2017 (2) TMI 455 - HC - Income Tax

Commissioner's Discretion Upheld in Income Tax Benefit Case

The Court allowed the writ petition in favor of the petitioner in a case involving a claim under Section 54F of the Income Tax Act, 1961 in revisional ... Revision u/s 264 - whether benefit of Section 54F could be granted when it was originally not claimed during the assessment proceedings - Held that:- Unless there is a direct impediment to the power under Section 264 (exercisable by the Commissioner) which inhibits the grant of relief, it is per se admissible. The impediment may be in the form of a substantive provision which might place a time limit, to the grant of such relief or it may be otherwise. In the present case, the concerned provision Section 54F, does not per se contain any such impediment. Therefore, as far as the text of the provision goes, this Court is of the opinion that there is no bar in the grant of the relief despite the assessee apparently having missed the bus and having committed the mistake. The interpretation of this Court is clarified by the ruling of the Jammu & Kashmir High Court in Snehlata (2004 (4) TMI 579 - JAMMU & KASHMIR HIGH COURT ) where too the question was whether in the absence of the assessee’s claiming relief under Section 54F either in the original return or even in the revised return, it could be granted in revision. The Court unequivocally held that it could be granted. In view of the above discussion, we are of the opinion that the petition has to succeed. The matter is remitted to the AO for consideration who shall take into account the petitioner’s claim preferred by it in its revision petition and having regard to the provisions of the law. Issues:Claim under Section 54F in revisional proceedings under Section 264 of the Income Tax Act, 1961.Analysis:The petition involved a controversy regarding the grant of a claim under Section 54F of the Income Tax Act, 1961 in revisional proceedings under Section 264. The assessee had initially not claimed the benefit of Section 54F during the assessment proceedings for the relevant year. The original property was sold, and a new property was purchased, but the benefit was not claimed in the return filed later. The Commissioner rejected the revision petition citing reasons related to lack of evidence and failure to claim the deduction during assessment proceedings. The assessee contended that the revisional power allowed correction of orders to grant benefits under the Income Tax Act, relying on judgments from Jammu & Kashmir High Court and Gujarat High Court.The Revenue argued that the revisional power was narrower than the appellate power, emphasizing that the assessee could have claimed the benefit under Section 54F at the time of filing the return. The Court analyzed Section 264 of the Income Tax Act, which provides the Commissioner with wide discretionary powers to pass orders as deemed fit. The provision allows for revision of orders unless there is a direct impediment specified by the Act. In this case, Section 54F did not contain any such impediment. The Court referred to the Jammu & Kashmir High Court's decision, which supported granting relief even if the claim was not made in the original or revised return. Other rulings from Gujarat High Court and Allahabad High Court were also cited, emphasizing the correction of assessee's mistakes in revisional proceedings.Regarding the judgment in Goetze (India) Ltd., the Supreme Court had addressed different circumstances where a deduction was sought after the revised return deadline. The Court distinguished this case and clarified that the power of the Commissioner under Section 264 was not discussed in that judgment. Consequently, the Court held that the petition should succeed, remitting the matter to the Assessing Officer for reconsideration based on the petitioner's claim made in the revision petition and in accordance with the law. Ultimately, the writ petition was allowed in favor of the petitioner.