M/s. Medifield Equipments Corporation v. The Commissioner of Income-tax, Chennai
[Citation -2014-LL-1112-27]

Citation 2014-LL-1112-27
Appellant Name M/s. Medifield Equipments Corporation
Respondent Name The Commissioner of Income-tax, Chennai
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 12/11/2014
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags period of limitation • condonation of delay • additional income • limitation period • wrong statement
Bot Summary: 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 ORDER 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 for the Assessment Year 2002-03 and to direct the respondent to entertain and consider the Revision Petition filed by the petitioner on merits. 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. 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 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. 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.


IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.11.2014 CORAM 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 Constitution of India to issue writ of Certiorarified Mandamus, to call for records of 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 same and direct respondent to entertain and consider Revision Petition on merits. For Petitioner : Mr.T.N.Seetharaman For Respondent: Mr.T.Pramod Kumar Chopda ORDER In this writ petition, petitioner seeks Writ of Certiorarified Mandamus, to quash order dated 31.3.2010 passed by respondent Commissioner of Income Tax-VII, Chennai, under Section 264 of Income Tax Act, 1961 (hereinafter shortly referred 2 to as Act) for Assessment Year 2002-03 and to direct respondent to entertain and consider Revision Petition filed by petitioner on merits. 2.The facts, which led to filing of this writ petition, are as follows: (a)The petitioner is Firm, carrying on business of supplying hospital equipments and they filed their return admitting total income of Rs.6,14,372/- for assessment year 2001-02. In course of assessment proceedings, there was difference of Rs.11,41,607/- under head installation charges in its account with KG Hospital, Coimbatore. Subsequently, petitioner offered said amount as additional income for assessment year 2001-02 and assessment was completed by order dated 22.3.2004 adding sum of Rs.11,41,607/- towards installation charges relating to KG Hospital. Thereafter, petitioner filed its return for assessment year 2002-03 on 28.10.2002, admitting total income of Rs.7,50,462/- on basis of its accounts for year ended on 31.3.2002. It is case of petitioner that in arriving at said income, Rs.11,41,607/- being installation charges relating to KG Hospital had been included. return so filed was processed under section 3 143(1) of Act on 12.6.2003 accepting income returned. Therefore, petitioner would contend that Rs.11,41,607/-has been offered and assessed in assessment order dated 22.3.2004 for assessment year 2001-02 and same has been included in return filed earlier on 28.10.2002 for assessment year 2002-03 and assessed in that year also. (b)Thereafter, petitioner filed revised return for assessment year 2002-03 on 24.3.2005, excluding installation charges of Rs.11,41,607/-, which has already been charged to tax in assessment year 2001-02. Assessing Officer did not take any action on revised return filed by petitioner. Hence, petitioner filed Revision Petition under section 264 of Act on 15.4.2008 before respondent claiming deletion of Rs.11,41,607/- on ground that it has been taxed twice. Since Revision Petition was filed beyond period of limitation, as provided under Section 264(3) of Act, petitioner filed petition for condoning delay in filing Revision Petition. (c)The respondent by impugned order dated 31.3.2010, condoned delay in filing Revision Petition, but rejected prayer sought for by petitioner by stating that as per Section 139(5) of Act, if any person having furnished return under 4 section 139(1) or in pursuance of 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 expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier. Keeping said provision in mind, respondent stated that assessee filed revised return on 24.3.2005, which was beyond time limit stipulated under section 139(5) of Act. As such, filing of revised return is not within scope of Section 139(5) and no action need to be taken on such return. Therefore, respondent observed that Assessing Officer did not take any action on revised return filed by assessee for assessment year 2002-03 and same is in conformity with law and no illegality can be attributed to such action of Assessing Officer. Accordingly, respondent dismissed Revision Petition as devoid of any merits. said order is challenged in this writ petition. 3.The learned counsel for petitioner contended that petitioner has been taxed twice for amount of Rs.11,41,607/- under head installation charges relating to KG Hospital and said fact has not been considered by respondent. It is further submitted 5 that respondent failed to take into consideration Circular issued by Board in Circular No.14 (XL-35) dated 11.4.1955, by which, certain instructions were given to officers of department, as to how assessment proceedings have to be done under Section 143(1) and manner in which assessee has to be dealt with by officials and also attitude, which has to be borne in mind by Assessing officer, while scrutinising returns and in case of any refund or relief to which they appear to be clearly entitled, assessee should be granted such relief. learned counsel for petitioner relied on decision of High Court of Jammu and Kashmir reported in (2004) 140 TAXMAN 156 (J&K) (Sneh Lata Jain v. Commissioner of Income Tax) and decision of Gujarat High Court reported in 2001 Vol.251 ITR page 873 (Ramdev Exports v. Commissioner of Income Tax). Therefore, learned counsel prayed that impugned order may be quashed and respondent may be directed to consider Revision Petition filed by petitioner on merits. 4.Per contra, learned standing counsel for respondent submitted that impugned order clearly states legal position and petitioner filed revised return on 24.3.2005, which is beyond 6 limitation period, in light of sub section (4) to Section 139 of Act. Therefore, it is submitted that when there was no valid revised return on file of Assessing Officer, question of considering such return, which is non-est in law, does not arise and respondent was justified in rejecting prayer sought for by petitioner. It is submitted that for purpose of claiming deduction, petitioner can very well approach Board and Board is empowered under Section 119(2) of Act to admit any application or claim for any exemption, deduction, refund or any other relief, after expiry of period specified by or under this Act for making such application of claim and deal with same on merits and in accordance with law, which includes Section 139. On above grounds, learned standing counsel seeks to sustain impugned order. 5.Heard learned counsel for petitioner and learned standing counsel for respondent and perused materials placed before this Court. 6.The short issue, which falls for consideration in this writ petition is regarding scope and jurisdiction of respondent while exercising power under Section 264 of Act. 7.For better appreciation, Section 264 of Act is extracted 7 below: 264.(1) In case of any order other than order to which section 263 applies passed by authority subordinate to him, Commissioner may, either of his own motion or on application by assessee for revision, call for 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 provisions of this Act, may pass such order thereon, not being order prejudicial to assessee, as he thinks fit. (2) Commissioner shall not of his own motion revise any order under this section if order has been made more than one year previously. (3) In case of application for revision under this section by assessee, application must be made within one year from date on which order in question was communicated to him or date on which he otherwise came to know of it, whichever is earlier : Provided that Commissioner may, if he is satisfied that assessee was prevented by sufficient cause from making application within that period, admit application made after expiry of that period. (4) Commissioner shall not revise any order under this section in following cases (a) where appeal against order lies to [Deputy Commissioner (Appeals)][or to Commissioner (Appeals)] 8 or to Appellate Tribunal but has not been made and time within which such appeal may be made has not expired, or, in case of appeal[to Commissioner (Appeals) or] to Appellate Tribunal, assessee has not waived his right of appeal; or (b) where order is pending on appeal before [Deputy Commissioner (Appeals)];or (c) where order has been made subject of appeal [to Commissioner (Appeals) or] to Appellate Tribunal. (5) Every application by assessee for revision under this section shall be accompanied by fee of[five hundred] rupees. [(6) On every application by assessee for revision under this sub-section, made on or after 1st day of October, 1998, order shall be passed within one year from end of financial year in which such application is made by assessee for revision. Explanation. In computing period of limitation for purposes of this sub-section, time taken in giving opportunity to assessee to be re-heard under proviso to section 129 and any period during which any proceeding under this section is stayed by order or injunction of any court shall be excluded. (7) Notwithstanding anything contained in sub-section (6), 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 order of Appellate Tribunal, 9 [National Tax Tribunal,] High Court or Supreme Court.] Explanation 1. order by Commissioner declining to interfere shall, for purposes of this section, be deemed not to be order prejudicial to assessee. Explanation 2. For purposes of this section, [Deputy Commissioner (Appeals)] shall be deemed to be authority subordinate to Commissioner. In terms of above provision, Commissioner may, either of his own motion or on application by assessee for revision, call for record of any proceeding under Act, in which any such order has been passed and may make such inquiry or cause such inquiry to be made and subject to provisions of Act, may pass such order thereon, not being order prejudicial to assessee, as he thinks fit. language employed in Section 264 gives wider powers to Commissioner and such power may be exercised either suo motu or on application by assessee. power of revision includes power to call for record of any proceeding under Act, in which, any order has been passed and Commissioner is empowered to make inquiry or cause inquiry to be made and subject to provisions of Act, pass order thereon, not being order prejudicial to assessee. As such, language of statute does not restrict powers 10 of Commissioner in any manner. 8.When that being scope of Section 264, manner in which, such powers have to be exercised by Officers of department is dealt with in circular issued by Board. In this regard, it is relevant to look into Circular No.14 (XL-35) dated 11.4.1955, which issued certain guidelines, which read as follows:"Officers of Department must not take advantage of ignorance of assessee as to his rights. It is one of their duties to assist taxpayer in every reasonable way, particularly in matter of claiming and securing reliefs and in this regard, officers should take initiative in guiding taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in long run, benefit department for it would inspire confidence in him that he may be sure of getting square deal from department. Although, therefore, 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 11 to their rights and liabilities and as to procedure to be adopted for claiming refunds and reliefs." above circular would make it clear that officers of department has to bear in mind that they should not take advantage of ignorance of assessee as to his rights and it is duty cast on department to assist taxpayer in every reasonable way, particularly in matter of claiming and securing reliefs. Board also insisted officers to take initiative in guiding taxpayer, where proceedings or other particulars before them indicate that some refund or relief is due to him. 9.That being powers and duties of Commissioner, when revision petition was not filed within limitation period and separate petition was filed, for condonation of delay, showing sufficient cause which prevented petitioner from approaching Commissioner within time stipulated period, Commissioner entertained condone delay petition and was satisfied with reasons assigned by petitioner and condoned delay, in exercise of power under sub section (3) to Section 264. In normal circumstances, Commissioner, after condoning delay in filing revision petition, should take up revision petition on merits and consider claim of assessee, in terms of Section 264. Whereas, 12 in present case, Commissioner did not examine, as to whether claim of petitioner that it has been taxed twice for amount of Rs.11,41,607/-, was bonafide, but Commissioner proceeded with aspect, as to whether revised return for assessment year 2002-03 filed by petitioner on 24.3.2005 was valid. While considering this issue, Commissioner relied on Section 139(5) of Act and observed that revised return was filed beyond time limit and therefore, Assessing Officer did not take any action on revised return and same was in conformity with law. In my considered view, going by language of Section 264, Commissioner should have gone into factual aspect as to whether assesssee was taxed twice for said amount and same should have been done, in light of wider powers conferred on Commissioner, as discussed by this Court in preceding paragraphs. 10.In fact, in 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 present case, assessee had filed her return under section 139 and Assessing officer processed return under section 143(1) and raised demand for 13 certain amount. Thereafter, assessee approached revisional authority by raising plea of non-disclosure of certain facts in income tax return and claiming benefits. It is observed by Jammu and Kashmir High Court that assessee had remedy of filing revised return provided steps were taken within time prescribed under section 139 and that having not been done, she allowed assessment order to be passed and thereafter, realised mistake which was incurable after lapse of time. It is further observed that once it was found that assessee had no tax liability, respondents could not be permitted to levy tax and collect same in contravention of Article 265. Jammu and Kashmir High Court also pointed out that Commissioner has discretion to invoke revisional jurisdiction under Section 264. Once he entertains revision, he has power to call for record of any proceedings under 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. revisional authority have widest possible powers under section 264 was required to hold inquiry or cause any inquiry to be held and consider question raised by assessee. 11.It is observed by Gujarat High Court in judgment 14 reported in 2001 Vol.251 ITR page 873 (Ramdev Exports v. Commissioner of Income Tax) (cited supra) that it is open to revisional authority to look into deductions which might be claimed by assessee for first time. Even if return as submitted by assessee is accepted by Assessing Officer and if thereafter assessee comes to know about some mistake omitted, where either he was eligible for more deduction or had paid more tax, he can approach revisional authority and in such event, it is open to revisional authority to exercise its jurisdiction under section 264 of Income Tax Act, 1961 . In my considered view, decisions relied on side of petitioner are squarely applicable to facts of present case. 12.In light of above discussions it is held that Commissioner has wide power under Section 264 and in exercise of such power, Commissioner ought to have considered claim of petitioner, as to whether it has been taxed twice for amount of Rs.11,41,607/- under head installation charges relating to KG Hospital. 13.In light of above conclusion, issue as to whether 15 petitioner has to approach Board under section 119(2), does not arise of consideration and question is left open. Therefore, impugned order passed by respondent, in rejecting revision petition filed by petitioner under section 264, calls for interference by this court. 14.In result, writ petition is allowed and impugned order passed by respondent is quashed. Revision Petition is remanded back to respondent for fresh consideration and respondent, in exercise of power under section 264, shall conduct inquiry or cause inquiry to be made, as regards claim of petitioner and pass orders, after affording opportunity of personal hearing to 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 Commissioner of Income Tax, Chennai VII, Chennai. 16 W.P.No.13408 of 2010 12.11.2014. M/s. Medifield Equipments Corporation v. Commissioner of Income-tax, Chennai
Report Error