Application for revision under Section 264 is permissible to fix a genuine error

Fact and issue of the case

Case of the petitioner in brief is that petitioner is an old lady of advancing age and being unaware of the technicalities of the income tax law, committed mistake in her return by including the exempted income in question relating to dividend and long term capital gain as income payable to tax and such mistake was realised by her only upon receipt of the orders passed under Section 143 (1) of The Income Tax Act, 1961, and it is her case that since the filing of original return itself was delayed no revised return could be filed by her under Section 139 (5) of the Act for claiming deduction of the income exempted from income tax which was included as taxable income due to bonafide mistake and having no other recourse like filing of revised return or appeal, she filed revision applications under Section 264 of the aforesaid Act before the Commissioner of Income Tax concerned. Respondent CIT concerned dismissed the revision applications of the petitioner in question by the aforesaid impugned orders by holding that since the orders passed under Section 143 (1) of the Act relating to relevant assessment years could not be called erroneous and that the petitioner did not file the revised return under Section 139 (5) of the Act for the claim in question he could not allow such claim in the revision application under section 264 of the Act and further by holding that since the original return under Section 139 (5) of the Act was filed beyond the specified date, petitioner was debarred from filing revised return through which the mistake of unclaimed deduction could have been claimed and further held that the scope of revision by the Commissioner is not an alternative path to the revised return by relying on a judgment of the Hon’ble Supreme Court in the case of Goetze (India) Limited –Vs- CIT (2006) 284 ITR 323 (SC).

Mr. Sen, Ld. Advocate for the petitioner challenged the aforesaid impugned orders of revision passed by the Commissioner, under Section 264 of the Act by contending that nowhere on merit Commissioner has held that the income in question claiming for deduction by the petitioner was not an exempted income or the same is a taxable income under the Act in the facts and circumstances of the case. He also submits that without going into the merit of claim by considering the records of the case including relevant income tax returns on the basis of which orders under Section 143 (1) of the Act were passed, CIT erroneously tried to draw similarity between the revised return and revision and dismissed the revision applications in question.

Mr. Sen submits that power conferred on the Commissioner, under Section 264 of the Act is not only wider in its scope rather it is also intended for the purpose of preventing miscarriage of justice and providing relief to an assessee which an assessee is otherwise entitled to. He submits that expression “such enquiry” and “such order” under Section 264 of the Act are wide enough to include a situation like present one where a bonafide mistake has been committed in her return for which she was made liable to pay tax which is exempted under the Act. He submits that the learned Commissioner has misinterpreted and misconstrued the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Limited (supra) which relates to exercise of power by an Assessing Officer in allowing any deduction without claiming in any return or without filing a revised return and not relates to power to be exercised by the Commissioner under Section 264 of the Income Tax Act, 1961.

He submits that the aforesaid decision of the Hon’ble Supreme Court is restricted to the power of the Assessing Officer to enter into the claim for deduction without filing revised return but the same does not include the exercise of power by the Appellate Tribunal under Section 254 of the Act or by the Commissioner under Section 264 of the Act.

Considering the facts and circumstances of the case as appears from record, submission of the petitioner and ratio laid down in the judgments cited, I am of the considered view that the respondent Commissioner of Income Tax concerned in the facts and circumstances of the case has committed error in law in dismissing the revision applications of the petitioner filed under section 264 of The Income Tax Act, 1961, by refusing to consider the claim of the petitioner on merit that the income in question was exempted from tax and not liable to tax under The Income Tax Act, 1961, which according to the petitioner was included in her return as taxable income due to bonafide mistake and which she could not rectify by filing revised return since original return itself was belatedly filed and petitioner had no other remedy except taking recourse to filing of revision application under section 264 of The Income Tax Act, 1961.

Observation of the court

In view of the reasoning and discussions made above, , I am of the considered view that the impugned orders dated 24th March, 2014 under Section 264 of The Income Tax Act, 1961, relating to assessment years 2007-08 and 2008 -09 in WPA No. 16473 of 2014 and WPA No. 16476 of 2014 are not sustainable in law and accordingly the same set aside and the matters are remanded back to the Commissioner of Income Tax concerned to reconsider and dispose of the applications in question under Section 264 of The Income Tax Act, 1961, by passing a reasoned and speaking order in the light of the discussion and observation made in this judgment, within a period of eight weeks from the date of communication of this judgment, after giving opportunity of hearing to the petitioner or her authorised representative.

Accordingly, these writ petitions being W.P.A No. 16473 of 2014 and W.P.A. No. 16476 of 2014 stand disposed of by allowing the same. No order as to costs.

Urgent certified photocopy of this judgment, if applied for, be supplied to the parties upon compliance with all requisite formalities.