Pramod R. Agrawal Vs PCIT-5 (Bombay High Court)
Summary: The Bombay High Court considered a writ petition challenging an order dated 22 March 2017 by the Principal Commissioner of Income Tax-5 rejecting the petitioner’s application under Section 264 of the Income Tax Act, 1961. The petitioner, a resident individual, had filed his return for A.Y. 2007-08 declaring total income of Rs.8,49,118/-, including long-term capital gain from sale of a flat inherited with three other persons, in which he held a 25% share.
While computing the capital gain, the petitioner had not claimed indexed cost of improvement relating to renovation expenses incurred in September 1990. During scrutiny, an addition under Section 50C was made by adopting the stamp duty value. Subsequently, after learning that another co-owner had been allowed the relevant share of renovation cost, the petitioner sought rectification under Section 154, which was rejected on the ground that the claim had not been made earlier. The petitioner thereafter invoked Section 264, but the application was rejected. The High Court held that there was no delay because the Section 264 application challenged the Section 154 order dated 8 December 2015 and was filed on 18 January 2016.
The Court further held that Section 264 confers wide jurisdiction on the Commissioner and is intended to provide relief to an assessee where the law permits it, including where a legitimate claim was omitted from the original return due to an error and was subsequently discovered. Relying on, inter alia, Hindustan Diamond Company Pvt. Ltd., Smita Gupta, Asmita Damale, Selvamuthukumar and Vijay Gupta, the Court held that the Commissioner’s powers are not confined to correcting errors of subordinate authorities and may extend to errors committed by the assessee.
