Wp/1206/2018 Of Dwarikesh Sugar Industries Ltd v. Dy. Commissioner Of Income Tax Circle-3 (1) (1) And 2 Orrs

* 1/13 * IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1206 OF 2018 Dwarikesh Sugar Industries Ltd. ….Petitioner V/s. Dy. Commissioner of Income-Tax Circle-3(1)(1) and 2 Ors.….Respondents * * * * * Mr. Rafique Dada, Senior Counsel a/w. Mr. Pankaj Toprani I/by. PRH Juris Consultus, Advocate for the petitioner. Mr. A.R. Malhotra a/w. Mr. N.A. Kazi, Advocate for therespondent. P.C. :- 1. At the request of the parties, the petition is Rane * 2/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 being disposed of finally at the stage of admission. 2. This petition under Article 226 of theConstitution of India challenges the order dated 23[rd]March, 2018 passed by the Principal Commissioner ofIncome-tax-respondent no.2. By the impugned orderdated 23[rd]March, 2018 the petitioner's RevisionApplication under Section 264 of the Income-tax Act,1961 (the Act) in respect of Assessment Year 2012-13 wasrejected as being time-barred and dismissed on meritsalso. 3. Briefly, the facts relevant are as under :Briefly, the facts relevant are as under : (a). The petitioner is engaged in manufacture of sugar. It purchases sugarcane from farmers through various Societies established by the State Governmentunder the U.P. Sugarcane (Regulation of Supply &Purchase) Rules, 1954 (for short “the Sugarcane Act”).The petitioner is required to pay commission to the aboveSocieties from whom sugarcane is procured. Rane * 3/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 (b) For the previous year relevant to AssessmentYear 2012-13, the petitioner paid the Societies, theCommission under the Sugarcane Act upto January, 2012.However, the petitioner was under a belief that the StateGovernment would announce waiver of commission to bepaid to the Society under the Sugarcane Act for themonths of February and March, 2012. In the above view,the petitioner did not claim deduction on account of theabove accrued liability in its assessment for AssessmentYear 2012-13. However, the waiver as expected from theState Government did not come. On the contrary, on 19[th]June, 2012 the State Government called upon thepetitioners to pay the Commission of Rs.4.25 crorespayable to the sugarcane Societies for having acquiredsugarcane from them during February and March, 2012.In the aforesaid circumstances, during the previous yearrelevant to Assessment Year 2013-14, the petitioner paidthe commission of Rs.4.25 crores to the Societies underthe Sugarcane Act. Rane * 4/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 (c). In the above view, the petitioner claimed adeduction of Rs.4.25 crores in its return for the previousyear relevant to the Assessment Year 2013-14. However,the Assessing Officer, by an order dated 25[th] March, 2016passed under Section 143(3) of the Act for theAssessment Year 2013-14 did not accept the petitioner'sclaim for deduction of Rs.4.25 crores being commissionpaid to the Societies under the Sugarcane Act. This on theground that the payment relates to the Assessment Year2012-13 and therefore could not be allowed as a deductionin the Assessment Year 2013-14. (d). Consequent to the above, the petitioner filed an Appeal on 22[nd] April, 2016 before the Commissioner ofIncome Tax (Appeal) CIT(A), challenging the order dated25[th] March, 2016 in respect of Assessment Year 2013-14.At the same time, i.e. on 22[nd] April, 2016 the petitioneralso filed a Revision Application under Section 264 of theAct before respondent no.2-Principal Commissioner of Rane * 5/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 Income-tax alongwith an application for condonation of delay. (d). Consequent to the above, the petitioner filed an Appeal on 22[nd] April, 2016 before the Commissioner ofIncome Tax (Appeal) CIT(A), challenging the order dated25[th] March, 2016 in respect of Assessment Year 2013-14.At the same time, i.e. on 22[nd] April, 2016 the petitioneralso filed a Revision Application under Section 264 of theAct before respondent no.2-Principal Commissioner of Rane * 5/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 Income-tax alongwith an application for condonation of delay. (e). The reason for the delay, in filing the RevisionApplication as explained by the petitioner, in itsapplication for condonation of delay, was that thededuction on account of payments made to the societies asclaimed for the Assessment Year 2013-14 stood rejectedby the assessment order dated 25[th] March, 2016. This byholding that the deduction relates to Assessment Year2012-13 and could not be allowed in the Assessment Year2013-14. It was in the aforesaid circumstances, that therewas a delay in filing the Revision Application on 22[nd]April, 2016. The petitioner's sought condonation of delayon the above account and entertainment of its RevisionApplication on merits. (f). By the impugned order dated 23[rd] March, 2018respondent no.2-Principal Commissioner of Income-taxrejected the petitioner's application for condonation of Rane * 6/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 delay. This on the ground that the petitioner could havemade this claim in a revised return for the AssessmentYear 2012-13, which infact it filed on 8[th] June, 2013. Thiswithout claiming this deduction. Thus, the impugnedorder found, there is no cause for the delay and rejectedthe condonation of delay application. Further, on meritsalso, respondent no.2 rejected the claim. 4. Before considering the petitioner's challenge, itis clear on the above facts, that the respondent no.2-Principal Commissioner of Income-tax mis-directedhimself in deciding with the merits of the RevisionApplication after having rejected the condonationapplication. The jurisdiction to examine the merits of thepetitioner's grievance would only arise if the applicationfor condonation of delay is allowed. Besides, it gives aproper opportunity (more fair) to the party to address theCommissioner of Income-tax on the merits of its RevisionApplication, once it is held that the condonation of delayapplication is allowed. Infact, this Court in EBR Rane * 7/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 Enterprises Vs. Union of India, [2018] 89 taxmann.com194 (Bombay), has on identical fact situation has heldthat the Commissioner misdirected himself in dealingwith the merits of the Revision Application, when thecondonation of delay application was rejected. 5. So far as the delay in filing the RevisionApplication under Section 264 of the Act is concerned, itis the petitioner's case that as payments of commission toSocieties under the Sugarcane Act was made in previousyear relevant to Assessment Year 2013-14. This wasconsequent to the order dated 19[th] June, 2012 of the StateGovernment. Therefore, they took a view that, thededuction was allowable in Assessment Year 2013-14. Itwas in the above context, that though the petitioner hadfiled a revised return of income, in the year 2013 forAssessment Year 2012-13, it did not claim the deductionof Rs.4.25 crores being the amount paid to the Societies.It was only after Assessing Officer, by his order dated 25[th]March, 2016 held that, this deduction of Rs.4.25 crores Rane * 8/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 Rane * 8/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 relates to Assessment Year 2012-13 and therefore couldnot be allowed in the Assessment Year 2013-14 that thepetitioner was compelled to file the Revision Petition so asto claim the deduction. This to ensure that, in atleast oneof the two assessment years it gets the benefit ofdeduction. It is to be noted that the petitioner filed itsRevision Application on 22[nd] April, 2016 i.e. within amonth of the order of the Assessing Officer dated 25[th]March, 2016 relating to Assessment Year 2013-14. In theaforesaid circumstances, the reason in filing the RevisionApplication is for reasonable cause and should have beencondoned by the respondent no.2-Principal Commissionerof Income-tax. 6. In the above circumstances, we are inclined to set aside the impugned order dated 23[rd] March, 2016 andrestore the Revision Application to the respondent no.2for disposal of the application on merits. This after, wehave condoned the delay. Rane * 9/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 7. At this stage, Mr. Malhotra, the LearnedCounsel for the Revenue submits that restoring theRevision Application would be a futile exercise as theRevision Application itself is not maintainable. It ispointed out that the claim of deduction of Rs.4.25 croresbeing the payment made to the Societies was not a claimmade either in the original or revised return of incomebefore the Assessing Officer for the Assessment Year 2012-13. Thus, relying upon the decision of the Apex Court inGoetze (India) Ltd. vs. Commissioner of Income-tax, 2006(284) ITR 323, it is submitted that such a claim could notbe made before the Commissioner of Income-tax inRevision under Section 264 of the Act. It was pointed outto him that the decision of the Apex Court in Goetze(India) Ltd. (supra) was considered by this Court inCommissioner of Income Tax V/s. Pruthvi Brokersand Shareholders Ltd. (2012) 349 ITR 336, whereinafter consideration of Goetze (India) Ltd. (supra), thisCourt after placing reliance upon National ThermalPower Co. Ltd. V/s. Commissioner of Income-Tax, Rane * 10/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 (1998) 229 ITR 383 it has been held that nothing barsan appellate authority from entertaining a claim whichmay not have been made by the Assessing Officer. It heldthat it is only the Assessing Officer who is prohibited fromentertaining the claim which is not been made in thereturn filed before it. 8. Mr. Malhotra, Learned Counsel appearing on behalf of the Revenue, responded by pointing out thatdecisions of this Court in Pruthvi Brokers (supra) mayhave no application as it was rendered in the context ofthe appellate proceedings while the present proceedingsbefore the respondent no.2-Principal CIT are Revisionalproceedings under Section 264 of the Act. It was furthersubmitted by him that only particular types of errors canbe subjected to correction by revisional authorities underSection 264 of the Act. In support places reliance uponthe decision of the Delhi High Court in Vijay Gupta V/s.Commissioner of Income Tax, Delhi-XIII and anr.(Writ Petition (C) No. 1572 of 2013) rendered on 23[rd] Rane * 11/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 March, 2016 and on Sanchit Software & Solutions (P.)Ltd. V/s. Commissioner of Income-tax-8, [2012] 349ITR 404 (Bombay). Rane * 11/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 March, 2016 and on Sanchit Software & Solutions (P.)Ltd. V/s. Commissioner of Income-tax-8, [2012] 349ITR 404 (Bombay). 9. On the other hand, Mr. Rafique DadaLearned Senior Counsel appearing for the petitioners,invited our attention to the decisions of the Delhi HighCourt in Rajesh Kumar Aggarwal V/s. Commissionerof Income-Tax, Delhi-VIII, [2017] (78) taxmann.com265 and the decision of the Kerala High Court inTransformers & Electricals Kerala Ltd. Vs. DeputyCommissioner of Income-tax, Circle 4(2), Kochi,[2016] 75 taxmann.com 298 wherein a view has beentaken that the powers of revision under Section 264 of theAct are very wide and is not restricted to onlyconsideration of claims made before the Assessing Officer.Therefore, it is submitted that it would be appropriatethat, respondent no.2-Principal CIT passes a fresh orderafter hearing the parties and considering the abovedecisions relied upon by the Learned Counsel for the Rane parties. 10. In view of the rival contentions, we do notaccept the contention of the Revenue that restoring theapplication under Section 264 of the Act the PrincipalCommissioner of Income-tax-respondent no.2 would be anexercise in futility. There are issues to be adjudicated andit is best that the Authority under the Act, discharges hisobligation. 11. At this stage, we make no comments on themerits of the Revision Application which is before thePrincipal CIT-respondent no.2. We set aside the impugnedorder dated 23[rd] March, 2018 and after condoning thedelay in filing the Revision Application, we restore thepetitioner's Revision Application dated 22[nd] April, 2016before the respondent no.2-Principal Commissioner ofIncome-tax for disposal on merits after following theprinciples of natural justice. All contentions kept open. Rane * 13/13 * WP-1206-2018 (SR.9)Thursday, 12.7.2018 12. Petition allowed in above terms. No order as to costs. (SANDEEP K. SHINDE, J) (M.S. SANKLECHA, J)