Madras High Court
M/S.Medifield Equipments Corporation vs The Commissioner Of Income Tax on 12 November, 2014
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.11.2014
CORAM
THE HONOURABLE MR. JUSTICE T.S.SIVAGNANAM
W.P.No.13408 of 2010
M/s.Medifield Equipments Corporation
represented by its Partner
C.Govindarajan Gupta ... Petitioner
vs.
The Commissioner of Income Tax,
Chennai VII, Chennai. ... Respondent
Writ petition filed under Article 226 of the Constitution of India to issue a writ of Certiorarified Mandamus, to call for the records of the respondent Commissioner of Income Tax, Chennai VII, Chennai in his file C No.7032(1)/CIT-VII/2008-09 dated 31.3.2010 for assessment year 2002-03 and quash the same and direct the respondent to entertain and consider the Revision Petition on merits.
For Petitioner : Mr.T.N.Seetharaman
For Respondent : Mr.T.Pramod Kumar Chopda
O R D E R
In this writ petition, the petitioner seeks a Writ of Certiorarified Mandamus, to quash the order dated 31.3.2010 passed by the respondent Commissioner of Income Tax-VII, Chennai, under Section 264 of the Income Tax Act, 1961 (hereinafter shortly referred to as Act) for the Assessment Year 2002-03 and to direct the respondent to entertain and consider the Revision Petition filed by the petitioner on merits.
2.The facts, which led to filing of this writ petition, are as follows:
(a)The petitioner is a Firm, carrying on business of supplying hospital equipments and they filed their return admitting total income of Rs.6,14,372/- for the assessment year 2001-02. In the course of the assessment proceedings, there was a difference of Rs.11,41,607/- under the head installation charges in its account with KG Hospital, Coimbatore. Subsequently, the petitioner offered the said amount as additional income for the assessment year 2001-02 and the assessment was completed by order dated 22.3.2004 adding the sum of Rs.11,41,607/- towards installation charges relating to KG Hospital. Thereafter, the petitioner filed its return for the assessment year 2002-03 on 28.10.2002, admitting total income of Rs.7,50,462/- on the basis of its accounts for the year ended on 31.3.2002. It is the case of the petitioner that in arriving at the said income, Rs.11,41,607/- being the installation charges relating to KG Hospital had been included. The return so filed was processed under section 143(1) of the Act on 12.6.2003 accepting the income returned. Therefore, the petitioner would contend that Rs.11,41,607/- has been offered and assessed in the assessment order dated 22.3.2004 for the assessment year 2001-02 and the same has been included in the return filed earlier on 28.10.2002 for the assessment year 2002-03 and assessed in that year also.
(b)Thereafter, the petitioner filed the revised return for the assessment year 2002-03 on 24.3.2005, excluding the installation charges of Rs.11,41,607/-, which has already been charged to tax in the assessment year 2001-02. The Assessing Officer did not take any action on the revised return filed by the petitioner. Hence, the petitioner filed a Revision Petition under section 264 of the Act on 15.4.2008 before the respondent claiming deletion of Rs.11,41,607/- on the ground that it has been taxed twice. Since the Revision Petition was filed beyond the period of limitation, as provided under Section 264(3) of the Act, the petitioner filed a petition for condoning the delay in filing the Revision Petition.
(c)The respondent by the impugned order dated 31.3.2010, condoned the delay in filing the Revision Petition, but rejected the prayer sought for by the petitioner by stating that as per Section 139(5) of the Act, if any person having furnished a return under section 139(1) or in pursuance of a notice issued under section 142(1) discovers any omission or any wrong statement therein, he may furnish revised return of income on any time before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Keeping the said provision in mind, the respondent stated that the assessee filed the revised return on 24.3.2005, which was beyond the time limit stipulated under section 139(5) of the Act. As such, filing of the revised return is not within the scope of Section 139(5) and no action need to be taken on such return. Therefore, the respondent observed that the Assessing Officer did not take any action on the revised return filed by the assessee for the assessment year 2002-03 and the same is in confirmity with the law and no illegality can be attributed to such action of the Assessing Officer. Accordingly, the respondent dismissed the Revision Petition as devoid of any merits. The said order is challenged in this writ petition.
3.The learned counsel for the petitioner contended that the petitioner has been taxed twice for the amount of Rs.11,41,607/- under the head installation charges relating to KG Hospital and the said fact has not been considered by the respondent. It is further submitted that the respondent failed to take into consideration the Circular issued by the Board in Circular No.14 (XL-35) dated 11.4.1955, by which, certain instructions were given to the officers of the department, as to how the assessment proceedings have to be done under Section 143(1) and the manner in which the assessee has to be dealt with by the officials and also the attitude, which has to be borne in mind by the Assessing officer, while scrutinising the returns and in the case of any refund or relief to which they appear to be clearly entitled, the assessee should be granted such relief. The learned counsel for the petitioner relied on the decision of the High Court of Jammu and Kashmir reported in (2004) 140 TAXMAN 156 (J&K) (Sneh Lata Jain v. Commissioner of Income Tax) and the decision of the Gujarat High Court reported in 2001 Vol.251 ITR page 873 (Ramdev Exports v. Commissioner of Income Tax). Therefore, the learned counsel prayed that the impugned order may be quashed and the respondent may be directed to consider the Revision Petition filed by the petitioner on merits.
4.Per contra, the learned standing counsel for the respondent submitted that the impugned order clearly states the legal position and the petitioner filed the revised return on 24.3.2005, which is beyond the limitation period, in the light of sub section (4) to Section 139 of the Act. Therefore, it is submitted that when there was no valid revised return on the file of the Assessing Officer, the question of considering such return, which is non-est in law, does not arise and the respondent was justified in rejecting the prayer sought for by the petitioner. It is submitted that for the purpose of claiming deduction, the petitioner can very well approach the Board and the Board is empowered under Section 119(2) of the Act to admit any application or claim for any exemption, deduction, refund or any other relief, after the expiry of the period specified by or under this Act for making such application of claim and deal with the same on merits and in accordance with law, which includes Section 139. On the above grounds, the learned standing counsel seeks to sustain the impugned order.
5.Heard the learned counsel for the petitioner and the learned standing counsel for the respondent and perused the materials placed before this Court.
6.The short issue, which falls for consideration in this writ petition is regarding the scope and jurisdiction of the respondent while exercising the power under Section 264 of the Act.
7.For better appreciation, Section 264 of the Act is extracted below:
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 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 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 129and 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. In terms of the above provision, the Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under the 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 the Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. The language employed in Section 264 gives wider powers to the Commissioner and such power may be exercised either suo motu or on an application by the assessee. The power of revision includes the power to call for the record of any proceeding under the Act, in which, any order has been passed and the Commissioner is empowered to make inquiry or cause inquiry to be made and subject to the provisions of the Act, pass order thereon, not being an order prejudicial to the assessee. As such, the language of statute does not restrict the powers of the Commissioner in any manner.
8.When that being the scope of Section 264, the manner in which, such powers have to be exercised by the Officers of the department is dealt with in the circular issued by the Board. In this regard, it is relevant to look into the Circular No.14 (XL-35) dated 11.4.1955, which issued certain guidelines, which read as follows:
"Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard, the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should:-
(a)draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other
(b)freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs."
The above circular would make it clear that the officers of the department has to bear in mind that they should not take advantage of ignorance of an assessee as to his rights and it is the duty cast on the department to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs. The Board also insisted the officers to take initiative in guiding a taxpayer, where proceedings or other particulars before them indicate that some refund or relief is due to him.
9.That being the powers and duties of the Commissioner, when the revision petition was not filed within the limitation period and separate petition was filed, for condonation of delay, showing sufficient cause which prevented the petitioner from approaching the Commissioner within the time stipulated period, the Commissioner entertained the condone delay petition and was satisfied with the reasons assigned by the petitioner and condoned the delay, in exercise of power under sub section (3) to Section 264. In normal circumstances, the Commissioner, after condoning the delay in filing the revision petition, should take up the revision petition on merits and consider the claim of the assessee, in terms of Section 264. Whereas, in the present case, the Commissioner did not examine, as to whether the claim of the petitioner that it has been taxed twice for the amount of Rs.11,41,607/-, was bonafide, but the Commissioner proceeded with the aspect, as to whether the revised return for the assessment year 2002-03 filed by the petitioner on 24.3.2005 was valid. While considering this issue, the Commissioner relied on Section 139(5) of the Act and observed that the revised return was filed beyond the time limit and therefore, the Assessing Officer did not take any action on the revised return and the same was in confirmity with the law. In my considered view, going by the language of Section 264, the Commissioner should have gone into the factual aspect as to whether the assesssee was taxed twice for the said amount and the same should have been done, in the light of the wider powers conferred on the Commissioner, as discussed by this Court in the preceding paragraphs.
10.In fact, in the decision reported in (2004) 140 TAXMAN 156 (J&K) (Sneh Lata Jain v. Commissioner of Income Tax) (cited supra), which is identical as that of the present case, the assessee had filed her return under section 139 and the Assessing officer processed return under section 143(1) and raised a demand for a certain amount. Thereafter, the assessee approached the revisional authority by raising a plea of non-disclosure of certain facts in the income tax return and claiming benefits. It is observed by the Jammu and Kashmir High Court that the assessee had the remedy of filing a revised return provided the steps were taken within the time prescribed under section 139 and that having not been done, she allowed the assessment order to be passed and thereafter, realised the mistake which was incurable after the lapse of time. It is further observed that once it was found that the assessee had no tax liability, the respondents could not be permitted to levy tax and collect same in contravention of Article 265. The Jammu and Kashmir High Court also pointed out that the Commissioner has discretion to invoke the revisional jurisdiction under Section 264. Once he entertains a revision, he has the power to call for the record of any proceedings under the Act and is also entitled to make any inquiry himself or cause any inquiry to be made and pass such order as he thinks fit. The revisional authority have widest possible powers under section 264 was required to hold an inquiry or cause any inquiry to be held and consider the question raised by the assessee.
11.It is observed by the Gujarat High Court in the judgment reported in 2001 Vol.251 ITR page 873 (Ramdev Exports v. Commissioner of Income Tax) (cited supra) that it is open to the revisional authority to look into the deductions which might be claimed by the assessee for the first time. Even if the return as submitted by the assessee is accepted by the Assessing Officer and if thereafter the assessee comes to know about some mistake omitted, where either he was eligible for more deduction or had paid more tax, he can approach the revisional authority and in such an event, it is open to the revisional authority to exercise its jurisdiction under section 264 of the Income Tax Act, 1961. In my considered view, the decisions relied on the side of the petitioner are squarely applicable to the facts of the present case.
12.In the light of the above discussions it is held that the Commissioner has wide power under Section 264 and in exercise of such power, the Commissioner ought to have considered the claim of the petitioner, as to whether it has been taxed twice for the amount of Rs.11,41,607/- under the head installation charges relating to KG Hospital.
13.In the light of the above conclusion, the issue as to whether the petitioner has to approach the Board under section 119(2), does not arise of consideration and the question is left open. Therefore, the impugned order passed by the respondent, in rejecting the revision petition filed by the petitioner under section 264, calls for interference by this court.
14.In the result, the writ petition is allowed and the impugned order passed by the respondent is quashed. The Revision Petition is remanded back to the respondent for fresh consideration and the respondent, in exercise of power under section 264, shall conduct inquiry or cause inquiry to be made, as regards the claim of the petitioner and pass orders, after affording opportunity of personal hearing to the petitioner, on merits and in accordance with law, as expeditiously as possible. No costs.
rk
Index:Yes/No
Internet:Yes/No 12-11-2014
T.S.SIVAGNANAM, J.
rk
To
The Commissioner of Income Tax,
Chennai VII, Chennai.
W.P.No.13408 of 2010
12.11.2014