Venkatdharma Reddy Methukupally V. Principal Commissioner of Income Tax

WP/10775/2024

AI Insights

The case involves a writ petition filed by Venkatdharma Reddy Methukupally against the Principal Commissioner of Income Tax, Hyderabad, challenging an order that disallowed his application for revision under Section 264 of the Income Tax Act, 1961. The petitioner had sought to confirm the SRO values as on the date of the agreement and registration of a sale deed, which were not considered in his income tax return, leading to an alleged over-assessment. The High Court found that the reasons provided for disallowing the application were unjustifiable and did not adequately address the legal provisions under Section 264, which allows for correction of mistakes or errors in tax assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 690555 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-12-2024
• Assessment Year: misc
• Other Referred Cases: Vijay Gupta v. Commissioner of Income Tax Delhi-XI
• Laws Referred To: Article 226 of the Constitution of India, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B SAPNA REDDY
• Assessee Lawyers: B NISHITHA
• Keywords: Income tax assessment; Legal error; Revision application; Writ of Mandamus; SRO values
• Section: 264; 56(2)(x)

Judgement Text

"[ 3430 ] HIGH COURt'FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) TUESDAY, THE SEVENTEENTH DAY OF DECEMBER TWOTHOUSAND AND TWENry FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION NO:1 0775 0F 2024 Between: Venkatdharma Reddy Methukupally,. -S/o vears. H.NO. 3-6-23411-5' FNO 401 fuimayatnagar, HYderabad - 29 AND . Late Narsimha ReddY, Age 58 Vaishnavi Enclave, St. No. 15' ...PETITIONER 1 . Principal Commissioner of lncome Tax, Hyderabad - 1 ' i. cditiSrizea erocessini' Ceni\"i \"-fitins U-nit' lncome Tax Department' ...RESPONDENTS Bengaluru - 560500. Petition under Article 226 oI the Constitution of lndia praying that in the circumstancesstatedintheaffidavitfiledtherewith'theHighCourtmaybe pleased to issue a writ, direction or order more particularly in the nature of a writ of mandamus declaring the Order bearing DIN No llBNCOMlFl17l2O23- 2411061740090(1) dated 2gt)2l2)24 passed by the Respondent No' 1 for the assessmentyear2022-23asbeingvoid,illegal'arbitrary'andviolativeofArticles 14 and 265 of the constitution of lndia and consequently set aside the same by directing the Respondent No. 1 pass appropriate orders by taking into consideration the Market Value certificate submitted by the Petitioner' Counsel for the Petitioner: M/s' B'NISHITHA FOR M/s' M'NAGA DEEPAK a;;;;;i for the Respondentir M/s' B'SAPNA REDDY' JUNIoR SC FgI- - -- SRI J.V.PRASAD, Sr' SC FOR INCOME TAX The Gourt made the following: ORDER 7 THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION No.1O775 of 2024 ORDER.' /per Hon'bLe Si Justice Sujoy Paul) Ms.B.Nistritha, learned counsel for the petitioner and Ms.B.Sapna Reddy, learned Junior Standing Counsel representing Sri J.V.Prasad, iearned Senior Standing Counsel for lncome Tax Department, ap,pears for respondents. 2. With the r:onsent, finally heard. 3. This petition Iiled under Article 226 of the Constitution of India takes exr:eption to the order dated 29 .O2.2O24, whereby, respondent No. 1 disallowed the application of petitioner filed under Sectiorr iO+ of the Income Tax Act. .t961 (for short \"the tr,ct\") seeking revision. 4. The adm;ltted facts between the parties are that agreement to sale was enr-ered into on 08.11.2021, whereas, tht: sale deed was registered on 71.O3.2O22. The Return was filed on 31.72.2022. Ttre petitioner hled an application under Section 264 of the Act a1on61 with Annexure-Il issued by S.R.O. to r:onfirm the SRO values prevailing as on the date of agreement and the date of registration. The said revision of petitioner was rejected by assigning following reasons: - 2 \"8. I have perused tlle contentions of the assessee and the material available on record' The assessee has voluntarily admitted the amount of Rs-55,86,OO0/-, being the difference ;;;\"^ the registered SaIe Deed Value as per SRo and the .\"t,ra \"rf. con\"\"ide.ation (i.e. Rs'2,95,86,O00-Rs 2'40'OO'000) \"ra.. tt\" head. Income from Other Sources and paid taxes accordingly. The assessee claims that the relief/benefrt \"\"J\"tf.\"tl him has not been claimed at ttre time of filing the n\"t\".t o, 3l-12-2022 due to non-availability of SRO values' He further claimed that to avoid litigation and levy of possible ;;;ti\"\", he disclosed the'above deemed income ald paid the all applicable taxes. 8. 1. It is pertinent to mention that the date of sale agreement *r.\" OS.ft.ZOZl, date of registr^ation was |T.OS.ZOZZ and the date of frling of return is 31 12'2022 ' A\"=.\"\"\"\" had an ample of time to claim tJle actual price il frling of return of iniome. The assessee is well aware of the irt\"E pr\"u\"itirrg on the date of agreement and as well as on tJle a.t\" \"f registr:ation. Now, the lssessee has come $ith an ;;;;;;.i;; tls 264 just to set the advantase of the ,eiuction in SRO values. In the Computation of Total Income Statement, the assessee himself voluntarily offered the diff\"..r.\" income under Sec 56(2)(x) under the head Income frorn Otfr\". Sources and the Present claim is clearly just an .ttettt\"ogt t. The income offired while frling the Return is not a mistake crept or an error' It also does not fall under the Jai.e;lj of ,rot \"1ri-irrg a legitimate claim .The facts of the \"\"\".-f#\" relied upon by the-assessee are different from the facts of the assessie's case' In view of the above discussion' facts and circumstances of the case, the assessee's claim does \"\"i.o-. under ttre purview of Sec'264 of t1-e Income-tax Act' 1961; and hence dismissed.\" 5. Criticizing the findings, (EmPhasis suPPlied) Iearned counsel for the petitioner submits that para No.4 of the impugned order itself shows that the petitioner has filed the relevant Annexure-Il to establish the SRO value. The petitioner's revision was rejected mainly for twin reasons. Firstly, on the ground that the petitioner' while filing the Return of income, was aware of the SRO rates prevailing' but' did ): ll ! I I I I 3 not claim benefit of the same. Secondly, in order to get advantage of reduction in SRO values, as an aJterthought, the application under Section 2',64 of the Act is filed. 6. Learned counsel for the petitioner by placing reiiance on the Division Bench judgment of Delhi High Court in Vijay Gupta v. Commissioner of Income Tax Delhi-Xlflt submits that even error committed by an Assessee can be a reason to exercise power under Section 2',64 of the Act. The power under Sectiort 264 of ll;re Act is wide enough to take care of such mistakes. This judgment was cited beforr: respondent No.1, but, no heed is paid to the said judgment. So far second reason is concerned, it is submitted that the finding is p,s1ys15s in nature, becamse, ng material is quoted as to how the finding is recorded that petitioner's attempt was to take advantage of reduction in SRO values. No such document showing reduction in SRO values is referred. For these reasons, the impugned order may be interfered with. 7. Learned Standing Counsel for Income Tax I)epartment supported the impugned order and urged that there is no error in the impugned order. The petitioner was given an opportunity of ' MINUTDE/o;+zl:o t6 4 hearing. After following \"the due process\" the impugned order has been passed. 8. A careful reading of the impugned order shows that the twin reasons highlighted by learned counsel for the petitioner became operative reason to disallow.the application under Section 264 of the Act. The Delhi High Court in Vijay Gupta's case opined as under: \"35. From the various judicial prorlouncements, it is setfled that the powers conferred under section 264 of the Act are very wide. The Comrnissioner is bound to apply his\"mind to the question whether t]-e petitioner was taxable on that income. Since section 264 uses ttte expression \"any order\", !! would implv that the section does not lirnit the power to correct errors committed bv the subordinate authorities but could even be exercised where errors are committed by assesses. It would everr cover situations where the assessee because of an error has not Put forth a legitimate cl,aim at the time of filing the return and the error is subsequently discovered aad is raised for the frrst time in an application under Sectiou 264. 36. An assessee is liabie 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 aay restrictioa on the Commissioner's rewisional Poqrer to give relief to the assessee in a case where the assessee detracts mistakes because of which he was over- assessed alter the assessment was completed. Once it is found that there was a mistake in making an assessment, tJle Comrnissioner had power to correct it under s. 264(1): Vlhen the substantive law confers a benefit on the assessee under a statute, it cautrot be taken away by the adjudicatory authority on mere techaicalities. It is settled proposition of law that no tax can be lewied or recovered without authority of law. Article 265 of t] e Constitution of India and section 1 14 of the State Constitution imposes al embargo on irnposition and collection of tax if the same is without authority of 1aw.\" (Emphasis supplied) 5 9 . A plain reading of these paragraphs makes it clear that even if, ar errc,r is committed by al Assessee, it can tre gone into in exercise of power conferred under Sectio n 264 of the: Act, which was held to be \"very wide\". Considering the aforesa,rd, the first reason for not exercising power under Section 264 of the Act cannot sustain judicial scrutiny. Even if details about SRO value is not discloserl in the Return, revision under Section 264 of the Act is indeed maintainable. It is alother aspect, u,here after considering the matter, the revision authority may takt: a different view on merits, but, it cannot decline consideration, when the Assessee commits a mistake/error. Secondly, as rightly highlighted by learned counsel for the petitioner, the application under Section 264 of the Act was rejected by stating that the application uncler Section 264 is hled, just to get aclvantage of reduction in SRO values. 10. No iota of reason is mentioned in the impugned order as to why the Annexr-rre-Il showing SRO rates mentioned in para No.4 of the impugned order was not applicable or trustworthy. No other SRO value, u.hi<:h is held to be .reduced, one, is also mentioned. 11. We are co:rvinced that both the reasons for not entertaining the application under Section 264 of the Act are ur--justifiable. 6 I Resultantly, the impugned order dated, 29.02.2024 is set aside. The matter is remitted back before respondent No.1. The petitioner agreed to appear before said respondent on O2.O1.2025, for which, no fresh notice will be required to be issued to the petitioner. Respondent No.1 shall rehear the petitioner and pass a fresh order in accordance with law. 12. Accordingly, the Writ Petition is disposed of, without expressing any opinion on the merits of the case. No costs. Miscellaneous petitions pending, il any, shall stand closed. SD/-P. PADMANABHA REDDY / ASSISTANT REGISTRAR / //TRUE COPY// dl SECTION OFFICER To '1 . Principal Commissioner of lncome Tax, Hyderabad - 1. 2. Centr;lized Processing Center, e-Filing Unit, lncome Tax Department, Bengaluru - 560500. 3. OndCC to Mis M.NAGA DEEPAK, Advocate [oPUc] +. One CC to SRI J.V.PRASAD, Sr. SC FOR INCOME TAX [OPUC] 5. Two CD Copies PSK. BS HIGH COURT DATED:1711212024 ORDER WP.No.10775 of 2024 DISPOSING OF THE WRIT PETITION WITHOUT COSTS [, !) O .r<+i 2 f) ( 1 2W (r i 4 4s , L Ei!.!. T C )n l-t1 "