Wp(C) v. Wp(C)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL THURSDAY, THE 3 DAY OF AUGUST 2023 / 12TH SRAVANA, 1945WP(C) NO. 7779 OF 2016 PETITIONER/S: EQUITY INTELLIGENCE INDIA PVT. LTD5TH FLOOR, AREEKAL MANSION, MANORAMA JUNCTION, PANAMPILLY NAGAR, COCHIN 682036, REP BY ITS MANAGING DIRECTOR, MR PORINJU VELIYATH BY ADVS.SRI.JOSEPH MARKOSE (SR.)SRI.V.ABRAHAM MARKOSSRI.ABRAHAM JOSEPH MARKOSSRI.HARAN THOMAS GEORGESRI.ISAAC THOMASSRI.NOBY THOMAS CYRIAC RESPONDENT/S: 1PRINCIPAL COMMISSIONER OF INCOME TAXC R BUILDING, I S PRESS ROAD, KOCHI 6820182THE ASSISTANT COMMISSIONER OF INCOME TAXCIRCLE 1(1), ERNAKULAM -682018BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES)SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARDON 03.08.2023, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: J U D G M E N T 1.Orders dated 20.11.2015, Exts.P10 and P11,rejecting applications moved under Section 264 ofthe Income Tax Act, 1961 ('Act', for short) by thepetitioner for revising return for the assessmentyears 2007-08 and 2009-10 respectively, are underchallenge in the present writ petition.2.Petitioner is Securities and ExchangeBoard of India (SEBI) registered Portfolio Managersince 2003 and engaged in the business of renderingportfolio management services to its clients inaccordance with the guidelines and regulationsissued by SEBI from time to time. It is also anassessee under the Act in filing returns. From theinception onwards, petitioner filed return showinggains from investments in shares under the head'investments' in the balance sheet as 'capitalgains' for the respective financial years, whichwere accepted by the Department. However, for theassessment years 2006-07, 2008-09 and 2010-11, the Department assessed such gains as 'businessincome', while for the assessment years 2007-08 and2009-10, when petitioner suffered capital loss, itwas assessed as 'capital gain/loss'. Assessmentorders for the years 2006-07, 2008-09 and 2010-11were assailed before the appellate authority andbefore this Court. Both the authorities rejectedthe case of the petitioner and the matter is statedto be pending before the Hon'ble Supreme Court.Realising the fact that the income on sale ofshares is to be assessed under the head 'businessincome/loss' and not as 'capital gain', petitionsfor revision of assessments for the years 2007-08and 2009-10, Exts.P6 and P7, under Section 264 ofthe Act were submitted along with delay condonationapplications. Those were dismissed by theCommissioner as per orders dated 20.11.2015,Exts.P10 and P11, respectively, which arechallenged in the present writ petition. 3.Learned Senior Counsel appearing on behalfof the petitioner submitted that orders of the competent authority Exts.P10 and P11 are notsustainable in the eyes of law, that at the timewhen petitions were considered, the law with regardto revision of orders was different than the ratiodecidendi culled out in the judgment of Delhi HighCourt in Vijaya Gupta v. Commissioner of Income Taxand Another [(2016) 386 ITR 643 (Delhi)]. Theimpediment of the limitation would not also betaken against the petitioner as petitioner soughtto rectify the orders taking into consideration theorder passed by the assessing officer for the year2006-07 treating it as capital gain instead ofbusiness gain. 4.On the other hand, learned StandingCounsel for the Income Tax Department opposed theaforementioned contentions and stated that noexplanation has come forward in not submittingapplications within a period of one year asprovided under Section 264 of the Act, but did notdispute the fact that the Commissioner would havethe power to rectify mistake by taking into consideration the provisions of Section 264. 5.I have heard the learned counsel appearingfor the parties and appraised the paper book. 6.Section 264 of the Act reads as under: 4.On the other hand, learned StandingCounsel for the Income Tax Department opposed theaforementioned contentions and stated that noexplanation has come forward in not submittingapplications within a period of one year asprovided under Section 264 of the Act, but did notdispute the fact that the Commissioner would havethe power to rectify mistake by taking into consideration the provisions of Section 264. 5.I have heard the learned counsel appearingfor the parties and appraised the paper book. 6.Section 264 of the Act reads as under: “264.Revision of other orders.—(1) In the caseof any order other than an order to whichsection 263 applies passed by an authoritysubordinate to him, the Principal Commissioneror Commissioner may, either of his own motion oron an application by the assessee for revision,call for the record of any proceeding under thisAct in which any such order has been passed andmay make such inquiry or cause such inquiry tobe made and, subject to the provisions of thisAct, may pass such order thereon, not being anorder prejudicial to the assessee, as he thinksfit. (2) The Principal Commissioner orCommissioner shall not of his own motion reviseany order under this section if the order hasbeen made more than one year previously. (3) In the case of an application forrevision under this section by the assessee, theapplication must be made within one year fromthe date on which the order in question wascommunicated to him or the date on which heotherwise came to know of it, whichever isearlier: Provided that the Principal Commissioner orCommissioner may, if he is satisfied that the assessee was prevented by sufficient cause frommaking the application within that period, admitan application made after the expiry of thatperiod. (4) The Principal Commissioner orCommissioner shall not revise any order underthis section in the following cases: (a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or tothe Commissioner (Appeals) or to theAppellate Tribunal but has not been made andthe time within which such appeal may bemade has not expired, or, in the case of anappeal to the Commissioner (Appeals) or tothe Appellate Tribunal, the assessee has notwaived his right of appeal; or (b) where the order is pending on an appealbefore the Deputy Commissioner (Appeals); or(c) where the order has been made thesubject of an appeal to the Commissioner(Appeals) or to the Appellate Tribunal. (5) Every application by an assessee forrevision under this section shall be accompaniedby a fee of five hundred rupees. (6) On every application by an assessee forrevision under this sub-section, made on orafter the 1[st] day of October, 1998, an ordershall be passed within one year from the end ofthe financial year in which such application ismade by the assessee for revision. Explanation.—In computing the period oflimitation for the purposes of this sub-section, the time taken in giving an opportunity to theassessee to be re-heard under the proviso tosection 129 and any period during which anyproceeding under this section is stayed by anorder or injunction of any court shall beexcluded. (7) Notwithstanding anything contained insub-section (6), an order in revision under sub-section (6) may be passed at any time inconsequence of or to give effect to any findingor direction contained in an order of theAppellate Tribunal, High Court or the SupremeCourt. Explanation 1.—An order by the PrincipalCommissioner or Commissioner declining tointerfere shall, for the purposes of thissection, be deemed not to be an orderprejudicial to the assessee.Explanation 2.—For the purposes of this section,the Deputy Commissioner (Appeals) shall bedeemed to be an authority subordinate to thePrincipal Commissioner or Commissioner.” (7) Notwithstanding anything contained insub-section (6), an order in revision under sub-section (6) may be passed at any time inconsequence of or to give effect to any findingor direction contained in an order of theAppellate Tribunal, High Court or the SupremeCourt. Explanation 1.—An order by the PrincipalCommissioner or Commissioner declining tointerfere shall, for the purposes of thissection, be deemed not to be an orderprejudicial to the assessee.Explanation 2.—For the purposes of this section,the Deputy Commissioner (Appeals) shall bedeemed to be an authority subordinate to thePrincipal Commissioner or Commissioner.” 7.It is a matter of record that for theassessment year 2006-07, income derived frominvestment of shares though was claimed in theincome tax return as capital gain, but theDepartment treated it as a business sale. The saiddecision was assailed before the appellate authority and ultimately before this Court, butpetitioner was not successful. Now, the matter,according to the contention, is stated to bepending before the Hon'ble Supreme Court. As anabundant precaution, applications Exts.P6 and P7were submitted to the Commissioner forrectification/revision of the orders for assessmentyears 2007-08 and 2009-10 to treat the same as hasbeen done for the assessment year 2006-07. Thoughthe aforesaid applications were submitted on12.6.2014, it was beyond the period of one year asprovided under the statute. Such delay could nothave been condoned, as per the plain and simplereading of Section 264 extracted above. 8.Commissioner, in my view, rightly rejectedthe applications being time barred, though on otherpoint the reasoning given is not sustainable inview of the ratio deciendi culled out in thejudgment of Delhi High Court in Vijaya Gupta(supra) regarding the powers of Commissioner. Theexplanation given by the petitioner for condoning the delay was also not found satisfactory as it wasa subsequent cause of action. Since delay has notbeen explained in a proper and reasonable manner,dismissal of the applications for revision oforders for the assessment years 2007-08 and 2009-10, vide orders dated 20.11.2015, Exts.P10 and P11,respectively, are perfectly correct and do not callfor interference. In my view, such an attempt wasan afterthought realising the fact that forassessment years 2007-08 and 2009-10, return ofincome/gains arising from investment in equityshares was capital loss. Writ petition is bereft of merit and isaccordingly dismissed. Pending interlocutoryapplications, if any, in the writ petition wouldstand dismissed. jg Sd/- JUDGE AMIT RAWAL PETITIONER EXHIBITS P1:-TRUE COPY OF INTIMATION UDER SECTION 143(1) DTD 10/3/2010 FOR AY 2007-08 P2:-TRUE COPY OF INTIMATION UNDER SECTION 143(1) DTD 4/9/2010 FOR AY 2009-10 P3:-TRUE COPY OF ASSESSMENT ORDER DTD 15/12/2011 UNDER SECTION 147 FOR AY 2006-07 P4:-TRUE COPY OF ASSESSMENT ORDER DTD 30/12/2010 UNDER SECTION 143(3) FOR AY 2008-09 P5:-TRUE COPY OF ASSESSMENT ORDER DTD 08/3/2013 UNDER SECTION 143(3) FOR AY 2010-11 P6:-TRUE COPY OF REVISION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2007-08 UNDER COVERING LETTER DTD 12/6/2014 P6(a):-TRUE COPY OF DELAY CONDONATION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2007-08 P7:-TRUE COPY OF REVISION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2009-10 UNDER COVERING LETTER DTD 12/6/2014 P7(a):-TRUE COPY OF DELAY CONDANATION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2009-10 P8:-TRUE COPY OF JUDGMENT DTD 3/7/2015 OF THIS HONOURABLE COURT IN ITA NO 280/2014 AND CONNECTED CASES P9:-TRUE COPY OF ORDER DTD 2/11/2015 OF THE HONOURABLE SUPREME COURT OF INDIA IN SLP(C)NOS 30335-30337/2015 FILED BY THE PETITIONER P6:-TRUE COPY OF REVISION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2007-08 UNDER COVERING LETTER DTD 12/6/2014 P6(a):-TRUE COPY OF DELAY CONDONATION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2007-08 P7:-TRUE COPY OF REVISION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2009-10 UNDER COVERING LETTER DTD 12/6/2014 P7(a):-TRUE COPY OF DELAY CONDANATION PETITION DTD 10/6/2014 FILED BY THE PETITIONER BEFORE THE IST RESPONDENT FOR AY 2009-10 P8:-TRUE COPY OF JUDGMENT DTD 3/7/2015 OF THIS HONOURABLE COURT IN ITA NO 280/2014 AND CONNECTED CASES P9:-TRUE COPY OF ORDER DTD 2/11/2015 OF THE HONOURABLE SUPREME COURT OF INDIA IN SLP(C)NOS 30335-30337/2015 FILED BY THE PETITIONER P10:-TRUE COPY OF ORDER UNDER SECTION 264 DTD 20/11/2015OF THE IST RESPONDENT FOR AY 2007-08 P11:-TRUE COPY OF ORDER UNDER SECTION 264 DTD 20/11/2015OF THE IST RESPONDENT FOR AY 2009-10