Revenue authorities must exercise Section 264 revisional powers when assessee makes mistake regarding SRO values

Telangana HC allowed revision petition challenging rejection of application u/s 264. Revenue authorities incorrectly refused to exercise revisional powers despite assessee's error regarding SRO values between agreement and registration dates. Court held Section 264 powers are wide and maintainable even when SRO value details aren't disclosed in return. Authorities failed to provide reasons for rejecting annexure showing SRO rates and didn't specify alternative values. Both grounds for declining Section 264 application were deemed unjustifiable, establishing that revision authority cannot decline consideration when assessee commits mistake.

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Issues:
Challenge to disallowance of application under Section 264 of the Income Tax Act, 1961 based on reasons of not claiming benefit of SRO rates and seeking advantage of reduction in SRO values.

Detailed Analysis:
The petitioner challenged the order disallowing their application under Section 264 of the Income Tax Act, 1961. The impugned order rejected the revision mainly on the grounds that the petitioner did not claim the benefit of Stamp Registration Office (SRO) rates while filing the income tax return and filed the application under Section 264 to take advantage of reduced SRO values. The petitioner contended that they had submitted Annexure-II to establish the SRO value and cited a Delhi High Court judgment to support the argument that even errors by an assessee can be a reason to exercise power under Section 264. However, the standing counsel for the Income Tax Department supported the impugned order, stating that the due process was followed in passing the order.

The impugned order highlighted that the petitioner voluntarily admitted the difference between the registered sale deed value and the actual sale consideration and paid taxes accordingly. It was noted that the petitioner claimed the relief was not claimed earlier due to non-availability of SRO values and to avoid litigation and penalties. The order emphasized that the petitioner had sufficient time to claim the actual price in the return of income and that the revision under Section 264 was an afterthought to benefit from reduced SRO values. The petitioner argued that the findings were unjustified as no material was provided to show how the petitioner sought to take advantage of reduced SRO values.

The judgment referred to the Delhi High Court's opinion that Section 264 confers wide powers to correct errors committed by assesses, including situations where a legitimate claim was not made at the time of filing the return and subsequently discovered. The court emphasized that even if details about SRO values were not disclosed in the return, revision under Section 264 was maintainable. It was concluded that the reasons for not entertaining the application under Section 264 were unjustifiable, leading to setting aside the impugned order and remitting the matter back for a fresh order.

In conclusion, the High Court set aside the impugned order disallowing the application under Section 264 and remitted the matter back to the respondent for a fresh order. The petitioner was directed to appear before the respondent without the need for a fresh notice. The court disposed of the writ petition without expressing any opinion on the merits of the case and ordered the closure of any pending miscellaneous petitions.

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