KAMLESH RANI AND ANR V. UNION OF INDIA AND ORS

CWP/7370/2013

AI Insights

The case involves Smt. Kamlesh Rani and another petitioner who challenged the orders passed by the Income Tax Officer and the Commissioner of Income Tax, Karnal, regarding the withholding of a tax refund following the compulsory acquisition of their land. The petitioners argued that the Commissioner erred in dismissing their application under Section 264 of the Income Tax Act, 1961, by relying solely on the dismissal of their earlier application under Section 154, without conducting an independent enquiry. The court found that the powers under Sections 154 and 264 are distinct, with Section 264 allowing for a broader revisional power to ensure compliance with the Act, which was not properly exercised by the Commissioner.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 741057 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 14-11-2013
• Assessment Year: misc
• Other Referred Cases: C. Parikh & Co. Versus Commissioner of Income Tax, O.C.M. Ltd. (London) Versus Commissioner of Income Tax, Allahabad and another, Ramdev Exports Versus Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: YOGESH PUTNEY
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Compulsory Acquisition; Income Tax; Rectification of mistake; Revisional power; TDS Certificate; Refund withholding
• Section: 154; 264

Judgement Text

"C.W.P. No.7370 of 2013 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH C.W.P. No.7370 of 2013. Decided on:-November 14, 2013. Smt. Kamlesh Rani & another .........Petitioners. Versus Union of India and others ...........Respondents. CORAM: Hon'ble Mr. Justice Rajive Bhalla Hon'ble Mr. Justice Dr. Bharat Bhushan Parsoon. ***** Present:- Mr. Pankaj Jain, Advocate for the petitioners. Mr. Yogesh Putney, Advocate for the respondents. Rajive Bhalla, J (Oral) Prayer in this petition is for quashing order dated 4.10.2011 (Annexure P-4) passed by the Income Tax Officer, Ward-1, Karnal as also order dated 18.12.2012 (Annexure P-7) passed by the Commissioner of Income Tax, Karnal. Counsel for the petitioners submits that land belonging to the petitioners was compulsorily acquired and compensation was received after deduction of tax at source. A TDS certificate dated 18.5.2011 was issued for Rs.22,11,774/- and pursuant to return filed, a refund of Rs.80,233/- was Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -2- ordered but was withheld and an assessment order was passed. The petitioners filed a petition under Section 154 of the Income Tax Act, 1961 (hereinafter referred to as, the Act) which was dismissed by holding that there is no error apparent on the face of the record that requires rectification. The petitioners thereafter filed a petition under Section 264 of the Act which has been dismissed on the ground that as application under Section 154 of the Act has already been dismissed, relief cannot be granted under Section 264 of the Act. Counsel for the petitioners submits that Sections 264 and 154 of the Act operate in different fields with the former empowering rectification of mistakes apparent on the face of record and the latter empowering the Commissioner to revise an order. Section 264 of the Act, is a successor to Section 33(A) of the Income Tax Act, 1922 which was inserted with the object of ensuring that assessments are in consonance with provisions of the Act and, therefore, an assessment that violates any provision of the Act, may be rectified by resort to revisional power. Section 264 of the Act also confers power to correct errors committed by an assessee as to any deduction/ exemption not claimed, but available to an assessee. The words “any order”, “any proceeding” and “may pass such order” clearly indicate that power under Section 264 of the Act is unhampered by any legal impediment or provision of the Act except by those imposed by Section 264 of the Act. The impugned order passed on the ground that petition under Section 154 of the Act has already been rejected, is illegal and may, therefore, be set aside. Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -3- Counsel for the revenue submits that a remedy of appeal was available to the petitioners. The petitioners choose not to file an appeal and, instead filed a petition under Section 154 of the Act. The petitioners, therefore, cannot invoke provisions of Section 264 of the Act. It is further submitted that the petitioners having taken a chance by filing a petition under Section 154 of the Act, cannot be allowed to file a petition under Section 264 of the Act for the same relief. It is further contended that whatever be the amplitude or extent of power conferred by Section 264 of the Act, the power is discretionary and cannot be exercised merely because an assessee chooses to approach the Commissioner. The Commissioner has examined merits of the controversy and on finding that the petitioners could not convince the Assessing Officer of the merits of their claim, has rightly dismissed the petition under Section 264 of the Act. We have heard counsel for the parties and perused the record. Chapter XX (E) of the Act contains two significant provisions, namely, Sections 263 and 264. The former is a provision that confers a right upon the Commissioner to revise orders that are erroneous and prejudicial to the interest of the revenue whereas the latter confers power to revise any “other order” whether suo motu or on the basis of an application so filed. Section 264 of the Act reads as follows: “264. (1) In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -4- any proceeding under this Act in which any 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, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. (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 prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period. (4) The Commissioner shall not revise any order under this section in the following cases – (a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal to the Commissioner (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 Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -5- section shall be accompanied by a fee of five hundred rupees. (6) On every application by an assessee for revision under this sub-section, made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision. Explanation. - In computing the period of limitation for the purposes of this sub section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. (7) Notwithstanding anything contained in sub-section (6), an order in revision under sub-section (6) may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation 1 - An order by the Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee. Explanation 2 - For the purposes of this section, the Deputy Commissioner (Appeals) shall be deemed to be an authority subordinate to the Commissioner.” Section 264 of the Act opens with the words “in the case of any order” qualified by the words “other than an order to which Section 263 applies”. The words “any order” have received repeated judicial interpretation to denote every order. The opening words of Section 264 of the Act make it abundantly clear that Section 264 of the Act encompasses Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -6- “any order” and is not confined to any particular variety of order. Section 264 of the Act empowers the Commissioner to either suo motu or on an application by an assessee call for the record of “any proceeding under this Act in which any such order has been passed” and after making “such enquiry” pass “such order” thereon. Section 264 of the Act leaves no ambiguity that it has been enacted to ensure that orders passed and proceedings taken by authorities, subordinate to the Commissioner, are in consonance with provisions of the Act. The amplitude of the power conferred by Section 264 of the Act cannot be suborned to any other provisions of the Act much less by reference to Section 154 of the Act. The only impediments on the exercise of power conferred by Section 264 of the Act are impediments enumerated in Section 264 of the Act itself. The power conferred by Section 154 of the Act to rectify an error apparent on the face of record cannot be read to limit or in any manner denude power conferred by Section 264 of the Act. The extent and nature of this power is further illustrated by sub-section (7) of Section 264 of the Act which does not provide period of limitation for revising an order based upon an order passed by the Appellate Tribunal; the High Court or the Supreme Court. An impediment, however, to the exercise of power under Section 264 of the Act is the filing of a properly constituted appeal, in which case an application under Section 264 of the Act shall not be maintainable. A reading of Section 264 of the Act, thus, leads us to a singular conclusion that words and expressions used in Section 264 of the Act confer Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -7- a right upon an assessee to seek adjudication of an order that is contrary to provisions of the Act and confer an obligation upon the Commissioner to rectify such errors whether committed by the Assessing Officer or the assessee himself. A reference in this regard may be made to the following judgments of various High Courts where a similar opinion has been recorded. (1) C. Parikh & Co. Versus Commissioner of Income Tax (1989) 15 CTR (Gujarat) 64, (2) O.C.M. Ltd. (London) Versus Commissioner of Income Tax, Allahabad and another 1982 Income Tax Reports 689 (Allahabad), and (3) Ramdev Exports Versus Commissioner of Income Tax 2001 Income Tax Reports 873 (Gujarat). A perusal of the impugned order would reveal that apart from referring to Section 154 of the Act and conclusions recorded in the order passed thereunder, the Commissioner has not conducted an independent enquiry as envisaged by Section 264 of the Act nor has he expressed any independent opinion for or against the petitioners. The Commissioner has primarily relied upon the order passed under Section 154 of the Act. We would like to reiterate that powers under Sections 154 and 264 of the Act are entirely different. The former confers power to rectify errors apparent on the face of record whereas the latter confers a revisional power to ensure that assessment orders passed under the Act are not violative of any provision of the Act. The learned Commissioner, in our considered opinion, did not comprehend the nature of his jurisdiction, the Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document C.W.P. No.7370 of 2013 -8- extent of his powers and considering that as his jurisdiction is circumscribed by the order passed under Section 154 of the Act, dismissed the petition thereby committing an error of jurisdiction. In view of what has been recorded hereinabove, the writ petition is allowed, the impugned orders are set aside and the matter is remitted to the Commissioner of Income Tax, Karnal to decide the petition filed under Section 264 of the Act in accordance with the law after conducting an enquiry as envisaged under Section 264 of the Act. Parties are directed to appear before the Commissioner of Income Tax, Karnal on 21.1.2014. (Rajive Bhalla) Judge (Dr. Bharat Bhushan Parsoon) Judge November 14, 2013 'Yag Dutt' Yag Dutt 2014.01.15 18:40 I attest to the accuracy and integrity of this document "