Appeals and revision query

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Rahul Bansal

Finalist

35929 Points Joined September 2009

Que.

Can an assessee file a revision petition under section 264, if the revised return to correct an inadvertent error apparent from record in the original return, is filed after the time limit specified under section 139(5) on account of the error coming to the notice of the assessee after the specified time limit?

Ans.

The CIT had committed a fundamental error in proceeding on the basis that no deduction on account of dividend income and LTCG under section 10 was claimed from the total income, without considering that the assessee had specifically sought to exclude the same as is evident from the entries in the relevant Schedule. Therefore, this was an error on the face of the order and hence, the same was not sustainable. Accordingly, the High Court set aside the order of Commissioner and remanded the matter for fresh consideration.

The High Court further directed the Assessing Officer to consider the rectification application filed by the assessee under section 154 as a fresh application received on the date of service of this order and dispose of the rectification application on its own merits, without awaiting the result of the revision proceedings before the CIT on remand, at the earliest.

Please exactly clarify the above statement.

Not able to understand............ !!

Replies (5)

Rahul Bansal

Finalist

35929 Points Joined September 2009

FACTS RELATED TO ABOVE QUERY ARE GIVEN BELOW:

The assessee-company had electronically filed its return of income. It committed a

mistake by including dividend income [exempt under section 10(34)] and long term

capital gains on sale of shares [exempt under section 10(38)] in its return of income,

though the same was correctly disclosed in the Schedule containing details of exempt

income. The return was processed under section 143(1) denying the exemptions under

section 10(38) and 10(34) and therefore, intimation under section 143(1) was served on

the assessee raising a demand of tax. The assessee, on receiving the intimation,

noticed the error committed and filed a revised return rectifying the error. However, the

revised return was not sustainable as the same was filed beyond the period of limitation

as provided under section 139(5). Later, the assessee filed an application for

rectification under section 154 and also a revision petition under section 264.

The Commissioner of income-tax, while considering the revision petition, contended that

the intimation under section 143(1) was based on the return of the assessee, in which the

claims under section 10(34) and under section 10(38) were not made by the assessee.

Hence, it cannot be said that the intimation under section 143(1) was erroneous, since

the same was squarely based on the return filed by the assessee. Secondly, the power of

Commissioner under section 264 is only restricted to the record available before the

Assessing Officer which can be examined by the Commissioner. In the circumstances,

the other evidence sought to be brought on record to establish the mistake committed by

the assessee cannot be considered by the Commissioner under section 264. The

revision petition under section 264 was rejected by the Commissioner on the above

grounds.

The High Court observed that the entire object of administration of tax is to secure the

revenue for the development of the country and not to charge the assessee more tax

than which is due and payable by the assessee. In this context, the High Court referred

to the CBDT Circular issued as far back as 11th April, 1955 directing the Assessing

Officer not to take advantage of the assessee’s mistake. The High Court opined that the

said Circular should always be borne in mind by the officers of the Revenue while

administering the Act.

Please explain the above query considering given facts and answer in layman language.

Mihir

Wealth Manager

5293 Points Joined December 2008

Assessee made a mistake in IT returns which was filed after due date. The ITO could have gone ahead with rectification on their own but raised a tax demand instead. The assessee realised the mistake and tried in vain to revise the return. He then filed rectification u/s 154, but the same was rejected on the ground that the ITO did not make any apparent mistake; the mistake was committed by the assessee himself and therefore, rectification shall not be entertained thereon. However, the assessee was given due relief when the High Court stated that even if the mistake was committed by the assessee, the ITO may entertain rectification u/s 154 filed by the assessee and not subject the assessee to any hardship especially when the revenue has already secured its taxes.

Wait for more replies.

Rahul Bansal

Finalist

35929 Points Joined September 2009

So, what is the final answer " Can an assessee file a revision petition under section 264, if the revised return to correct an inadvertent error apparent from record in the original return, is filed after the time limit specified under section 139(5) on account of the error coming to the notice of the assessee after the specified time limit?"

Mihir

Wealth Manager

5293 Points Joined December 2008

I doubt this view can be applied in all the cases. The assessee may have failed to filed a correct return but he did correctly disclosed the the details in the schedules. And the same was observed by the court, which is why it asked the commissioner to set aside the rejection order and consider accepting a fresh application for rectification. This is one of those cases where the outcome may not be the same if used in some other situation.