Mr. Paresh Vaish v. The Assistant Commissioner Of Income Tax And Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.319 OF 2006 Mr. Paresh Vaish. ...Petitioner. vs.The Assistant Commissioner of Income tax and ors....Respondents. Mr. Paras Kaka, Senior Counsel along with Mr. Divesh Chawla and Mr. Nishith Doshi i/by DSK Legal for the Petitioner.Mr. Arvind Pinto for the Respondents. CORAM : M. S. SANKLECHA AND M.S. SONAK, JJ.DATE : O3 NOVEMBER 2014 PC: This petition under Article 226 of the Constitution of India challenges the orders: (a) dated 8 September 2000 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 (“the Act”) and (b) dated 12 October 2004 passed by the Commissioner of Income Tax rejecting the petitioner's application for rectification of the order dated 8 September 2000. 2) For Assessment Year 1991-92 and 1992-93 the petitioner worked as a Consultant for Mckinsey and Company (Mckinsey) in India. During the Assessment Year 1993-94, Mckinsey established an office in India and the petitioner became its salaried employee. 3)On 31 March 1995, the petitioner filed his Return of Income for Assessment Year 1993-94 declaring a total income of Rs.64.42 lacs comprising of salary of Rs.29.83 lacs and the consultancy fees of Rs.34.58 lacs. By mistake the fees received by the petitioner on account of consultancy of Rs.8.79 lacs for Assessment Year 1991-92 and Rs.23.06 lacs for Assessment Year 1992-93 aggregating to Rs.31.85 lacs was shown as part of income received during the Assessment Year 1993-94. 4)On 18 March 1996, the return of income for Assessment Year 1993-94 was processed under Section 143(1)(a) of the Act and the petitioner's income was accepted at Rs.64.42 lacs as declared by the petitioner. However, the petitioner was denied the credit for tax and TDS for Assessment Year 1993-94 to the extent the credit for tax and TDS was attributable to income earned during the Assessment Years 1991-92 and 1992-93 By the time the petitioner realized its above mistake the time to file revised Return of Income for Assessment Years 1991-92 and 1992-93 had expired. 5)Thus, on 2 May 1997 the petitioner filed a Revision Application under Section 264 of the Act against the Intimation dated 18 March 1996 under Section 143(1) of the Act for Assessment Year 1993-94 to the Commissioner of Income Tax. In the Revision Application the petitioner sought modification of Intimation dated 18 March 1996 issued under Section 143(1)(a) of the Act for Assessment Year 1993-94 to assess income arising for Assessment Year 1993-94 only and so far as income attributable to Assessment Years 1991-92 and 1992-93 are concerned, it was prayed that the Assessing Officer be directed to issue reopening notice under Section 148 of the Act. This was so as otherwise time to file revised Return of Income for Assessment Years 1991-92 and 1992-93 had expired. Only a reopening notice would enable the petitioner to file appropriate Return of Income and to discharge its liability to tax for the Assessment Years 1991-92 and 1992-93. 6) On 10 April 1997, the Commissioner of Income tax entertained the Revision Application and directed the Assessing Officer to issue notices for reassessment under Section 148 of the Act for Assessment Years 1991-92 and 1992-93. Consequent thereto notices for reassessment under Section 148 of the Act were issued and the petitioner did file his Returns of Income for Assessment Year 1991-92 and 1992-93. On 29 February 2000, the Assessing Officer passed two separate orders under Section 143(3) read with Section 148 of the Act accepting the petitioner's income at Rs.8.70 lacs for Assessment Year 1991-92 and at Rs.23.06 lacs for Assessment Year 1992-93. The tax liability for both the Assessment years was paid by the petitioner. 6) On 10 April 1997, the Commissioner of Income tax entertained the Revision Application and directed the Assessing Officer to issue notices for reassessment under Section 148 of the Act for Assessment Years 1991-92 and 1992-93. Consequent thereto notices for reassessment under Section 148 of the Act were issued and the petitioner did file his Returns of Income for Assessment Year 1991-92 and 1992-93. On 29 February 2000, the Assessing Officer passed two separate orders under Section 143(3) read with Section 148 of the Act accepting the petitioner's income at Rs.8.70 lacs for Assessment Year 1991-92 and at Rs.23.06 lacs for Assessment Year 1992-93. The tax liability for both the Assessment years was paid by the petitioner. 7)The petitioner was thereafter awaiting the disposal of its Revision application under Section 264 of the Act by the Commissioner of Income Tax from the Intimation dated 18 march 1996 for Assessment Year 1993-94. By order dated on 8 September 2000 the Commissioner of Income Tax rejected the Revision Application under Section 264 of the Act on the ground that he is not competent to entertain the petition under Section 264 of the Act. This on the basis that by the amendment with effect from 1 June 1999 deleting the Explanation to Section 143 of the Act rendered an Intimation under Section 143(1) (a) of the Act ceasing to be an order for the purposes of Section 264 of the Act. 8)At the time the petitioner filed its Revision Application on 2 May 1997 in respect of Intimation dated 18 May 1996 for Assessment Year 1993-94 the Explanation to Section 143(1) of the Act read as under:- “Explanation-An intimation sent to the assessee under sub-section (1) or sub-section (1B) shall be deemed to be an order for the purposes of sections 246 and 264.” The deletion of the above Explanation with effect from 1 June 1999 is the basis of the impugned order dated 8 September 2000. Besides the impugned order dated 8 September 2000 also records that the petitioner did not respond when called upon to do so, to the above view, before passing of the impugned order dated 8 September 2000. 9)Thereafter, on 25 March 2003 the petitioner filed an application to rectify the order dated 8 September 2000 passed by the Commissioner of Income Tax. In its application the petitioner pointed out that the order dated 8 September 2000 by mistake records that the petitioner had not responded to the proposed dismissal of his Revision Application dated 2 May 1997. It was pointed out that the petitioner had objected to the proposed dismissal on the ground of deletion of the Explanation by letter dated 28 December 1999. This application for rectification was also dismissed by order dated 12 October 2004 by the Commissioner of Income Tax on the ground that it raises a debatable issue. 10)Mr. Porus Kaka the learned Senior Counsel in support of the petition submits : (a)The dismissal of the Revision Application under Section 264 of the Act, filed on 2 May 1997 in respect of Assessment Year 1993-94 on account of deletion of the Explanation to Section 143 of the Act with effect from 1 June 1999 is bad in law. This is so as the above deletion of the Explanation can have no retrospective effect. (b)The Revision Application dated 2 May 1997 has been entertained on merits inasmuch as an order dated 10 April 1997 has been passed directing issue of reopening notice for Assessment Year 1991-92 and 1992-93 and consequent assessment. Thus, it is submitted that it is not open to entertain a Revision Application in part and reject it in part as done in this case with Revision Application dated 2 May 1997; and (c)The petitioner is being charged to tax twice in respect of the same income arising earlier in Assessment Year 1991-92 and 1992-93 as well as in Assessment Year 1993-94.This is contrary to ASN fundamental position in law that no person shall be taxed twice on the same income. (b)The Revision Application dated 2 May 1997 has been entertained on merits inasmuch as an order dated 10 April 1997 has been passed directing issue of reopening notice for Assessment Year 1991-92 and 1992-93 and consequent assessment. Thus, it is submitted that it is not open to entertain a Revision Application in part and reject it in part as done in this case with Revision Application dated 2 May 1997; and (c)The petitioner is being charged to tax twice in respect of the same income arising earlier in Assessment Year 1991-92 and 1992-93 as well as in Assessment Year 1993-94.This is contrary to ASN fundamental position in law that no person shall be taxed twice on the same income. 11. Mr. Pinto, learned Counsel for the Revenue supports the impugned order. 12)We have considered the rival submissions. We notice that at the time the petitioner filed his Revision Application on 2 May 1997, the Explanation to Section 143(1) of the Act clearly permitted an assessee to file an appeal or revision under Section 246 and 264 of the Act in respect of intimation under Section 143(1)(a) of the Act. The above Explanation was omitted from the statute with effect from 1 June 1999. It is therefore, very clear that the amendment/deletion of the Explanation to Section 143 of the Act was only effective from1June 1999 and would have no impact/effect on the Revision Application filed earlier. In fact this issue is no longer open to debate as Division Bench of this Court in Balmukund Acharya vs. Dy. Commissioner of Income Tax 310 ITR 310 dealt with the effect of omission to Explanation to Section 143(1) of the Act w.e.f. 1 June 1999 and observed as under:- “Section 143(1) with the Explanation would be applicable to the case in hand, since the Assessment Year in question is 1995-96. The explanation which was on the statute up to June 1, 1999, till its omission by the Finance Act, 1999, if read in the light of clause (37)and the memo explaining the provision in the Finance Bill, 1994, extracted herein above, would unequivocally go to show that the intimation sent to the assessee under sub section (1) of section (1B) was deemed to be an order for the purposes of sections 246 and 264 . Section 246 deals with appeal able orders. If this be so, then the appeal against an intimation sent relating to the assessment for the Assessment Year 1995-96 was very much maintainable in view of the Explanation till its deletion with effect from June 1, 1999. This view of ours is in consonance with the view taken by the Division Bench of this Court (Panji Bench) in the case of CIT vs. Anderson Marine and Sons Pvt. Ltd. (2004) 266 ITR 694, we do not propose to address the question relating to the effect of deletion of the Explanation with effect from June 1,1999, on the right of appeal vis a vis intimation under Section 143(1) of the Act, since it does not arise in the facts and circumstances of the case in hand”. The above observations though made in the context of an appeal would equally apply to the Revision Application filed to the Commissioner of Income Tax in 1997 in respect of Assessment Year 1993-94 under Section 264 of the Act. 13)Moreover, in this case we find that the Commissioner of Income Tax has already entertained the appeal and passed orders directing the reopening of assessment for Assessment Year 1991-92 and 1992-93. The Commissioner of Income Tax cannot now reject the Revision Application to the prejudice of the petitioner. In the present case, the Revision Application filed under Section 264 of the Act is in respect of an Intimation issued under Section 143(1) (a) of the Act for Assessment Year 1993-94. However, in the revision application the petitioner had prayed that the Assessing Officer be directed to issue notice under Section 148 of the Act for reassessment for Assessment 13)Moreover, in this case we find that the Commissioner of Income Tax has already entertained the appeal and passed orders directing the reopening of assessment for Assessment Year 1991-92 and 1992-93. The Commissioner of Income Tax cannot now reject the Revision Application to the prejudice of the petitioner. In the present case, the Revision Application filed under Section 264 of the Act is in respect of an Intimation issued under Section 143(1) (a) of the Act for Assessment Year 1993-94. However, in the revision application the petitioner had prayed that the Assessing Officer be directed to issue notice under Section 148 of the Act for reassessment for Assessment Years 1991-92 and 1992-93. In view of the directions to reopen the assessment the petitioner has filed his Return of Income and also paid tax for Assessment Year 1991-92 and 1993-94. This prayer of the petitioner was granted on 10 April, 1997. It is therefore correctly submitted on behalf of the petitioner that once having entertained the Revision Application which was validly filed and certain directions were given it is not open to the Commissioner of Income Tax to reject a validly filed revision as being invalid. As admittedly the amendment to the Act, deleting the Explanation to Section 143(1) of the Act was with effect from 1 June 1999 cannot be retrospective to have application to the petitioner's revision application filed on 2 May 1997 in respect of Assessment Year 1993-94. 14)So far as the Revision application filed by the petitioner seeking to rectify the impugned order dated 8 September 2000 is concerned, we find that the factual error being sought to be corrected therein is dismissed on the ground that it raises a debatable issue. 15)In the above view, we find that the impugned order dated 8 September 2000 of the Commissioner of Income Tax read with order dated 12 October 2004 rejecting the revision application are unsustainable in law. Therefore, both the impugned orders dated 8 September 2000 and 12 October 2012 are set aside. The Revision application dated 2 May 1997 is restored to the file of the Commissioner of Income Tax to decide the petitioner's application under Section 264 of the Act for Assessment Year 1993-94 on its own merits. 16)It is submitted by the petitioner that as a consequence of notice under Section 148 of the Act for Assessment Years 1991-92 and 1992-93 the petitioner has filed Returns of income and paid tax thereon. This very income to which the petitioner has been separately assessed for Assessment Year 1991-92 and 1992-93 is being charged to tax on income declared for Assessment Year 1993-94. We are certain that if the aforesaid facts so exist then the Commissioner of Income Tax while passing an order on the petitioner's revision application dated 2 May 1997 will consider the above aspect and ensure that the petitioner is not made to pay tax twice over in respect of the same income. As observed in Balmukund Acharya (supra) the authorities under the Act can collect tax only as provided under the Act. If any assessee has paid tax due to tax misconception or otherwise the authorities under the Act, are not supposed to take advantage. The authorities under the Act can only collect the tax which is legitimately due from the assessee and not a penny more. . 17)In the present case it would be appropriate that till such time as the Commissioner of Income Tax disposes of the revision application and four weeks thereafter from the date of communication of the order so passed, the Revenue will not adopt any coercive proceedings for recovery of tax against the petitioner. We trust that in view of the fact that the issue in Revision is in respect of Assessment Year 1993-94, the Commissioner of Income Tax will decide the revision application dated 2 May 1997 as expeditiously as possible and ASN preferably within 15 weeks from today. 17)In the present case it would be appropriate that till such time as the Commissioner of Income Tax disposes of the revision application and four weeks thereafter from the date of communication of the order so passed, the Revenue will not adopt any coercive proceedings for recovery of tax against the petitioner. We trust that in view of the fact that the issue in Revision is in respect of Assessment Year 1993-94, the Commissioner of Income Tax will decide the revision application dated 2 May 1997 as expeditiously as possible and ASN preferably within 15 weeks from today. 18)Petition is disposed of in the above terms. (M. S. SONAK, J.) (M.S. SANKLECHA, J.)