TaxTMI 
TaxTMI 
2024 (10) TMI 186
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....oner has challenged the order dated 24.03.2021 passed by respondent No. 1 under Section 264 of the Income-Tax Act, 1961 ("the Act" for short) for the Assessment Year 2016-2017 as well as the order dated 22.12.2018 passed under Section 144 of the Act and order dated 12.08.2021 passed under Section 154 of the Act read with Section 264 of the Act. 5. Brief facts of the case are that, that the petitioner filed the return of income for the Assessment Year 2016-2017 on 17.10.2016 declaring total loss at Rs.(-)53,21,870/-.- 5.1. The case of the petitioner was selected for the limited scrutiny under CASS to verify whether the share application money is genuine and from declared sources or not. The assessment order dated 22.12.2018 was passed under Section 144 of the Act whereby the Assessing Officer made addition of Rs. 80 lakhs on the basis of the balance-sheet and profit and loss account filed by the petitioner which was shown as a share application money pending for allotment as the amount was credited in the books of account during the year and the assessee did not participate in the assessment proceedings. 5.2. Being aggrieved, the assessee preferred a revision application under Se....
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....r Section 264 of the Act. 5.7. Being aggrieved, the petitioner has preferred this petition challenging the aforesaid orders. 6. Learned Senior Counsel Mr. Tushar Hemani, with learned advocate Ms. Vaibhavi Parikh for the petitioner submitted that it is apparent from the record that there was opening balance appearing in the balance-sheet of share application money for the year under consideration and therefore, the Assessing Officer could not have made an addition of Rs. 80 lakhs. It is further pointed out that the Director of the assessee - Company who was managing the affairs of the Company was critically ill during the said period and, therefore, the assessee could not appear during the assessment proceedings. It was submitted that the Commissioner of Income-Tax merely on the ground that the assessee is a private limited company could not have rejected the petition under Section 264 of the Act without dealing with the same on merits. 6.1. In support of his submissions reliance was placed on the decision of the Hon'ble Supreme Court in the case of Pramod R. Agrawal vs. Principal Commissioner of Income-tax reported in [2023] 156 taxmann.com 126 (Bombay). 7. On the other hand, l....
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.... income and his powers are not limited to correct the error committed by the subordinate authorities but could even be exercised where errors are committed by assessee. It would even cover situation where assessee because of an error has not put forth legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264 of the Act. Paragraphs 7 and 8 of Smita Rohit Gupta (supra), read as under: "7. The provisions of section 264 and the power available to the Commissioner to exercise under section 264 of the Act came up for consideration before the Division Bench of this Court in Hindustan Diamond Company Pvt. Ltd. v. CIT . The Division Bench was pleased to observe that exercise of power under section 264 was not subject to the power of the Assessing Officer to make adjustment under section 143 (1) of the Act. The Court held that power of the Commissioner under section 264 is rather wide and even the errors committed could be rectified. Paragraph 6 of the Hindustan Diamond Company (P.) Ltd. (supra), reads as under: "6. Having heard the Counsel on both sides, we are of the opinion that the C....
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....rities but could even be exercised where errors are committed by assessees. It would even cover situations where assessee because of an error has not put forth a legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264. " (emphasis supplied) 12. In Ms. Asmita A. Damale (supra), also the court held that the Commissioner while exercising revisionary powers under section 264 of the Act has to ensure that there is relief provided to assessee where the law permits the same. Paragraphs 3 and 4 read as under: "3 In view thereof, assessee filed the application under section 154 for rectification of the assessment order. This application was rejected. Against that order, the petitioner filed a revision under section 264 of the Act to the Commissioner of Income-tax, for refund. The Commissioner of Income-tax, by the impugned order held that there was no mistake apparent from record. He held that the provisions of section 264 were not attracted. 4 There is no dispute regarding the petitioner's entitlement to the benefit. The only question is whether the petitioner is entitled to e....
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....f section 263 of the Income-tax Act, the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of revenue, he may pass an order enhancing or modifying the assessment or cancelling the same with a direction to make it afresh. The provisions as presently worded have given rise to two areas of controversy. The first is relating to the interpretation of the word "record" and the second is regarding the issue relating to merger of the order of the Assessing Officer with the order of the appellate authority. Courts have held in some cases that the word 'record' occurring in section 263 could not mean the record as it stood at the time of examination by the CIT but the record as it stood at the time when the order was passed by the Assessing Officer. Limiting the power of the CIT only to the situation that was existing at the time of making the assessment is to make the provision too restrictive, as many times information comes on record from various sources which indicate that the order of the Assessing Officer is erro....
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....rial obtained subsequently. The power under section 264 of the Act is, in fact as wide a power, and one that is intended to prevent miscarriage of justice. Courts have consistently taken a view that the conferment of powers under section 264 of the Act is to enable the Commissioner to provide relief to an assessee, where the law permits the same. Reference may be made to the decisions of the Gujarat High Court in C. Parikh and Co. v. Commissioner of Income-tax (122 ITR 610); Ramdev Exports v. Commissioner of Income-tax (251 ITR 873); Kerala High Court in Parekh Brothers v. Commissioner of Income-tax and Calcutta High Court in Smt. Phool Lata Somani v. Commissioner of Income-tax (276 ITR 216). In this view of the matter, we see no reason to take a different view on the interpretation of the word 'record' occurring in section 264 of the Act from that expressed by the Central Board of Direct Taxes in the Circular extracted above. The order under section 144A dated 31-12-2007 is thus part of the record and ought to have been take into consideration in deciding the petition under section 264 of the Act. 1 11. In fact the objection raised by the Department is hyper-technical an....