Sharp Tools Vs. PCIT (Madras High Court)
The issue under consideration is whether the denial of assessee’s application u/s 264 on the ground that assessee not having filed revised return within prescribed time is justified in law?
High Court states that, in the present case, a mere typographical error committed by the Assessee cannot cost them payment of excess tax as collected by the Revenue. Certainly, the denial for repayment of such excess collection would amount to great injustice to the assessee. Even though the Statute prescribes a time limit for getting the relief before the Assessing Officer by way of filing a revised return, in view of HC, there is no embargo on the Commissioner to exercise his power and grant the relief under Section 264 of the IT Act. In other words, for granting the relief to an Assessee, which the Commissioner finds that the Assessee is entitled to otherwise, no time restriction is provided under Section 264 of the IT Act, if such revisional jurisdiction is invoked by the Assessee by making an application under Section 264 of the IT Act. However, the Commissioner is not entitled to revise any order under Section 264 on his own motion, if the order has been made more than an year previously. Thus, it is manifest that only suo-motu power of the Commissioner under Section 264 of the IT Act, is restricted against an order passed within one year, whereas no such restriction is imposed on the Commissioner to exercise his power in respect of an order, which has been passed more than on year, if such revisional power is sought to be invoked at the instance of the Assessee by making an application under Section 264 of the IT Act.. Considering the above stated facts and circumstances, High Court is of the firm view that the order of the respondent impugned in this writ petition cannot be sustained. Accordingly, this Writ Petition is allowed and the impugned order is set aside.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Challenge made in this writ petition is against the order of the
respondent dated 18.03.2019 passed under Section 264 of the Income Tax Act, 1961 (for brevity “IT Act”) relevant to the assessment year 2013-2014.
2. The case of the petitioner, in short, is as follows:
The petitioner is carrying on business as manufacturer of Engineering goods. For the relevant assessment year, the petitioner filed their return on 30.09.2013 declaring total income as “Nil” after setting off of earlier year losses. In column No.14 of the said return of income, under the head “Debits to Profit and Loss Account”, “compensation to Employees”, the petitioner entered the figure as Rs.1,38,59,509/- against the correct amount of Rs.1,87,82,244/-. The claim of Rs.1,87,82,244/- comprises of Labour charges to the tune of Rs.56,12,426/- Wages to the tune of Rs.75,14,652/- and Salary and Bonus to the tune of Rs.56,55,166/-. The difference on account of the wrong entry being Rs.49,22,735/- was reckoned as the income of the petitioner in the intimation dated 04.05.2014 issued under Section 143(1) of the IT Act and demand of Rs.17,37,280/- was raised comprising tax and interest. After adjusting tax credit of Rs.3,17,381/- the balance tax payable was determined as Rs.14,19,900/-. On receipt of the said intimation and realizing the mistake, which has crept in inadvertently while filling up the quantum in column No.14(i) of the return, a rectification return was filed on 09.01.2016. The said return was not processed by the Central Processing Centre, since the return was considered as revised return filed beyond the specified time under Section 139(5) of the IT Act. The petitioner made an application to the Assistant Commissioner of Income Tax, for rectification under Section 154 of the IT Act. The Assessing Officer, rejected the plea for rectification, by his order dated 24.10.2017, stating that the claim was belated. Thereafter, the petitioner filed revision petition under Section 264 of the IT Act on 25.01.2018 before the respondent stating that the claim of Rs.49,22,735/-, being the difference between actual expenditure of Rs.1,87,82,244/- and the expenditure shown in the returns, duly supported by profit and loss account filed along with the return of income and that the mistaken claim of Rs.1,38,59,509/- was due to typographical error. However, the respondent, by the impugned order has disposed the revision by observing that the petitioner has to file a revised return of income and however, the time for filing the same had already expired. Therefore, the present writ petition is filed before this Court.
3. The respondent filed a counter affidavit, wherein, it is stated as follows:
The Assessee filed the petition dated 22.01.2018 under Section 264 of the IT act, to process the rectified return and to correct the mistake in the assessed income. The Assessee has filed the revised return claiming certain inadvertent errors that had crept in the original return and the processing of the same had resulted in a demand, that the Assessee felt was flawed. The revised return of income filed on 09.01.2016 was not taken up for processing, since the revised return was filed beyond the due date provided under Section 139 of the IT Act. The remedy in the present case to the pleas of the Assessee would not lie under Section 264 of the IT Act. The logical remedy is to rectify the entries made in the return of income under the relevant columns, obviously by filing a revised return of income, for which, the time period had already been expired. The revision petition filed by the Assessee was thoroughly examined and decided on merits and in accordance with law.
4. A rejoinder is also filed by the petitioner disputing the contentions raised in the counter affidavit.
5. The learned counsel for the petitioner, after reiterating the contentions raised in the affidavit filed in support of this writ petition, further submitted as follows:
The Commissioner has power under Section 264 of the IT Act, to grant the relief. The Commissioner has accepted in his order that the Assessee had committed an error inadvertently while making the entries. The Commissioner has also advised the Assessee to file a revised return for seeking the relief and however, further observed that the time for filing such revised return had already expired. Even if the revised return is not filed, the Commissioner, by exercising his power under Section 264 of the IT Act, can grant the relief. The respondent failed to note that Circular No.14 of 1955 dated 11.04.1955 empowers the authorities to permit the correction of mistake and that the Department must not take advantage of ignorance of an Assessee as to his rights. The application under Section 264 of the IT Act, was filed before the respondent within one year from the date of rejection of the rectification return.
6. In support of the above contention, the learned counsel for the petitioner relied on the following decisions:
(i) [2016] 75 taxmann.com 298 (Ker), Transformers & Electricals 5/26 Kerala Ltd., Vs. Deputy CIT.
(ii) [2017] 394 ITR 247 (Mad), Sri Selvamuthukumar Vs. CIT.
(iii) [2018] 402 ITR 271 (Mad), M/s.Bali Trading Pvt. Ltd., Vs. Principal CIT.
(iv) [2016] 386 ITR 643 (Del.), Vijay Gupta CIT.
7. Per contra, the learned standing counsel for the respondent, after reiterating the contentions raised in the counter affidavit, has further submitted as follows:
The original return was filed on 30.09.2013 and intimation under Section 143(1) was given on 04.05.2014. Only after receiving the intimation, the rectification of return was filed by the Assessee on 09.01.2016, that too, with a delay of two years. It is not the revised return and on the other hand, it is only the rectification return. Section 139(5) of the IT Act, contemplates that a revised return has to be filed within one year from the date of filing of the original return. The Commissioner can exercise his power under Section 264 of the IT Act, subject to the provision of the Act and therefore, he cannot extend the time for filing the revised return as there is no power for the Commissioner to condone the delay for filing such return. Therefore, the impugned order was rightly passed by the respondent.
8. Heard both sides and perused the materials placed before this Court.
9. The petitioner is an Assessee under the respondent-Department. For the assessment year 2013-2014, the petitioner filed their return on 30.09.2013. While filling up the columns therein, the petitioner, in Column14, under the head “Debits to Profit and Loss Account”, “Compensation to Employees” and “Total Compensation to Employees”, has entered the figure of Rs.1,38,59,509/-, which according to the petitioner is incorrect figure and on the other hand, the actual figure towards the “Total Compensation to Employees” ought to have been entered is Rs.1 petitioner as to how such sum is arrived as follows:
