Double taxation of a receipt as accrued interest and capital gain - court remits assessment for fresh discretionary refund consideration

Assessee contended the same receipt was taxed twice-once as accrued interest and again as capital gain; court found the contention not incorrect even prima facie and emphasised that where entitlement to refund is beyond reasonable doubt, authorities should adopt a liberal approach to conditionalities. The court held the statutory discretion must be exercised to protect the just interest of the assessee and that the Revenue's role is enforcement rather than scorekeeping. Consequence: writ petitions allowed in part, the impugned assessment order for the relevant year set aside and the matter remitted to the Commissioner for fresh consideration in accordance with law.

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Issues involved:
1. Commissioner's refusal to exercise revisional jurisdiction u/s 264 for assessment year 1991-92.
2. Commissioner's refusal to condone delay in filing revision petition u/s 264 for assessment year 1995-96.

Regarding assessment year 1991-92:
The Commissioner rightly declined to exercise revisional jurisdiction u/s 264 as per the precedent set in Reiter Machine Works Ltd. v. CIT [1999] 240 ITR 531, which states that revision cannot be done if an appeal has already been filed against the order. Since an appeal had been preferred for the assessment year 1991-92, the Commissioner correctly refused to revise the assessment order.

Regarding assessment year 1995-96:
The revision was sought for taxing the sum of Rs. 4,57,100 as accrued interest received by the assessee on Candoubles. The delay in filing the revision petition was from the expiry of one year from the assessment order date to September 27, 1999, which was not properly explained by the Commissioner. The assessee claimed that the need for revision arose after realizing the correct tax treatment of the amount received. The delay, according to the assessee, should be computed from the date of receiving the certified copy of the appeal dismissal order, not earlier.

The discretion to condone the delay should consider the merits of the revision petition. In cases where the assessee's right to refund is clear, a liberal view should be taken. The Act should not enable the State to retain money erroneously collected as tax. The authority's discretion should protect the just interests of the assessee, and the Revenue's role is to enforce the Act justly, not adversarially. In this case, the impugned order for the assessment year 1995-96 was set aside, and the matter was remitted back to the Commissioner for fresh consideration in accordance with law.

The writ petitions were allowed in part, with no costs incurred.

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