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VIJAY GUPTA Vs. COMMISSIONER OF INCOME TAX DELHI-XIII AND ANR.
March, 30th 2016
* IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                Judgment reserved on: 05th November, 2015
                                 Judgment delivered on: 23rd March, 2016

+         WP(C) 1572/2013
VIJAY GUPTA                                                              .... Petitioner
                                         versus
COMMISSIONER OF INCOME TAX DELHI -XIII AND
ANR.                           .... Respondents

Advocates who appeared in this case:
For the Petitioner   :   Mr Ajay Vohra, Sr Advocate with Ms Bhavita Kumar, Advocate with
                         petitioner in person.
For the Respondents :    Mr Kamal Sawhney, Mr Raghvendra Singh, Mr Shikhar Garg and Mr Sharad
                         Aggarwal, Advocates.


 CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SANJEEV SACHDEVA

                                    JUDGEMENT

 SANJEEV SACHDEVA, J

1.         The Petitioner has filed the present Writ Petition seeking
quashing of the order dated 20.11.2012, passed by the Respondent No.
1 under section 264 of the Income Tax Act, 1962 (hereinafter referred
to as the Act) for the assessment years 2008-09, and for a direction to




WP(C) No.1572/2013                                                                  Page 1 of 25
the    Respondents    to   refund   the   income    tax   amounting       to
Rs.2,96,58,825/- for assessment years 2008-09 paid by the Petitioner.

2.      The petitioner is an individual. It is contended that during the
period July, 2007 to November, 2007, the petitioner sold 2,98,000
shares out of 3,08,000 shares in DLF Ltd., having face value of Rs.2
each, on the recognized stock exchange for a total consideration of
Rs.19,78,00,000. It is contended that the said shares in DLF Ltd. were
received by the Petitioner as gift from his mother on 30.01.2007.

3.      On 31.01.2009, the Petitioner filed his return of income for
assessment year 2008-09 declaring total income of Rs. 20,57,73,420/-.
By adopting the date of gift from the mother as the date of acquisition
of shares, the Petitioner offered for tax, gains arising on sale of shares
in the DLF Ltd. as "short term capital gains". The g ains were
computed as under:
        Sale consideration of 2,98,000 shares :      Rs.19,78,00,000
        Less: Proportionate cost of acquisition :    Rs.      74,500
        Short term capital gains               :     Rs.19,77,25,500

4.      The Assessing Officer (Respondent No. 2) on 27.03.2010
issued intimation under section 143(1) of the Act accepting the
returned income. The Assessing Officer, however levied tax @ 30%
instead of 10% as computed by the Petitioner.




WP(C) No.1572/2013                                               Page 2 of 25
5.      On 14.01.2011 the Petitioner filed an application under section
154 of the Act before the Respondent No. 2 contending that the
capital gains on transfer of shares in DLF Ltd., were actually in the
nature of "long term capital gains" and since the shares were sold on
the recognized stock exchange, the entire gains were exempt from tax
under section 10(38) of the Act.

6.      The assessing Officer by order dated 21.02.2011, passed under
section 154, of the Act partly rectifying the intimation and computed
the tax on capital gains @ 10% as against 30% computed in the
intimation.

7.      The Assessing Officer passed another order dated 12.07.2011
under section 154/143(1) of the Act thereby rejecting the application
filed by the Petitioner under section 154 of the Act holding inter-alia
as under:-
        "Since the assessee has paid major part of taxes as self
        assessment tax hence the assessee plea cannot be accepted as
        he was not aware about his income from sale of shares.
        However the assessee has not claimed any refund during the
        time prescribed in section 139 of the IT Act, 1961, hence the
        assessee's plea for refund cannot be accepted at this stage. This
        issue does not fall in the ambit of section 154 of the IT Act,
        1961. In the above mentioned circumstances, the assessee's
        application under sec. 154 is hereby rejected."

8.      The order dated 12.07.2011, rejected the application for
rectification primarily on the ground that the Petitioner did not claim

WP(C) No.1572/2013                                              Page 3 of 25
any refund in the return filed under section 139 of the Act and further
that the issue of refund did not fall within the ambit of section 154 of
the Act.

9.      Thereafter, the Petitioner approached the Commissioner of
Income Tax (Respondent No. 1) by a revision application under
section 264 dated 09.11.2011 impugning the intimation under section
143(1) dated 27.03.2010 and the rectification order dated 12.07.2011.

10.     By the Impugned Order dated 20.11.2012 the application of the
petitioner under section 264 has been rejected, first of all, holding that
the petition was not filed with the prescribed fee of Rs 500/- and,
secondly, that the order dated 12.11.2011 was proper as the scope of
interference under section 154 of the Act was very limited and had to
be strictly based on the return filed by the Petitioner/assessee and,
thirdly, holding that there was no material on the basis of which
capital gains could be calculated by taking the date of acquisition as
the year 1987 or 2005 and, lastly, holding that the Intimation under
section 143(1) could not be regarded as an order and was thus not
amenable to revisionary jurisdiction under section 264 of the Act.

11.      The Petitioner has impugned the said decision contending that
the respondents do not dispute the fact that the gains disclosed in the
return were exempt from tax under section 10(38) of the Act. It is not
in dispute that while filing the return of income the Petitioner had





WP(C) No.1572/2013                                               Page 4 of 25
calculated his period of holding the shares in DLF Ltd. from the date
on which the said shares were received by him as gift from his
mother. Shares in DLF Ltd were acquired by the mother partly in the
year 1987 and partly consequent to conversion of secured convertible
debentures issued by the said company in December, 2005. Thus
computing the period as less than 12 months, the Petitioner declared
income from transfer of such shares as taxable short term capital
gains. Reliance is also placed on Circular No. 14(XL-35) of 1955,
dated 11.4.1955 of the Central Board of Direct Taxes.

12.     To settle the controversy that arises in the present petition, we
need to examine the scheme of the Act.

13.     The Relevant provisions of Section 2 of the Act read as under:

        "2. Definitions
        *****              *****               *****
        (29A) "long-term capital asset" means a capital asset
              which is not a short-term capital asset;

        (29B) "long-term capital gain" means capital gain
             arising from the transfer of a long-term capital
             asset;
        *****              *****               *****

        (42A) "short-term capital asset" means a capital asset
              held by an Petitioner for not more than thirty-six



WP(C) No.1572/2013                                              Page 5 of 25
                months immediately preceding the date of its
                transfer:

                Provided that in the case of a share held in a
                company or any other security listed in a
                recognised stock exchange in India or a unit of the
                Unit Trust of India established under the Unit
                Trust of India Act, 1963 (52 of 1963) or a unit of a
                Mutual Fund specified under clause (23D) of
                section 10 or a zero coupon bond , the provisions
                of this clause shall have effect as if for the words
                "thirty-six months", the words "twelve months" had
                been substituted.

                Explanation 1-
                (i)      In determining the period for which any
                         capital asset is held by the assessee-

                *****                 *****              *****
                      (b) in the case of a capital asset which becomes
                         the property of the assessee in the
                         circumstances mentioned in sub-section (1)
                         of section 49, there shall be included the
                         period for which the asset was held by the
                         previous owner referred to in the said
                         section;

                *****                 *****              *****

                      (f) in the case of a capital asset, being a
                          financial asset, allotted without any payment
                          and on the basis of holding of any other
                          financial asset, the period shall be reckoned
                          from the date of the allotment of such
                          financial asset;


WP(C) No.1572/2013                                                   Page 6 of 25
                *****                 *****                    *****
        (42B) "short-term capital gain" means capital gain
             arising from the transfer of a short-term capital
             asset;

                *****                 *****                    *****"

14.     The relevant provisions of section 49, referred to in clause (b)
of Explanation 1 to section 2 (42A) of the Act reads as under:
        "49. Cost with          reference       to   certain    modes   of
        acquisition.

        (1)     Where the capital asset became the property of the
                assessee-

        *****                 *****                   *****

                (ii)    under a gift or will;
        *****                 *****                   *****"


15.     Reading Explanation I to section 2(42A) with section 49 of the
Act shows that for computing the period of holding a capital asset,
which becomes the property of the assessee by way of gift or will, the
period for which the asset was held by the previous owner shall be
included.

16.     Therefore, for the purposes of computing capital gains on
transfer of shares in DLF Ltd., the Petitioner should have included the
period for which the said shares were held by his mother. This, it is
contended, was not done when the return of income was filed. Since

WP(C) No.1572/2013                                                      Page 7 of 25
the period for which the mother had held the shares was in excess of
the stipulated period for computing "short term capital gains", the
gains made by the petitioner on sale of the subject shares were "long
term capital gains" which were exempt from tax under section 10(38)
of the Act.

17.     Article 265 of the Constitution of India reads that "No tax shall
be levied or collected except by the authority of law. " In terms of the
Article 265 of the Constitution, tax can be levied only if it is
authorized by law. The taxing authority cannot collect or retain tax
that is not authorized. Any retention of tax collected, which is not
otherwise payable, would be illegal and unconstitutional.

18.     The Supreme Court of India in CIT v. Shelly Products and
another 261 ITR 367 held that if the assessee has by mistake or
inadvertence or on account of ignorance, included in his income any
amount which is exempted from payment of income-tax or is not
income within the contemplation of law, the assessee may bring the
same to the notice of the assessing officer, which if satisfied, may
grant the assessee necessary relief and refund the tax paid in excess, if
any.

19.     In CIT v. Bharat General Reinsurance Co. Ltd. 81 ITR 303
(Del), this court held that merely because the assessee wrongly
included the income in its return for a particular year, it cannot confer


WP(C) No.1572/2013                                              Page 8 of 25
jurisdiction on the department to tax that income in that year even
though legally such income did not pertain to that year.

20.     The Bombay High Court in Balmukund Acharya vs DCIT,
CIT and UOI 310 ITR 310 held that Tax can be collected only as
provided under the Act. If any assessee, under a mistake,
misconception or on not being properly instructed is over assessed,
the authorities under the Act are required to assist him and ensure that
only legitimate taxes due are collected.

21.     The Bombay High Court in Nirmala L. Mehta v. A.
Balasubramaniam, C.I.T. (2004) 269 ITR 1 held that there cannot be
any estoppel against the statute. Article 265 of the Constitution of
India in unmistakable terms provides that no tax shall be levied or
collected except by authority of law. Acquiescence cannot take away
from a party the relief that he is entitled to where the tax is levied or
collected without authority of law.

22.     Circular No. 14(XL-35) of 1955, dated 11.4.1955, issued by the
Central Board of Direct Taxes and relied upon by the Petitioner reads
as under:
        "Officers of the department must not take advantage of
        ignorance of an assessee as to his rights. It is one of their duties
        to assist a tax payer in every reasonable way, particularly in
        the matter of claiming and securing reliefs and in this regard
        the officers should take the initiative in guiding a tax payer
        where proceedings or other particulars before them indicate


WP(C) No.1572/2013                                                 Page 9 of 25
           that some refund or relief is due to him. This attitude would, in
           the long run, benefit the department, for it would inspire
           confidence in him that he may be sure of getting a square deal
           from the department. Although, therefore, the responsibility for
           claiming refunds and reliefs rests with the assesses on whom it
           is imposed by law, officers should ­

           (a)     draw their attention to any refunds or reliefs to which
                   they appear to be clearly entitled but which they have
                   omitted to claim for some reason or other;
           (b)     freely advise them when approached by them as to their
                   rights and liabilities and as to the procedure to be
                   adopted for claiming refunds and reliefs".

23.        A reading of the circular shows that a duty is cast upon the
assessing officer to assist and aid the assessee in the matter of
taxation. They are obliged to advise the assessee and guide them and
not to take advantage of any error or mistake committed by the
assessee or of their ignorance. The function of the Assessing Officer is
to administer the statute with solicitude for public exchequer with an
inbuilt idea of fairness to taxpayers.1

24.        Section 264 of the Act read as under:

                   264. Revision of other orders

                   (1) In the case of any order other than an order
                   to which section 263 applies passed by an
                   authority subordinate to him, the Commissioner
                   may, either of his own motion or on an application
                   by the assessee for revision, call for the record of
1
    CIT V. Rajesh Jhaveri Stock Brokers (P) Limited: 291 ITR 500 (SC)


WP(C) No.1572/2013                                                      Page 10 of 25
                any proceeding under this Act in which any such
                order has been passed and may make such inquiry
                or cause such inquiry to be made and, subject to
                the provisions of this Act, may pass such order
                thereon, not being an order prejudicial to the
                assessee, as he thinks fit.

                (2) The Commissioner shall not of his own
                motion revise any order under this section if the
                order has been made more than one year
                previously.

                (3) In the case of an application for revision
                under this section by the assessee, the application
                must be made within one year from the date on
                which the order in question was communicated to
                him or the date on which he otherwise came to
                know of it, whichever is earlier: Provided that the
                Commissioner may, if he is satisfied that the
                assessee was prevented by sufficient cause from
                making the application within that period, admit
                an application made after the expiry of that period.
                (4) The Commissioner shall not revise any
                order under this section in the following cases-

                      (a) where an appeal against the order
                      lies    to    the Deputy      Commissioner
                      (Appeals) or to the Commissioner (Appeals)
                      or to the Appellate Tribunal but has not
                      been made and the time within which such
                      appeal may be made has not expired or, in
                      the case of an appeal to the Commissioner
                      (Appeals) or to the Appellate Tribunal, the
                      assessee has not waived his right of appeal;
                      or


WP(C) No.1572/2013                                               Page 11 of 25
                      (b) where the order is pending on an
                      appeal before the Deputy Commissioner
                      (Appeals)]; or

                      (c) where the order has been made the
                      subject of an appeal to the Commissioner
                      (Appeals) or to the Appellate Tribunal.

                (5) Every application by an assessee for
                revision under this section shall be accompanied
                by a fee of twenty five rupees
                Explanation 1-An order by the Commissioner
                declining to interfere shall, for the purposes of this
                section, be deemed not to be an order prejudicial
                to the assessee.

                Explanation 2.- For the purposes of this section,
                the Deputy Commissioner (Appeals) shall be
                deemed to be an authority subordinate to the
                Commissioner.

25.     Section 264 of the Act empowers the Commissioner to revise
any order other than an order to which section 263 applies passed by
an authority subordinate to him, of his own motion or on an
application by the assessee for revision. The Commissioner is
empowered to call for the record of any proceeding under this Act in
which such order has been passed and may make such inquiry or
cause such inquiry to be made and, subject to the provisions of this
Act, pass such order thereon, not being an order prejudicial to the
assessee, as he thinks fit. This power has been conferred on the
Commissioner to correct any order passed by a subordinate authority.

WP(C) No.1572/2013                                                 Page 12 of 25
26.      In Pt. Sheonath Prasad Sharma v. CIT, [1967] 66 ITR 647
(All) while determining the question, whether the assessee can, in
revision question the taxability of particular amounts offered by him
as income for assessment, the Allahabad High Court observed as
under:

         " It seems to me, however, that the order of the
         Commissioner rejecting the previous applications, on the
         mere ground that the petitioner had shown the income in
         his return, is erroneous. The Commissioner was bound to
         apply his mind to the question whether the petitioner was
         taxable on that income. The Income-tax Officer is entitled
         under Section 23(1) to make an assessment on the basis
         of the return if he is satisfied, without requiring the
         presence of the assessee or the production of evidence in
         support of the return, that the return is correct and
         complete. But it may be that the assessee may have
         committed a mistake in treating a certain receipt as
         taxable. The mere circumstance that he has shown that
         receipt as income in his return does not make him liable
         to tax thereon. An assessee is liable to tax only upon such
         receipt as can be included in his total income and is
         assessable under the Income-tax Act. The law empowers
         the Income-tax Officer to assess the income of an
         assessee and determine the tax payable thereon. In doing
         so, he may proceed on the basis that, where an assessee
         discloses that a certain sum of money has been deceived
         by him, the fact of that receipt may be accepted without
         anything more as constituting an admission on the part of
         the assessee. That would be an admission as to a state of
         fact. But whether the receipt can be considered as
         taxable income is quite another matter, and
         consideration of that question leads into the realm of


WP(C) No.1572/2013                                               Page 13 of 25
        law. If the Income-tax Officer assesses an assessee upon
        a receipt which is not taxable in law, it is always open to
        the assessee to take the case in appeal or in revision
        thereafter. It is then for the Appellate Assistant
        Commissioner or the Commissioner of Income-tax, as the
        case may be, to examine the matter and determine
        whether, although the money has been received by the
        assessee, it is taxable in law. The assessee is then within
        his rights in requiring the appellate or the revisional
        authority to examine the validity of the assessment to tax
        of a receipt which, though admitted by him, is not taxable
        in law."

27.     In O.C.M. Ltd. (London) v. ITO, [1977] 110 ITR 722, a
Division Bench of the Allahabad High Court following the decision in
the case of Pt. Sheonath Prasad Sharma (Supra) held as under:

        "In our opinion, the Commissioner has taken a too
        narrow view of the scope of the revision under Section
        264. Though the Income-tax Officer accepted the income
        as returned by the petitioner and made assessment, its
        case is that the order of assessment has to be revised in
        view of the fact that a sum of Rs. 2,30,000 which ought to
        have been included in the return filed by it was omitted
        by inadvertence and, consequently, it was deprived of the
        refund of Rs. 11,500. This aspect of the case has not at
        all been considered by the Commissioner,
        *****              *****               *****
        In the light of the aforesaid decision of this court, it is
        clear that the Commissioner should have applied his
        mind to the petitioner's plea that it had inadvertently
        omitted to include in its return the amount of interim
        dividend received by it from M/s. O.C.M. India (Private)


WP(C) No.1572/2013                                              Page 14 of 25
        Ltd. and that the assessment made by the Income-tax
        Officer without taking into account that amount of
        interim dividend, should be revised and that it (the
        petitioner) should be given the benefit of the refund of the
        super-tax which was deducted at source before payment
        of the interim dividend to it. Hence, the impugned order
        of the Commissioner suffers from a manifest error and
        has to be quashed."

28.     Similar is the view taken by the Gujarat High Court in C.
Parikh & Co. v. CIT: [1980] 122 ITR 610 (Guj), wherein it is
observed as under:
        "It is clear that under s. 264, the Commissioner is
        empowered to exercise revisional powers in favour of the
        assessee. In exercise of this power, the Commissioner
        may, either of his own motion or on an application by the
        assessee, call for the record of any proceeding under the
        Act and pass such order thereon not being an order
        prejudicial to the assessee, as the thinks fit. Sub-sections
        (2) and (3) of s. 264 provide for limitation of one year for
        the exercise of this revisional power, whether suo motu,
        or at the instance of the assessee. Power is also
        conferred on the Commissioner to condone delay in case
        he is satisfied that the assessee was prevented by
        sufficient cause from making the application within the
        prescribed period. Sub-section (4) provides that the
        Commissioner has no power to revise any order under s.
        264(1) : (i) while an appeal against the order is pending
        before the AAC, and (ii) when the order has been subject
        to an appeal to the Income-tax Appellate Tribunal.
        Subject to the above limitation, the revisional powers
        conferred on the Commissioner under s. 264 are very
        wide. He has the discretion to grant or refuse relief and
        the power to pass such order in revision as he may think

WP(C) No.1572/2013                                               Page 15 of 25
        fit. The discretion which the Commissioner has to
        exercise is undoubtedly to be exercised judicially and not
        arbitrarily according to his fancy. Therefore, subject to
        the limitation prescribed in s. 264, the Commissioner in
        exercise of his revisional power under the said section
        may pass such order as he thinks fit which is not
        prejudicial to the assessee. There is nothing in s.
        264 which places any restriction on the Commissioner's
        revisional power to give relief to the assessee in a case
        where the assessee detracts mistakes on account of which
        he was over-assessed after the assessment was
        completed. We do not read any such embargo in the
        Commissioner's power as read by the Commissioner in
        the present case. It is open to the Commissioner to
        entertain even a new ground not urged before the lower
        authorities while exercising revisional powers.
        Therefore, though the petitioner had not raised the
        grounds regarding under-totalling of purchases before
        the ITO, it was with in the power of the Commissioner of
        admit such a ground in revision. The Commissioner was
        also not right in holding that the over-assessment did not
        arise from the order the assessment. Once the petitioner
        was able to satisfy that there was a mistake in totalling
        purchases and that there was under-totalling of
        purchases to the tune of Rs. 20,000, it is obvious that
        there was over-assessment. In other words, the
        assessment of the total income of the assessee is not
        correctly made in the assessment order and it has
        resulted in over-assessment. The Commissioner would
        not be acting de hors the I.T. Act, if he gives relief to the
        assessee in a case where it is proved to his satisfaction
        that there is over-assessment, whether such over-
        assessment is due to a mistake detected by the assessee
        after completion of assessment or otherwise. In our
        opinion, the Commissioner has misconstrued the words


WP(C) No.1572/2013                                                Page 16 of 25
        "subject to the provisions of this Act" in s. 264(1) and
        read a restriction on his revisional power which does not
        exist. The Commissioner was, therefore, not right in
        holding that it was not open to him to give relief to the
        petitioner on account of the petitioner's own mistake
        which it detected after the assessment was completed.
        Once it is found that there was a mistake in making an
        assessment, the Commissioner had power to correct it
        under s. 264(1). In our opinion, therefore, the
        Commissioner was wrong in not giving relief to the
        petitioner in respect of over-assessment as a result of
        under-totalling of the purchases to the extent of Rs.
        20,000."
                                             (underlining supplied)
29.     Relying upon the above decisions, the Kerala High Court in the
case of Parekh Brothers v. CIT: 150 ITR 105 (Ker) held as under:

        In the light of the above discussions, we have no
        hesitation to hold that the Commissioner of Income-tax
        committed an error of law in holding that it is not open to
        him for the first time to entertain a relief of the kind
        pleaded by the assessee and in denying jurisdiction. We
        hold, that even though a mistake was committed by the
        assessee and it was detected by him after the order of
        assessment, and the order of assessment is not erroneous,
        none the less it is open to the assessee to file a revision
        before the Commissioner under Section 264 of the Act
        and claim appropriate relief. But it should not be
        forgotten that the power to be exercised under Section
        264 is a revisionary one. The limitations implicit in the
        exercise of such power are well known. The jurisdiction
        is discretionary; Whether in a particular case, on the
        basis of facts disclosed, the Commissioner will exercise
        his jurisdiction and interfere in the matter, is a matter of




WP(C) No.1572/2013                                               Page 17 of 25
        discretion. It is certainly a judicial discretion vested in
        the Commissioner, to be exercised in accordance with
        law. We are not called upon to pronounce on the scope
        and amplitude of the revisional power. The only question
        mooted for our consideration in this case is whether the
        Commissioner has got revisional jurisdiction at all,
        where the assessee having included the income for
        assessment, can claim the relief of weighted deduction
        under Section 35B of the Act, for the first time, in a
        petition filed under Section 264 of the Act. On that aspect
        of the question, we have no doubt in our mind that the
        Commissioner has jurisdiction to entertain a revision
        petition under Section 264 of the Act.
30.     The High Court of Gujarat in Digvijay Cement Co. Ltd. V CIT:
210 ITR 797 has held that "the power of revision under section 264
cannot be restricted to such erroneous Orders which have become
erroneous as a result of some error committed by the Income-tax
Officer while passing the Orders. Independently of any decision or
absence of any decision on the part of the Income-tax Officer, the
Order of assessment can be challenged as erroneous if, for example,
some provision was overlooked not only by the assessee but also by
the Income-tax Officer. Even in such a case, the Order of assessment
can be challenged by filing a revision application before the
Commissioner."

31.     In the case of Smt. Sneh Lata Jain v. CIT: 192 CTR (J&K) 50,
the High Court of Jammu & Kashmir, considered a similar issue,
where the assessee filed a return of income without claiming


WP(C) No.1572/2013                                              Page 18 of 25
exemption under section 54F of the Act. The return was processed
under section 143(1) of the Act. Subsequently, the mistake came to
the notice of the assessee. The assessee filed revision petition under
section 264 of the Act. The Commissioner rejected the contention of
the petitioner on the ground that since the return of income filed by
the assessee under section 139(1) of the Act had been accepted by the
assessing authority, the revisional powers could not be invoked to
allow relief not claimed in the return. The assessee filed a Writ
Petition impugning the order of the Commissioner. The contention
raised by the Department was that a claim was admissible only where
such claim was made by the assessee in the return of income and not
when the petitioner did not make any such claim in her return.
Relying upon the decisions of the Gujarat High Court in Digvijay
Cement Co. Ltd. (Supra) which in turn relied upon the decisions in
the cases of C. Parikh & Co (Supra), Parekh Brothers (Supra), and
Pt. Sheo Nath Prasad Sharma (Supra) the High Court held as under:
        "A bare reading of section makes it abundantly clear that
        the Commissioner has discretion to invoke the revisional
        jurisdiction. However, once he entertains a revision he
        has the power to call for the record of any proceedings
        under this Act and is also entitled to make any inquiry
        himself or cause any inquiry to be made and pass such
        order as he thinks fit. The only impediment on the power
        of the revisional authority is that he will not pass any
        order prejudicial to the assessee. The respondent No. 1
        has much wider power under section 264. It does not



WP(C) No.1572/2013                                            Page 19 of 25
        circumvent and confine the power of the revisional
        authority in any manner.........

                *****              *****                *****

        Though the assessing authority was not aware of the
        purchase of the property by the petitioner and proceeded
        on the basis of the admitted facts disclosed in the return.
        However, the revisional authority could not be oblivious
        of its duty to accept the contention of the assessee when
        the facts were brought to its notice about the capital gain
        being not chargeable to tax under law. What to say of its
        duty to advice the assessee the revisional authority
        rejected the contention of the petitioner only on technical
        grounds. When the substantive law confers a benefit on
        the assessee under a statute, it cannot be taken away by
        the adjudicatory authority on mere technicalities. It is
        settled proposition of law that no tax can be levied or
        recovered without authority of law. Article 265 of the
        Constitution of India and section 114 of the State
        Constitution imposes an embargo on imposition and
        collection of tax if the same is without authority of law.
        Admittedly, on the basis of facts disclosed before the
        revisional authorities and this Court, the petitioner is not
        liable to tax on the capital gain. Once it is found that the
        petitioner has no tax liability, the respondents cannot be
        permitted to levy the tax and collect the same in
        contravention to article 265 of the Constitution of India,
        which provides a constitutional safeguard on levy and
        collection of tax. It is true that this Court is not to act as
        Court of Appeal while exercising the writ jurisdiction,
        but at the same time where the admitted facts disclosed
        non-exercise of jurisdiction by an adjudicatory authority
        and a citizen is subjected to tax not payable by him,
        interference by this Court is warranted. The respondent
        No. 2 is directed to reassess the taxable income of the

WP(C) No.1572/2013                                                 Page 20 of 25
        petitioner, by taking into consideration the benefit
        available to her under section 54F of the Income-tax Act
        and pass appropriate order."

32.     By the impugned order dated 20.11.2012, the Commissioner
has rejected the revision petition under section 264 of the Act on two
grounds. Firstly, on the ground of that the Petitioner did not comply
with the mandatory requirement of payment of prescribed fees.
Secondly on the technical ground that the intimation under section
143(1) does not qualify as an order and there was no error committed
by the assessing officer based on the record available before him.

33.     It is an admitted position that the requisite fee was paid during
the pendency of the revision petition. The rejection of the application
on the technical ground of non payment of would be taking a hyper
technical view. The condition requiring the payment of fees prior to
the filing of the revision application would be directory in nature.
From a reading of the provisions of Section 264 of the Act, it cannot
be gathered that the non payment of the prescribed fee prior to the
institution of the application for revision would be fatal. The non
payment of the requisite fee would be a mere irregularity which could
be cured at a later stage. The applicant can always be called upon to
pay the requisite fee and make good the deficiency. If the deficiency
is cured, the irregularity would be rectified. In the present case, the
petitioner paid the requisite fee, though belatedly and thus cured the
irregularity. The finding returned by the commissioner that the

WP(C) No.1572/2013                                             Page 21 of 25
application was not maintainable on this account cannot be sustained
and is accordingly set aside.

34.     The other ground for rejection was that the assessing officer
was not at fault as there was no material on the basis of which period
of holding shares by the petitioner could be calculated, by taking the
date of acquisition as the year 1987 or 2005 and no fault could be
found     with       the   action   of   the   Assessing   Officer    in     the
processing/rectification under section 143(1)/154 of the Act.

35.     From the various judicial pronouncements, it is settled that the
powers conferred under section 264 of the Act are very wide. The
Commissioner is bound to apply his mind to the question whether the
petitioner was taxable on that income. Since section 264 uses the
expression "any order", it would imply that the section does not limit
the power to correct errors committed by the subordinate authorities
but could even be exercised where errors are committed by assesses. It
would even cover situations where the assessee because of an error
has not put forth a legitimate claim at the time of filing the return and
the error is subsequently discovered and is raised for the first time in
an application under Section 264.

36.     An assessee is liable 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 any restriction on the


WP(C) No.1572/2013                                                   Page 22 of 25
Commissioner's revisional power to give relief to the assessee in a
case where the assessee detracts mistakes because of which he was
over-assessed after the assessment was completed. Once it is found
that there was a mistake in making an assessment, the Commissioner
had power to correct it under s. 264(1). When the substantive law
confers a benefit on the assessee under a statute, it cannot be taken
away by the adjudicatory authority on mere technicalities. It is settled
proposition of law that no tax can be levied or recovered without
authority of law. Article 265 of the Constitution of India and section
114 of the State Constitution imposes an embargo on imposition and
collection of tax if the same is without authority of law.

37.     The Commissioner further erred in rejecting the application
under section 264 holding that intimation under section 143(1) could
not be regarded as an order and was thus not amenable to revisionary
jurisdiction under section 264 of the Act. The Intimation under section
143(1) is regarded as an order for the purposes of section 264 of the
Act. 2 He failed to appreciate that the petitioner was not only
impugning the intimation under section 143(1) but also the rejection
of the application under section 154 of the Act.



2
 Commissioner Of Income Tax vs K.V. Manakram & Co. [2000] 111 TAXMAN 439 Ker; Assam
Roofing Ltd. vs Commissioner of Income Tax [2014] 43 taxmann.com 316 (Gau); S R Koshti vs
Commissioner of Income Tax 276 ITR 165 (Guj)



WP(C) No.1572/2013                                                           Page 23 of 25
38.     In the present case, as per the Petitioner, in his return of
income, he has erroneously offered to tax gains arising on sale of
shares as short term capital gains instead of same being long term
capital gains exempt from tax. Subsequently, the petitioner on
14.01.2011 filed the application under section 154 of the Act. The
assessing officer on 21.02.2011 partly rectified the intimation and
computed the tax on capital gains @ 10% as against 30% computed in
the intimation issued under section 143(1) of the Act. The assessing
officer, however refused to accept the application under section 154
filed by the petitioner. When the assessing officer could rectify the
intimation on 21.02.2011, he could also consider the prayer of the
petitioner made in the rectification application under section 154 of
the Act, which was already pending before him on that date.

39.     When the commissioner was called upon to examine the
revision application under section 264 of the Act, all the relevant
material was already available on the record of the assessing officer.
The commissioner instead of merely examining whether the
intimation was correct based on the material then available should
have examined the material in the light of the Circular No. 14(XL-35)
of 1955, dated 11.4.1955 and Article 265 of the Constitution of India.
The commissioner has erred in not doing so and in failing to exercise
the jurisdiction vested in him on mere technical grounds.




WP(C) No.1572/2013                                            Page 24 of 25
40.     In view of the above, the impugned order dated 20.11.2012 is
set aside. The revision application under section 264 of the Act is
restored to the file of the Commissioner. The commissioner is directed
to consider the same afresh on merits and dispose the same within a
period of eight weeks from today. The Writ petition is disposed of,
leaving the parties to bear their own costs.


                                               SANJEEV SACHDEVA, J



                                       BADAR DURREZ AHMED, J
MARCH 23 , 2016
HJ




WP(C) No.1572/2013                                           Page 25 of 25

 
 
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