Bombay High Court
Ramesh Madhukar Deole vs The Principal Commissioner Of Income ... on 18 November, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:18842-DB
5.WPL21084_2023.DOC
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 21084 OF 2023
Ramesh Madhukar Deole ... Petitioner
Versus
The Principal Commissioner of Income Tax, Mumbai- ...Respondents
20 & Ors.
Mr. Mihir Naniwadekar, Ms. Rucha Vaidya a/w. Mr. Ruturaj H. Gurjar for
the petitioner.
Ms. Mamta Omle for the respondents.
_______________________
CORAM: G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
Date : 18 November, 2024
_______________________
Oral Judgment (Per: G. S. Kulkarni, J)
1. This petition under Article 226 of the Constitution of India challenges
an order dated 24 March, 2023 passed by respondent no. 1-Principal
Commissioner of Income tax (PCIT) whereby the petitioner's Revision
Application filed under the provisions of Section 264 of the Income-tax Act
(for short "I.T. Act") against an ex-parte assessment order dated 2 June, 2021
passed by respondent no. 3-NFAC under Section 143(3) read with the
provision of Section 144B of the I.T. Act, has been dismissed on the ground
that the Revision Application was not maintainable.
2. The petitioner's contention is that although a reasoned order is passed
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by PCIT accepting the petitioner's case as seen from paragraph 6 of the
impugned order, the same has been erroneously and contrary to the well-
settled position in law, has been held to be not maintainable. The PCIT inter
alia held that the refund was also not maintainable for a reason that the
petitioner had failed to produce certain materials in response to the notice
dated 15 April 2021 issued to the petitioner. It is in these circumstances, the
petitioner is before the Court assailing the impugned order passed by the PCIT
rejecting the petitioner's Revision Application.
3. The Assessment Year in question is 2018-19, for which the petitioner
filed its return of income on 31 July, 2018. The petitioner, however, realized
that the return of income was filed in the wrong form (ITR-4) on an incorrect
advice. The petitioner therefore filed the corrected return of income under
ITR-3 wherein he claimed deductions and exemptions from capital gains under
Section 54F in the context of the petitioner's acquisition of Flat No. 1001,
which was a consequence of surrender of tenancy, and having acquired a flat in
the redevelopment of the building, for which the petitioner had paid
consideration as also some amounts were paid for additional area.
4. The petitioner has contended that the petitioner's case was selected for
scrutiny and a notice under Section 142(1) was accordingly served on the
petitioner on 18 January, 2021. The petitioner engaged a Chartered
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Accountant to represent him before the department, who had made
submissions on the issue of capital gains, which according to the petitioner, was
exempt from tax under Section 54F. This for the reason that the amount
represented gain from sale of long term capital asset (tenancy rights in house)
which was reinvested in the new house.
5. On such backdrop, show cause notice dated 15 April, 2021 was issued to
the petitioner requiring documentation substantiating the capital gains of
Rs.52.12 lakhs, however, the petitioner-Chartered Accountant did not comply
with the notice dated 15 April, 2021 and consequently the Assessing Officer
proceeded to pass ex-parte assessment order dated 2 June, 2021. We need not
delve on the details of the assessment order, suffice it to observe that the
petitioner being aggrieved by the ex-parte assessment order had approached
PCIT in Revision filed under section 264 of the I.T. Act praying for deletion of
additions which were made of Rs.25,29,600/- and Rs.52,12,446/-. The
petitioner submitted all materials in that regard, before the Revisionary
Authority. However, by the impugned order, the Revision came to be rejected
by the PCIT being not maintainable as noted by us hereinabove.
6. Mr. Nandiwadekar, learned counsel for the petitioner primarily has two-
fold submissions to assail the impugned order. Firstly, he contends that the
impugned order passed by PCIT is completely oblivious of the powers and
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jurisdiction vested in the PCIT under section 264 of the I.T. Act, which
according to him, are well-settled to be very wide referring to the decision of
this Court in Smita Rohit Gupta vs. Principal Commissioner of Income-tax 1
and Bahar Infocons (P.) Ltd. vs. Principal Commissioner of Income-tax 2.
Second contention of Mr. Naniwadekar is that once in paragraph 6 of the
impugned order, the PCIT has taken into consideration and not disputed the
petitioner's case on merits, the conclusion as arrived by it was certainly
erroneous, namely, to hold that the petitioner's revision application was not
maintainable. It is, therefore, his submission that it is appropriate that the
impugned order is set aside and the proceedings are remanded to the
Revisionary Authority for a fresh decision.
7. Ms. Omle has relied on the reply affidavit of Mr. Sanjay Kumar filed on
behalf of the department. She supported the impugned order. However,
insofar as the position in law as urged on behalf of the petitioner is concerned,
she would not dispute the principles of law.
8. Having heard the learned counsel for the parties and having perused the
impugned order and the record, we may observe that certainly considering the
well-settled principles in law, the PCIT should not have rejected the
1
(2024) 158 taxmann.com 157 (Bombay)
2
(2024) 167 taxmann.com 179 (Bombay)
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petitioner's revision application as not maintainable. Mr. Naniwadekar would
also be correct in placing reliance on the decision of this Court in Smita Rohit
Gupta (supra) wherein referring to the decision of this Court in Hindustan
Diamond Company (P.) Ltd. vs. CIT 3, the Division Bench of this Court has
held that exercise of power under section 264 was not subject to the power of
the Assessing Officer to make adjustment under section 143(1) of the Act. It
was held that the power of the Commissioner under section 264 is rather wide
and even the error committed could be rectified. The Division Bench in
Hindustan Diamond Company (P.) Ltd. also observed that the proceedings
under Section 264 are intended to meet the situation faced by an aggrieved
assessee who is unable to approach the appellate authority for relief and has no
other alternate remedy available under the Act.
9. In Smita Rohit Gupta (supra), the Division Bench also referred to
decision of Vijay Gupta vs. CIT4 wherein the Delhi High Court observed it to
be a clear position from various judicial pronouncements, that the powers
conferred under Section 264 of the Act are very wide. It was also observed
that since Section 264 uses the expression "any order", which would imply that
the section does not limit the power to correct mere errors committed by the
3
(2003) 175 Taxation 91
4
(2016) 68 taxmann.com 131
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subordinate authorities but could even be exercised where errors are committed
by assessees. It was observed that it would even cover situations where the
assessee on an error has not put forth a legitimate claim, at the time of filing the
return and such error is subsequently discovered and raised for the first time in
an application under section 264.
10. In Bahar Infocons (P.) Ltd. (supra), the Division Bench of this Court, to
which one of us (G.S. Kulkarni, J.) was a member, observed that Section 264
was a salutary provision which bridges the gap and/or removes the vacuum to
remedy a bona fide mistake and/or for correction of an inadvertent situation,
which may take place in the assessment proceedings. It was observed that by
remedying such mistake by orders being passed under Section 264 of the Act,
any illegality or injustice which would otherwise be caused to the assessee can
be corrected, so as to maintain a lawful course of action being followed in the
course of assessment. The Court also observed that the object of such
provision appears to be that the law would not be oblivious to any bona fide
human mistake which may occur at the end of the assessee and which if
otherwise permitted to remain, may lead to injustice or the provisions of law
being breached.
11. In this view of the matter, considering the aforesaid position in law, we
are of the clear opinion that the cause in the present case warranted that the
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revision be decided on merits and more particularly considering the case of the
petitioner, which although was noticed in paragraph 6 of the impugned order,
was not taken to its logical conclusion, merely on a erroneous presumption in
law that the revision is not maintainable for a reason that the petitioner had
failed to produce certain materials in response to notice dated 15 April, 2021.
In our opinion, there is a manifest error on the part of PCIT in coming to such
conclusion to hold the revision not maintainable in the facts of the present
case.
12. In light of the above discussion, Writ Petition needs to succeed. Hence,
the following order:
ORDER
(i) The impugned order dated 24 March, 2023 is quashed and set aside.
(ii) The petitioner's Revision application are remanded to PCIT to be decided in accordance with law and an appropriate order be passed thereon within a period of three months from today.
13. Disposed of in the aforesaid terms. No costs.
(ADVAIT M. SETHNA, J.) (G. S. KULKARNI , J.) Page 7 of 7 18 November, 2024 Signed by: Vidya S. Amin Designation: PS To Honourable Judge Date: 21/11/2024 21:43:03