, however, need mention in brief infra. The petitioner is a public limited company registered as such under the Companie s Act. They are engaged in the business of manufacture and sale of asbestos ceme nt sheets, galvanized iron sheets (plain and corrugated). The manufactured goods are sold by the petitioner all over the country. The petitioner filed their income tax return for the assessment year (2002-2003) on due date. The Assistant Commissioner of Income Tax Circle - 3, Guwahati, who was an Assessing Authority for the petitioner, accepted the return filed by the petitioner in toto and accordingly, issued an order/intimation dated 13.2.2003 under Section 143 (1) of the Act in favour of the petitioner. As a result of acc eptance of the return, the petitioner became entitled to claim the refund for a sum of Rs.87, 969/- including interest on the said sum of Rs. 6068/-. It was acc ordingly paid to the petitioner. The petitioner then noticed two mistakes in their return. In the first place, it was noticed that it had wrongly claimed disallowance under Section 43 (b) for R s. 80, 77,832/- in place of Rs. 11, 32,623/-. In other words, according to petit ioner, instead of claiming disallowance of Rs. 11, 32,623/- under Section 43(b), they claimed disallowance of Rs. 80, 77,832/-. In the second place, it was noti ced that a sum of Rs.55,555/- spent by the petitioner during the assessment year s in question for installation of DG sets was claimed as revenue receipt whereas , according to it, the same should have been claimed as capital receipt. The petitioner, therefore, filed a revision petition under Section 264 of the Ac t before the Commissioner of Income Tax, Guwahati -II on 30.1.2004 seeking revis ion of the order/intimation dated 13.2.2003 of the Assessing Authority in relati on to the two mistakes, which, according to the petitioner, had crept in their r eturn and prayed for grant of an appropriate relief. The Commissioner of Income Tax by impugned order dismissed the revision as not m aintainable. In his opinion, since the return was accepted in toto by the Assess ing Authority and as even the refund was granted, the petitioner neither had rig ht to raise any grievance of any nature against its own return and nor it had a right to file revision against such order under Section 264 ibid. It was, there fore, dismissed as not maintainable without going into the merits of the issue r aised by the petitioner in their revision petition. The order of the commissioner reads as under:- In this connection the assessee has filed petition u/s. 264 of the I.T.Act agai nst the order passed by the AO u/s. 143(1). The assessee’s grievances are as und er:- a) Disallowances’ u/s 43B has been wrongly made for Rs.21,77,832/- against the correct amount of Rs.11,32,623/- AO be directed accordingly. b) Adjustment of capital subsidy of Rs.55,555/- as revenue receipt. In response to this office notice Shri M.L.Rajak Deputy Manager (Accounts) appea red with written submission and the case was discussed with him. On going through the assessment record it is seen that the assessee has filed to tal business loss of Rs.81,32,160/- thereby claiming a refund of Rs.81,901/-. It is also seen from the record that the AO has processed the return of loss as pe r the loss return filed by the assessee at Rs.81,32,160/- and also issued the re fund as claimed by the assessee i.e. Rs.81,901/- by giving interest of Rs.6,068/ -. The above facts reveal that the assessee is not aggrieved by the order of the AO passed u/s 143(1). The issues/the grievances mentioned in the assessee’s petiti on are not arisen out of the order passed by the AO and as such it has no relati on to the order passed by the AO. Therefore it is not an issue which can be deal t with u/s. 264 as it is not an issue/grievance arisen out of the order passed b y the AO. I hereby therefore decline to interfere in this matter. This order is passed u/s. 264 of the I.T.Act. It is against this order, the assessee had felt aggrieved and filed this writ pe tition under Article 226/227 of the Constitution of India. Heard Mr. GK Joshi, learned senior counsel for the petitioner and the le arned Standing Counsel for the Income Tax Department. Learned senior counsel for the petitioner, placing reliance on the law laid down in 122 ITR 610 (Guj), 132 ITR 619 (All),150 ITR 105 (Ker), 211 ITR 925 (Guj), 2 51 ITR 873 (Guj), 262 ITR 638 (Cal), 262 ITR 633 (Cal) 77 ITR 6 (SC), 210 ITR 79 9 (Guj), 276 ITR 165 (Guj), 339 ITR 310 (Guj), 258 ITR 401 (Del), 267 ITR 289 (K er), 349 ITR 404 (Bom), contended that the Commissioner erred in rejecting the p etitioner’s revision as not maintainable. It was his submission that applying th e principle laid down in the decisions cited at the bar, the revision filed by t he petitioner under section 264 should have been held maintainable and, therefor e, it should have been entertained for deciding the same on its merits. In reply, learned counsel for the respondent (revenue) supported the impugned or der and prayed for its upholding. Having heard the learned counsel for the parties and upon perusal of the record of the case, we find force in the submissions of learned counsel for th e petitioner and hence, are inclined to allow the writ petition, in part, as ind icated infra. In our considered opinion, the case decided by the Gujarat High Court re ported in 122 ITR 610 (C. Parikh & Co. vs. Commissioner of Income Tax, Baroda,) apart from being the first on the issue, in question, is almost nearer to the ca se in hand in all respects and we find no good ground to take a view different t o the one taken in the Gujarat case. In somewhat similar circumstances, the assesee in the case of C. Parikh (supra) had claimed that it had committed mistake in totaling of purchases in its retur n and which it noticed after the assessment order was passed under Section 143 ( 3) of the Act. The assessee, therefore, filed a revision under Section 264 ibid before the Commissioner and contended therein the mistakes noticed by it, which made it, pay more tax. The Commissioner declined to entertain this ground holdin g that such ground cannot be made subject matter of scrutiny in the revision pet ition filed under Section 264 ibid because it was the mistake committed by the p etitioner and, therefore, it was not entitled to raise the grievance in the revi sion. This is what was held by the Commissioner (reproduced in the judgment by the Hi gh Court), while declining to entertain the revision filed by the assessee:- The commissioner was of the view that his revisionary powers did not extend to giving relief to the assessee on account of the assessee’s own mistake which he detects after the assessment is completed. In this view of the matter, he (commi ssioner) refused to give any relief to the petitioner in respect of the under to talling of the purchase to the tune of Rs. 20,000. The petitioner (assessee) has challenged the commissioner’s order to the extent he has refused to give relief in respect of the under totaling of purchases to the extent of Rs. 20,000. The High Court then formulated the following question for deciding the petition: - The only question which arises for our determination is whether the Commissione r, in exercise of powers under S.264, could have given relief to the petitioner in respect of the under-totalling of the purchases to the extent of Rs.20,000? It is this question, which was examined by the High Court in the light of scope and powers of the Commissioner under Section 264 ibid, and after examining the i ssue, it was held as under:- It is clear that under S.264, the Commissioner is empowered to exercise revisio nal powers in favour of the assessee. In exercise of this power, the Commissione r may, either of his own motion or on an application by the assessee, call for t he record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee, as he thinks fit. Sub-Sections (2) and (3) of S.264 provide for limitation of one year for the exercise of this revisional power, whether suo motu, or at the instance of the assessee. Power is also conf erred on the Commissioner to condone delay in case he is satisfied that the asse ssee was prevented by sufficient cause from making the application within the pr escribed 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 pendin g before the AAC, and (ii) when the order has been subject to an appeal to the I ncome-Tax Appellate Tribunal. Subject to the above limitation, the revisional po wers conferred on the Commissioner under s.264 are very wide. He has the discret ion to grant or refuse relief and the power to pass such order in revision as he may think fit. The discretion which the Commissioner has to exercise is undoubt edly to be exercised judicially and not arbitrary according to his fancy. Theref ore, subject to the limitations prescribed in s.264, the Commissioner in exercis e of his revisional power under the said section may pass such order as he think s fit which is not prejudicial to the assessee. 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 detects 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 revisional powers. Therefore, though the petitioner had not raised the grounds regarding under-totalling of pu rchases before the ITO, it was within the power of the Commissioner to admit suc h a ground in revision. The Commissioner was also not right in holding that the over-assessment did not arise from the order of assessment. In other words, the assessment of the total income of the assessee is not correctly made in the asse ssment 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 wh ere 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 o f assessment or otherwise. In our opinion, the Commissioner has misconstrued the words subject to the provisions of this Act in S.264(1) and read a restrictio n on his revisional power which does not exist. The Commissioner was, therefore, not right in holding that it was not open to him to give relief to the petition er on account of the petitioner’s own mistake which it detected after the assess ment was completed. Once it is found that there was a mistake in making an asses sment, the Commissioner had power to correct it under S.264(1). In our opinion, therefore, the Commissioner was wrong in not giving relief to the petitioner in respect of over-assessment as a result of under-totalling of the purchase to the extent of Rs.20,000. In the result, we allow this petition, quash and set aside the order, annex. C , passed by the Commissioner, respondent herein, to the extent he has refused to give relief to the petitioner in respect of the under-totalling of purchases to the extent of Rs.20,000 and direct the Commissioner to revise the order of the ITO by reducing the assessed income by Rs.20,000. Rule made absolute accordingly. Respondent to pay the costs to the petitioner. As observed supra, we find no good ground to take a different view as taken by t he Gujarat High Court and are completely in agreement with the same. Indeed, lea rned counsel for the respondent ( revenue ) was not able to cite any case taking a contrary view in favour of the revenue and nor was able to point out any erro r or distinguishable features in the view taken by the Gujarat High Court. We ma y also note that the law laid down by Gujarat High Court was consistently follow ed by the Gujarat High Court in subsequent decisions in later years and also by other High Courts cited at the bar by the learned counsel for the petitioner. Apart from the aforesaid facts, we are also of the considered view that scope of revision under Section 264 is wider and different than the scope of revisionary powers exercised by the Commissioner under Section 263 ibid. It is clear from a mere reading of these two Sections (263 and 264). In our view, an order/ intima tion passed under Section 143(1) passed by the Assessing Authority is equally an order, which can be questioned and be made subject matter of revision under Sec tion 264 ibid before the commissioner for deciding the issues raised therein by the assessee on merits. Indeed the expression In the case of any order other than an order to which Sec tion 263 apply , occurring in Section 264, would include an order/intimation pas sed under Section 143(1) and hence, it can be made subject matter of challenge i n Revision by the assessee before Commissioner under Section 264 of the Act. If the argument of learned counsel for revenue is accepted that revision does not lie under Section 264 against such order passed by the Assessing Authority, then, it would result in denying the assessee of his remedy to question the corr ectness of such order passed by the assessing authority so also it would deny it a right to raise its grievance against such order before the higher authority u nder the Act, may be, it was based on own mistake of the assessee or otherwise. In order to, therefore, raise any kind of grievance after the issue is dealt wit h by the Assessing Authority, one of the remedies available to the assessee in s uch circumstances, apart from any other remedy as may be available under the Act , is to invoke the revisionary powers of Commissioner under Section 264 of the A ct against such grievance to call upon the Commissioner to examine the same on m erits in its revisionary jurisdiction in accordance with law. In the light of foregoing discussion, the writ petition succeeds and is allowed in part. The impugned order of the Commissioner dated 20.2.2003 (Annexure -VI) i s quashed by issuance of writ of certiorari. The revision filed by the petitione r under Section 264 of the Act is held maintainable. The revision is now restore d to the file of the Commissioner of Income Tax, Guwahati and he is directed to decide the revision on merits with a view to find out as to whether grievances raised by the petitioner (assessee) in its revision petition is acceptable on m erits and if so, how and why, and, if not, then, how and why? Let the revision be decided after affording an opportunity to the petitioner by the Commissioner within six months from the date of this order. A copy of this order be filed before the Commissioner by the parties within thre e weeks from today to enable him to decide the revision as directed above strict ly in accordance with law and without being in any way influenced by our observa tions made in this order. No cost. "