Wp/10775/2024 Of Venkatdharma Reddy Methukupally v. Principal Commissioner Of Income Tax

HIGH COURt'FOR AT HYDERABAD(SPecial Original [Jurisdiction)] TUESDAY, THE [SEVENTEENTH DAY OF DECEMBER]TWOTHOUSAND [TWENry ] PRESENT THE HONOURABLE ANDTHE HONOURABLE [DR. ] [G.RADHA ] WRIT PE [NO:1][ 0775 ][0] Between: . Late Narsimha [ReddY, ][Age ][58]Venkatdharma [Reddy ][Methukupally,. ]-S/ovears. H.NO. 3-6-23411-5' [401]Vaishnavi [Enclave, ][St. ][No. ][15']fuimayatnagar, [HYderabad - 29]...PETITIONER AND 1 . Principal [Commissioner of lncome Tax, Hyderabad - ][1 ']U-nit' lncome lncome U-nit' lncome lncome i. cditiSrizea [erocessini' ][Ceni"i ]"-fitins "-fitins Bengaluru [- ][560500.] U-nit' lncome lncome [Tax ][Department'] ...RESPONDENTS Petition under [Article ][226 ][oI ][the Constitution ][of ][lndia ][praying ][that ][in ][the]circumstancesstatedintheaffidavitfiledtherewith'theHighCourtmaybepleased to issue a writ, [direction ][or order ][more ][particularly ][in ][the ][nature ][of ][a ][writ ][of]mandamus [declaring ][the ][Order ][bearing ] [No ][llBNCOMlFl17l2O23-]2411061740090(1) [dated ][2gt)2l2)24 ][passed ][by ][the ][Respondent ][No' ][1 ][for ][the]assessmentyear2022-23asbeingvoid,illegal'arbitrary'andviolativeofArticles14 and 265 [of the constitution ][of ][lndia and ][consequently ][set ][aside ][the same ][by]the [Respondent ][No. ][1 ][pass ][appropriate ][orders ][by ][taking ][into]directing consideration [the ][Market Value ][certificate ][submitted ][by ][the Petitioner'] Counsel for [the Petitioner: ][M/s' B'NISHITHA ] [M/s' M'NAGA ] for the [Respondentir ][M/s' B'SAPNA ][REDDY' ][JUNIoR ] [FgI- ]- --a;;;;;i SRI J.V.PRASAD, [Sr' ] The Gourt made [the ][following: ] THE HONOURABLE SRI JUSTICE SUJOY PAULANDTHE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION No.1O775 of 2024 ORDER.' /per Hon'bLe Si Justice Sujoy Paul) Ms.B.Nistritha, learned counsel for the petitioner andMs.B.Sapna Reddy, learned Junior Standing Counsel representingSri J.V.Prasad, iearned Senior Standing Counsel for lncome TaxDepartment, ap,pears for respondents.2. With the r:onsent, finally heard.3. This petition Iiled under Article 226 of the Constitution ofIndia takes exr:eption to the order dated 29 .O2.2O24, whereby,respondent No. 1 disallowed the application of petitioner filedunder Sectiorr iO+ of the Income Tax Act. [.t961]Ms.B.Sapna Reddy, learned Junior Standing Counsel representingSri J.V.Prasad, iearned Senior Standing Counsel for lncome TaxDepartment, ap,pears for respondents.2. With the r:onsent, finally heard.3. This petition Iiled under Article 226 of the Constitution ofIndia takes exr:eption to the order dated 29 .O2.2O24, whereby,respondent No. 1 disallowed the application of petitioner filedunder Sectiorr iO+ of the Income Tax Act. [.t961](for short "the tr,ct") seeking revision.4. The adm;ltted facts between the parties are that agreementto sale was enr-ered into on 08.11.2021, whereas, tht: sale deed4. The adm;ltted facts between the parties are that agreementto sale was enr-ered into on 08.11.2021, whereas, tht: sale deedwas registered on 71.O3.2O22. The Return was filed on31.72.2022. Ttre petitioner hled an application under Section 264of the Act a1on61 with Annexure-Il issued by S.R.O. to r:onfirm theSRO values prevailing as on the date of agreement and the date of31.72.2022. Ttre petitioner hled an application under Section 264of the Act a1on61 with Annexure-Il issued by S.R.O. to r:onfirm theSRO values prevailing as on the date of agreement and the date ofregistration. The said revision of petitioner was rejected byassigning following reasons: - "8. I have [perused ][tlle ][contentions ][of ][the ][assessee ][and]the material [available ][on ][record' The ][assessee ][has ][voluntarily]admitted the amount [of ][Rs-55,86,OO0/-, ][being ][the ][difference];;;"^ the registered [SaIe ][Deed ][Value ][as per SRo and ][the]."t,ra "rf. con""ide.ation [(i.e. Rs'2,95,86,O00-Rs ][2'40'OO'000)]"ra.. [tt" ][head. ]The [Income ][assessee ][from Other ][claims ][Sources ][that the ][and paid ][relief/benefrt][taxes]accordingly. ""J"tf."tl [him ][has ][not ][been ][claimed ][at ][ttre ][time ][of ][filing ][the]n"t".t o, 3l-12-2022 [due ][to non-availability of ] [values']He further claimed [that ][to ][avoid ][litigation ][and levy ][of possible]he disclosed the'above [deemed ][income ][ald ][paid ][the];;;ti"", all applicable taxes. 8. 1. It is [pertinent ][to ][mention ][that ][the ][date ][of ][sale]*r." [OS.ft.ZOZl, ][date ][of ][registr^ation ][was]agreement |T.OS.ZOZZ and [the ][date ][of frling of return ][is ][31 ][12'2022 ][']A"=."""" had [an ][ample ][of ][time ][to ][claim ][tJle ][actual ][price ][il]frling of return [of ][iniome. ][The ][assessee ][is ][well ][aware ][of ][the]irt"E pr"u"itirrg [on ][the ][date of ][agreement ][and ][as ][well ][as on ][tJle]a.t" registr:ation. [Now, ][the ][lssessee ][has come ][$ith ][an];;;;;;.i;; "f tls 264 [just ][to ]set [the ][advantase ][of ][the],eiuction in SRO [values. In ][the ][Computation ][of ][Total ][Income]Statement, the [assessee ][himself voluntarily ][offered ][the]diff"..r." income [under ][Sec ][56(2)(x) ][under the ][head ][Income]frorn Otfr". Sources [and ][the ]Present [claim is ][clearly ][just ][an]t. [The ][income ][offired while frling ][the ][Return ][is ][not].ttettt"ogt a mistake crept [or an ][error' ][It ][also ][does ][not ][fall ][under ][the]Jai.e;lj of ,rot .The [facts ][of ][the]"1ri-irrg [a ][legitimate ][claim ]""".-f#" facts of the [relied upon ]assessie's [by ][case' ][the-assessee ][In ][view of ][are different ][the ][above discussion'][from ][the]facts and circumstances [of ][the ][case, ][the ][assessee's ][claim ][does]""i.o-. [under ][ttre ][purview of ][Sec'264 ][of ][t1-e ][Income-tax ][Act']1961; and hence [dismissed."] (EmPhasis suPPlied) 5. Criticizing the [findings,]Iearned counsel [for ][the ][petitioner]submits that [para ][No.4 ][of ][the ][impugned order ][itself ][shows ][that]the petitioner [has filed ][the ][relevant ][Annexure-Il ][to ][establish ][the]SRO value. [The ][petitioner's ][revision was rejected ][mainly ][for ][twin]reasons. Firstly, [on ][the ground ][that ][the ][petitioner' ][while ][filing ][the]Return of income, [was aware of ][the ] [rates ][prevailing' ][but' ][did] not claim benefit of the same. Secondly, in order to get advantageof reduction in SRO values, as an aJterthought, the applicationunder Section 2',64 of the Act is filed.6. Learned counsel for the petitioner by placing reiiance on theDivision Bench judgment of Delhi High Court in Vijay Gupta v.Commissioner of Income Tax Delhi-Xlflt submits that evenerror committed by an Assessee can be a reason to exercise powerunder Section 2',64 of the Act. The power under Sectiort 264 of ll;reAct is wide enough to take care of such mistakes. This judgmentwas cited beforr: respondent No.1, but, no heed is paid to the saidjudgment. So far second reason is concerned, it is submitted thatthe finding is p,s1ys15s in nature, becamse, ng material is quotedas to how the finding is recorded that petitioner's attempt was totake advantage of reduction in SRO values. No such documentshowing reduction in SRO values is referred. For these reasons,the impugned order may be interfered with.7. Learned Standing Counsel for Income Tax I)epartmentsupported the impugned order and urged that there is no error inthe impugned order. The petitioner was given an opportunity of ' [MINUTDE/o;+zl:o ][t6] hearing. After following "the due [process" ][the impugned ][order has]been passed. ' [MINUTDE/o;+zl:o ][t6] hearing. After following "the due [process" ][the impugned ][order has]been passed. 8. A careful reading of the impugned order shows that the [twin]reasons highlighted by learned counsel for the [petitioner ][became]operative reason to disallow.the application under [Section 264 ][of]the Act. The Delhi High Court in Vijay Gupta's [case ][opined ][as]under: "35. From the [various ][judicial ][prorlouncements, ][it ][is]setfled that the powers conferred under [section ][264 ][of ][the Act]are very wide. The Comrnissioner is bound to [apply ][his"mind to]the question whether t]-e [petitioner ][was ][taxable ][on ][that]income. Since section 264 uses ttte expression ["any ][order", ]!!would implv that the section does not lirnit [the ][power ][to]correct errors committed bv the subo[rdinate ][authorities but]could even be exercised where errors [are committed ][by]assesses. It would everr cover situations [where ][the]assessee because of an error [has ][not ]Put [forth ][a ][legitimate]cl,aim at the time of filing the [return ][and ][the ][error ][is]subsequently discovered aad is raised [for the frrst time ][in]an application under Sectiou 264. 36. An assessee is liabie to tax [only ][upon ][such ][receipt ][as]can be included in his total income [and ][is ][assessable ][under]the Income-tax Act. There is [nothing ][in' ][s-264, ][which ][places]aay restrictioa on the Commissioner's [rewisional ]Poqrer [to]give relief to the assessee in a case [where ]the [assessee]detracts mistakes because of which [he ][was ][over- ][assessed]alter the assessment was completed. [Once ][it ][is ][found that]there was a mistake in making an [assessment, ][tJle]Comrnissioner had [power ]to correct it [under s. ][264(1): ][Vlhen]the substantive law confers a benefit on [the ][assessee]under a statute, it cautrot be taken away [by ][the]adjudicatory authority on mere techaicalities. [It ][is ][settled]proposition of law that no tax can be lewied or [recovered]without authority of law. Article 265 of t] e [Constitution of]India and section 1 14 of the State Constitution [imposes ][al]embargo on irnposition and collection of tax [if ][the ][same is]without authority of 1aw." (Emphasis supplied) 9 . A plain reading of these paragraphs makes it clear thateven if, ar errc,r is committed by al Assessee, it can tre gone intoin exercise of power conferred under Sectio n 264 of the: Act, whichin exercise of power conferred under Sectio n 264 of the: Act, whichwas held to be "very wide". Considering the aforesa,rd, the firstreason for not exercising power under Section 264 of the Actcannot sustain judicial scrutiny. Even if details about SRO valueis not discloserl in the Return, revision under Section 264 of theAct is indeed maintainable. It is alother aspect, u,here afterconsidering the matter, the revision authority may takt: a differentcannot sustain judicial scrutiny. Even if details about SRO valueis not discloserl in the Return, revision under Section 264 of theAct is indeed maintainable. It is alother aspect, u,here afterconsidering the matter, the revision authority may takt: a differentview on merits, but, it cannot decline consideration, when theAssessee commits a mistake/error. Secondly, as rightlyhighlighted by learned counsel for the petitioner, the applicationunder Section 264 of the Act was rejected by stating that theapplication uncler Section 264 is hled, just to get aclvantage ofreduction in SRO values.application uncler Section 264 is hled, just to get aclvantage ofreduction in SRO values. 10. No iota of reason is mentioned in the impugned order as towhy the Annexr-rre-Il showing SRO rates mentioned in para No.4 ofthe impugned order was not applicable or trustworthy. No otherSRO value, u.hi<:h is held to be [.reduced, ]one, is also mentioned.11. We are co:rvinced that both the reasons for not entertainingthe application under Section 264 of the Act are ur--justifiable. 10. No iota of reason is mentioned in the impugned order as towhy the Annexr-rre-Il showing SRO rates mentioned in para No.4 ofthe impugned order was not applicable or trustworthy. No otherSRO value, u.hi<:h is held to be [.reduced, ]one, is also mentioned.11. We are co:rvinced that both the reasons for not entertainingthe application under Section 264 of the Act are ur--justifiable. Resultantly, the impugned order dated, 29.02.2024 is set aside.The matter is remitted back before respondent No.1. The petitionerThe matter is remitted back before respondent No.1. The petitioneragreed to appear before said respondent on O2.O1.2025, for which,no fresh notice will be required to be issued to the petitioner.Respondent No.1 shall rehear the petitioner and pass a fresh orderin accordance with law.in accordance with law. 12. Accordingly, the Writ Petition is disposed of, withoutexpressing any opinion on the merits of the case. No costs. Miscellaneous petitions pending, il any, shall stand closed. SD/-P. PADMANABHA REDDY /ASSISTANT REGISTRAR [/]dl//TRUE COPY//SECTION OFFICER To'1 . Principal Commissioner of lncome Tax, Hyderabad - 1. 2. . Centr;lized Processing [Center, e-Filing ][Unit, ][lncome ][Tax ][Department,] Bengaluru - 560500.3. OndCC to Mis M.NAGA [DEEPAK, Advocate ][oPUc]+. One CC to SRI J.V.PRASAD, [Sr. ] 5. Two CD Copies PSK.BS HIGH COURT DATED:1711212024 ORDERWP.No.10775 of 2024 .r<+i1((ri!)O24[,2W,f)4sT CLEi!.!. DISPOSING OF THE WRIT PETITIONWITHOUT COSTS )n l-t1