Shri Ved Parkash Chhabra v. Commissioner Of Income Tax & Anr

HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** CWP No.23651 of 2012 (O&M) Date of Decision: 25.09.2014 **** Shri Ved Parkash Chhabra . . . . Petitioner VS. Commissioner of Income Tax & Anr. . . . . Respondents **** CORAM: HON’BLE MR.JUSTICE SURYA KANT HON’BLE MR.JUSTICE DR. SHEKHER DHAWAN **** 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? **** Present: Mr. SK Mukhi, Advocate for the petitioner Mr. Yogesh Putney, Advocate for the respondents **** SURYA KANT, J. (Oral) (1)This order shall dispose of CWP Nos.23651 & 23812 of 2012. The short question that arises for consideration in both the cases is whether the application moved by the petitioner-Assessee for rectification in the intimation received under Section 143(1) of the Income Tax Act, 1961 (in short, ‘the Act’), has been decided in accordance with law? (2)The petitioner-Assessee voluntarily filed his Return of Income for the Assessment Year 2005-06 on 27.03.2006. He is said to have included a sum of �17,61,850 as Long-Term Capital Gains from the sale of agricultural land which was allegedly situated beyond 8 kms. of the Municipal limits. The Assessing Officer (AO) accepted the Return and sent an intimation on 31.08.2006 under Section 143(1) of the Act. The petitioner moved an application under Section 154 of the Act on 13.06.2007 seeking rectification of the intimation so received by him and sought exclusion of the subject amount from the Long-Term Capital Gains on the plea that the agricultural land was actually located beyond 8 kms. of the Municipal limits and was thus exempted under Section 2(14) of the Act. (3)The petitioner’s case is that no decision was taken on his application notwithstanding the time limit of six months prescribed under sub-Section (8) of Section 154 of the Act. He moved yet another application under Section 154 on 17.02.2009 (Annexure P5) along with a Certificate issued by the Tehsildar, Panipat certifying that the land sold by the petitioner was beyond 8 kms. of Municipal limits. (4)It appears that no order was passed on the second application also. The petitioner thereafter filed a revision petition before the Commissioner of Income Tax under Section 264 on 27.09.2010 (Annexure P6) which has been rejected vide order dated 05.03.2012 (Annexure P7), giving rise to these proceedings. (5)The Revenue has filed its written statement controverting the petitioner’s allegation and has placed on record a copy of the order dated 20.06.2007 passed by the AO (Annexure R1) rejecting the petitioner’s application under Section 154. (6)We have heard learned counsel for the parties and gone through the record. It is vehemently urged on behalf of the petitioner that the order dated 20.06.2007 passed by AO rejecting his application under Section 154 was never conveyed to him. (7)Learned counsel for Revenue, on the other hand, relies upon the endorsement to suggest that its copy was sent to the Assessee. He, however, does not have the records readily available to show that a copy of the said order was actually despatched or received by the petitioner. (8)Be that as it may, we have gone through the order (Annexure R1) and find that the AO has rejected the petitioner’s application under Section 154 only on the ground that the Assessee did not seek exemption under Section 2(14) of the Act while filing the Return of Income and as such his claim is not as per the law and is beyond the purview of Section 154 of the Act. (9)The aforesaid reason assigned by AO, we are afraid, cannot sustain for the reason that if the Assessee had sought benefit of Section 2(14) of the Act, namely, exemption of the sale proceeds of the agricultural land, where was the occasion for him to seek rectification of the mistake under Section 154? The very object (8)Be that as it may, we have gone through the order (Annexure R1) and find that the AO has rejected the petitioner’s application under Section 154 only on the ground that the Assessee did not seek exemption under Section 2(14) of the Act while filing the Return of Income and as such his claim is not as per the law and is beyond the purview of Section 154 of the Act. (9)The aforesaid reason assigned by AO, we are afraid, cannot sustain for the reason that if the Assessee had sought benefit of Section 2(14) of the Act, namely, exemption of the sale proceeds of the agricultural land, where was the occasion for him to seek rectification of the mistake under Section 154? The very object behind incorporation of Section 154 in the Act is to enable the authorities to rectify a mistake which is apparent on the record and to suitably amend/modify the previous order(s). (10)The reason assigned by the AO in a way amounts to rejection of the petitioner’s application being not maintainable. It is not a decision on merit. While we do not express any views on the petitioner’s entitlement to the benefit of Section 2(14) of the Act but it appears that the AO ought to have dealt with the merits of the application. Nothing precluded the AO to seek additional information from the petitioner, if it was so required. (11)The Revisional Authority also fell in error while passing the order dated 05.03.2012 (Annexure P7) as firstly it proceeded on the premise that the petitioner’s application under Section 154 was not decided. In the later part, it has then reiterated the same reasoning, namely, that the Assessee offered the entire capital gain for tax and did not seek exemption under Section 2(14) in the Return of Income. (12)The Revisional Authority has further observed that “the AO did not take any cognizance of the application made by the assessee u/s 154”. It went on to say that mere failure to decide application under Section 154 is not a ground to unsettle the settled issue or to invoke the power under Section 264 of the Act. (13)The other ground assigned by the Revisional Authority is that the petitioner filed petition under Section 264 after a lapse of four years from the date of the order sought to be amended. (14)The petitioner’s claim for alleged rectification for which he applied under Section 154 of the Act, thus, has not been decided on merits either by AO or the Revisional Authority. The Revisional Authority was clearly in error to hold the delay of four years, as the petitioner moved first application under Section 154 on 13/14.06.2007 i.e. within one year of the receipt of intimation dated 31.08.2006 under Section 143(1) of the Act. He moved another application under Section 154 on 17.02.2009 and after awaiting for the decision, filed revision petition in September, 2010. There was indeed no delay, much less an inordinate or unexplained. (15)Having held that, we are of the considered view that if we set aside the order dated 20.06.2007 passed by the AO with a consequential direction to decide the application under Section 154, it would unnecessarily prolong adjudication of a minor issue, namely, as to whether the petitioner is entitled to the benefit of Section 2(14) and that too by invoking Section 154 of the Act? (16)Suffice it would be to remit the matter to the Revisional Authority to decide the petitioner’s revision petition afresh and in that process, the revisional authority would also consider the legality of the order dated 20.06.2007 passed by the AO (Annexure R1). (17)For the reasons afore-stated, we allow the writ petition in part; set aside the order dated 05.03.2012 (Annexure P7) and remit the matter to the Revisional Authority to decide the petitioner’s revision petition under Section 264 of the Act afresh, on the premise as if the revision petition has been preferred against the order dated 20.06.2007 passed by the AO. ������� (18)Let appropriate orders be passed within a period of fourmonths from the date of receipt of a certified copy of this order, (16)Suffice it would be to remit the matter to the Revisional Authority to decide the petitioner’s revision petition afresh and in that process, the revisional authority would also consider the legality of the order dated 20.06.2007 passed by the AO (Annexure R1). (17)For the reasons afore-stated, we allow the writ petition in part; set aside the order dated 05.03.2012 (Annexure P7) and remit the matter to the Revisional Authority to decide the petitioner’s revision petition under Section 264 of the Act afresh, on the premise as if the revision petition has been preferred against the order dated 20.06.2007 passed by the AO. ������� (18)Let appropriate orders be passed within a period of fourmonths from the date of receipt of a certified copy of this order, after giving opportunity of personal hearing to the petitioner. (19)Ordered accordingly. Dasti. ������������������������� ������������������� ���������������������������