1983 (8) TMI 17 - HC - Income Tax

Commissioner can hear revision under s.264 for weighted deduction claim under s.35B despite earlier omission; matter remitted

Kerala HC held the Commissioner has jurisdiction under s.264 to entertain a revision petition seeking a weighted deduction under s.35B even if that relief ... Jurisdiction of commissioner to entertain a revision petition under s. 264 - export of goods to foreign countries - new claim for relief u/s 35B not raised before lower authorities - rectification of an assessment to afford a weighted deduction u/s 35B - scope and enforceability of such circulars issued by the Central Board of Direct Taxes - HELD THAT:- In our opinion, the circular envisages that ' Officers of the Department 'which will, certainly take in the Head of the Department the Commissioner of Income-tax (1 St respondent herein) should bear in mind the, spirit of the said circular in affording relief to the assessee, as indicated therein. The circulars, it any rate, are binding on the Department. The assessee is entitled to the benefit of such circulars. We have no hesitation to hold that the Commissioner of Income-tax committed an error of law in holding that it is not open to him for the first time to entertain a relief of the kind pleaded by the assessee and in denying jurisdiction. We hold, that even though a mistake was committed by the assessee and it was detected by him after the order of assessment, and the order of assessment is not erroneous, none the less it is open to the assessee to file a revision before the Commissioner under s. 264 of the Act and claim appropriate relief. But it should not be forgotten that the power to be exercised under s. 264 is revisionary one. The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary. Whether in a particular case, on the basis of facts disclosed, the Commissioner will exercise his jurisdiction and interfere in the matter, is a matter of discretion. It is certainly a judicial discretion vested in the Commissioner, to be exercised in accordance with law. We are not called upon to pronounce on the scope and amplitude of the revisional power. The only question mooted for our consideration in this case is whether the Commissioner has got revisional jurisdiction at all, where the assessee having included the income for assessment, can claim the relief of weighted deduction under s. 35B of the Act, for the first time, in a petition filed under s. 264 of the Act. On that aspect of the question, we have no doubt in our mind that the Commissioner has jurisdiction to entertain a revision petition under s. 264 of the Act. Thus, we quash ex. P-5 order passed by the 1st respondent-Commissioner of Income-tax. We direct the 1st respondent to restore ex. P-4 revision to file and pass appropriate orders. Before passing final orders on Ex. P-4 revision, the assessee will be given an opportunity for being heard along with such of those documents which he intends to produce to substantiate his plea. Issues Involved:1. Scope of the revisional power of the Commissioner of Income-tax u/s 264 of the I.T. Act, 1961.2. Whether the Commissioner can entertain a new claim for relief not raised before lower authorities.3. Whether the Commissioner's revisional power is analogous to the appellate power of the Appellate Assistant Commissioner.Summary:1. Scope of the Revisional Power of the Commissioner of Income-tax u/s 264 of the I.T. Act, 1961:The petitioner, an assessee, challenged the orders of the Income-tax Officer, Appellate Assistant Commissioner, and the Commissioner of Income-tax (exts. P-1, P-3, and P-5 respectively). The primary issue was the revisional power of the Commissioner u/s 264 of the I.T. Act. The petitioner sought rectification of an assessment to afford a weighted deduction u/s 35B, which was not claimed initially. The Commissioner dismissed the revision, stating that it was not within his quasi-judicial powers to entertain such a claim for the first time due to the assessee's negligence.2. Whether the Commissioner can entertain a new claim for relief not raised before lower authorities:The court opined that the powers vested in the Commissioner u/s 264 are not subject to the limitations as contended by the Revenue. The revisional jurisdiction is distinct from the appellate jurisdiction. The Commissioner can revise any order and make such inquiry or cause such inquiry to be made, and pass such order thereon as he thinks fit, not being prejudicial to the assessee. The court emphasized that the Commissioner's power is not limited to revising only erroneous orders.3. Whether the Commissioner's revisional power is analogous to the appellate power of the Appellate Assistant Commissioner:The court clarified that the scope of the appellate power u/s 251 and the revisional power u/s 264 are entirely different. The Commissioner's revisional power is broader and not analogous to the appellate power, which includes the power to enhance an assessment. The court referenced various cases to support that the Commissioner can grant relief even if the claim was not made before the lower authorities.Conclusion:The court quashed the Commissioner's order (ext. P-5) and directed the Commissioner to restore the revision petition (ext. P-4) and pass appropriate orders after giving the assessee an opportunity to be heard. The court also declined the Revenue's request for a certificate to appeal to the Supreme Court, as no substantial question of law of general importance was found to arise.