RAJESH BUILDERS MUMBAI vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX AND ORS

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WP/1790/2024HC BombayHCBM01019951202226 March 2024Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the writ petition with specific directions. It held that the Assessing Officer (AO) shall dispose of the Petitioner's application under Section 154 of the Act on or before May 31, 2024. Crucially, the AO was directed not to be influenced by any findings made by the Principal Commissioner of Income Tax in the impugned order passed under Section 264 of the Act. Furthermore, the AO is to consider the rectified 26AS statement for AY 2017-18 and pass a revised assessment order accordingly. Before passing any order, the AO must provide a personal hearing to the Petitioner, with at least five working days' advance notice. The Court did not decide the merits of the Section 264 order itself but focused on procedural directions to ensure a fair and timely resolution of the pending applications.

What were the facts?

The Petitioner, Rajesh Builders Mumbai, filed its return of income for AY 2017-18 on November 7, 2017, declaring a total income of Rs. 2,61,09,890/-. During the assessment under Section 143(3), the Assessing Officer (AO) observed an entry of Rs. 49,30,000/- in the 26AS statement in the name of P.W.D. Division B and R Datia, with TDS of Rs. 98,600/- deducted. The Petitioner contended this payment did not belong to them and was an error. Despite this, the AO added Rs. 49,30,000/- to the Petitioner's income, assessing it at Rs. 3,10,39,890/- on September 26, 2019. Subsequently, P.W.D. Division rectified the 26AS statement. The Petitioner's application under Section 264 of the Act was rejected by the Principal Commissioner of Income Tax on March 21, 2022, stating no error in the original assessment order. A Section 154 application is pending before the Deputy Commissioner.

What were the issues?

1. Whether the Principal Commissioner of Income Tax erred in rejecting the Petitioner's application under Section 264 of the Income Tax Act, 1961, by holding that there was no error in the assessment order dated September 26, 2019, particularly in light of the subsequent rectification of the 26AS statement by P.W.D. Division? (Mixed question of law and fact, turning on Section 264). Assessee's Contention: The Petitioner argued that the Principal Commissioner had the power to direct rectification of the assessment order, especially since the 26AS statement was rectified. This is the Petitioner's primary grievance against the Section 264 order. Revenue's Contention: The judgment records no specific arguments from the Revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 264,Section 143(3),Section 154

AI-generated summary — verify with the full judgment below

1/3 407-aswp-1790-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.1790 OF 2024 Rajesh Builders Mumbai …Petitioner Versus The Principal Commissioner of Income Tax And Ors. …Respondents Mr. Mihir C. Naniwadekar, with Ms. Rucha Vaidya & Ruturaj H Gurjar, for Petitioner. Mr. Akhileshwar Sharma, for Respondents-Revenue. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 26th March, 2024 PC:-

1.

Petitioner is impugning an order dated 21st March 2022 passed by Respondent No.1 under Section 264 of the Income Tax Act, 1961 (“the Act”).

2.

Petitioner had filed a return of income (“ROI”) for Assessment Year (“AY”) 2017-18 on 7th November 2017 declaring total income at Rs.2,61,09,890/-. During the course of assessment proceedings under Section 143(3) of the Act, while considering the 26AS details, it was observed there was an entry of Rs.49,30,000/- in the name of P.W.D. Division B and R Datia on which tax deducted at source (“TDS”) of Rs.98,600/- was deducted. Assessee submitted to the Assessing Officer (“AO”) that the payment does not belong to assessee and Shivgan SHAMBHAVI NILESH SHIVGAN SHAMBHAVI NILESH SHIVGAN Date: 2024.03.27 19:58:50 +0530

2/3 407-aswp-1790-2024.doc there seems to be an error. Despite that, the AO made an addition of Rs.49,30,000/- relying on this entry in 26AS to the return income of Petitioner and completed assessment proceedings on 26th September 2019 under Section 143(3) of the Act. Petitioner’s income was assessed at Rs.3,10,39,890/-

3.

Petitioner thereafter followed up with P.W.D. Division, B and R Datia and finally the 26AS was rectified by P.W.D. Division.

4.

An application under Section 264 of the Act came to be rejected by Respondent No.1 vide an order dated 21st March 2022 purely on the basis that there was no error in the order dated 26th September 2019 passed under Section 143(3) of the Act. Mr. Naniwadekar states, it was within the powers of Respondent No.1 to direct rectification of the assessment order, particularly, in view of the fact that P.W.D. Division rectified form 26AS. This is Petitioner’s main grievance against the impugned order passed under Section 264 of the Act.

5.

At the same time, Petitioner has also filed an application under Section 154 of the Act on 24th March 2022, which is still pending before the Deputy Commissioner of Income Tax, Circle 27(3) (Mumbai). This application is pending and Petitioner’s apprehension cannot be faulted that the AO might get influenced by the impugned order passed by Respondent No.

1.

Shivgan

3/3 407-aswp-1790-2024.doc

6.

We, therefore, dispose the Petition with following directions: (a) The AO shall dispose Petitioner’s application under Section 154 of the Act on or before 31st May 2024. (b) The AO shall not be influenced by any findings by Respondent No.1 in the impugned order under Section 264 of the Act. (c) The AO shall consider the 26AS statement of assessee for AY 2017-18 and pass revised assessment order as rectified, suitably.

7.

Before passing any order, the AO shall give personal hearing to Petitioner, a notice whereof shall communicated at-least five working days in advance.

8.

Petition disposed. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Shivgan

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