SHAM ANANT SALUKNHE vs. THE PR. COMMISSIONER OF INCOME TAX-2, PUNE AND ORS

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WP/170/2019HC BombayHCBM01036121201801 March 2019Author: HON'BLE SHRI JUSTICE M.S. SANKLECHA,HON'BLE SHRI JUSTICE AKIL KURESHI6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the revision application was filed beyond the period of limitation prescribed under Section 264(3) of the Income Tax Act, 1961. While the court was prepared to proceed on the basis that the intimation under Section 143(1) was not served on the petitioner, it recognized that the period of limitation for filing a revision application commences from the date of communication of the order or the date on which the assessee otherwise came to know of it, whichever is earlier. The court reasoned that once the petitioner filed his return of income, the period for scrutiny assessment would have become time-barred around 2010. Therefore, the knowledge that the department did not propose to conduct a scrutiny assessment could be attributed to the petitioner. The court found that the petitioner had filed the revision application seven years later, and such a long delay could not be ignored. The petitioner could not take shelter under the non-communication of the intimation, as he had to take appropriate steps before the CIT within the prescribed limitation period if he wished to dispute his own declaration in the return. The petition was dismissed.

What were the facts?

The petitioner, Sham Anand Salunkhe, an individual, retired from a partnership firm on May 23, 2005, receiving Rs. 51.96 lacs towards his share in goodwill. He filed his return for Assessment Year 2007-08, including this amount, which was accepted under Section 143(1) on March 24, 2009, without scrutiny. On September 6, 2017, he filed a revision application before the Commissioner of Income Tax (CIT) seeking deletion of the goodwill amount. He claimed the intimation under Section 143(1) was never served, and he only became aware of the incorrect acceptance of income on May 12-13, 2017, upon receiving a notice under Section 245. The CIT rejected the revision application as time-barred, stating the intimation was served on March 29, 2009. The petitioner challenged the CIT's order before the Bombay High Court.

What were the issues?

1. Whether the revision application filed by the petitioner before the Commissioner of Income Tax was within the period of limitation prescribed under Section 264(3) of the Income Tax Act, 1961, considering the petitioner's claim of non-service of the intimation under Section 143(1) and the revenue's contention of due service. Assessee's Contentions: The petitioner argued that the intimation under Section 143(1) was never served on him. Consequently, the limitation period for filing the revision application should commence from the date he became aware of the intimation, which was May 12, 2017. He contended that the CIT erred in holding the application to be beyond limitation. He also submitted that the CIT should have granted relief on merits, as he had erroneously offered the goodwill income to tax. Revenue's Contentions: The revenue contended that the intimation under Section 143(1) was duly served on the petitioner. In any case, the petitioner could not have waited for several years to file the revision application.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 245,Section 264

AI-generated summary — verify with the full judgment below

RNG 1/6 1-wp.170.19 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE CIVIL JURISDICTION

WRIT PETITION NO.170 OF 2019 Sham Anand Salunkhe ... Petitioner vs

1.

The Principal Commissioner of Income Tax­2

2.

The Assistant Commissioner of Income Tax­4

3.

Union of India …  Respondents ­­­­­­ Mr.Mandar Vaidya for Petitioner Mr.Suresh Kumar for Respondent nos.1 & 2. CORAM  :  AKIL KURESHI & M.S.SANKLECHA, JJ DATE     :   1st MARCH, 2019 P.C

1.

The   petitioner   has   challenged   the   order   dated   15.5.2018 passed   by   the   Commissioner   of   Income   Tax   rejecting   the   petitioner's revision application on the ground of delay. Brief facts are as under :

2.

The   petitioner   is   an   individual.   He   was   member   of   a partnership firm from which, he retired on 23.5.2005. The petitioner filed his return of income for Assessment Year 2007­2008 in which he had RNG 2/6 1-wp.170.19 included a sum of Rs.51.96 lacs (rounded off) which was received by him on   retirement   from   the   said   partnership   firm   towards   his   share   in goodwill.  Such return was accepted by the Assessing Officer under section 143 (1) of the Income Tax Act, 1961 (for short, 'the Act') without scrutiny on 24.3.2009. 3. The   petitioner   filed   a   revision   application   before   the Commissioner   of   Income   Tax   on   6.9.2017   against   the   said   order   of assessment, and requested that the amount of Rs.51.96 lacs be deleted from computation of his taxable income  for Assessment Year 2007­08. In such revision petition, the petitioner had stated that intimation under section 143 (1) of the Act, was not served on him and that therefore, there was no delay on his part in filing the revision application.    However, if the Commissioner of Income Tax was of the opinion that the revision application   was   beyond   the   period   of   limitation,   the   same   may   be condoned. The petitioner's assertions in the revision application in this respect may be noted. “11. It   is   further  brought   to  the   kind   notice  of   your   honour  that   the applicant/assessee applied on 01­06­2017 for issuance of the certified copy of   the   intimation   for   the   Assessment   Year   2007­08. It   may   kindly   be appreciated   that   the   applicant/assessee   was   not   served   with   the intimation/demand under sec.143 (1) of the Income Tax Act and realised for the first time on 12th  and 13th  May 2017, on receipt of notice under RNG 3/6 1-wp.170.19 sec.245 of Income Tax Act, regarding incorrect acceptance of the income­tax return filed by him for the Assessment Year 2007­08. It is submitted that, therefore, limitation for filing present application/representation runs from the date of his awareness of the intimation i.e. from 12th May 2017, and therefore present application/representation is within limitation.”

4.

The Commissioner of Income tax dismissed the revision petition by the impugned order,  on the ground that the same was filed much   beyond   the   period   of   limitation   prescribed.     The   concluding observations reads thus :

“4. Your petition u/s 264 is carefully considered.  As per the provision of Sec.264 the application for revision must be made within one year from the date on which the order in question was communicated to the assessee, or the date on which he otherwise came to know of it, whichever is earlier. As per   our   records,   in   your   case   intimation   u/s   143   (1)   was   served   on 29/03/2009, a copy of which is enclosed to this letter. Therefore, as Revision Petition is not filed in time, the same is not maintainable under provisions of Sec.264. Therefore, the Revision Petition is disposed of as dismissed.”

5.

Learned counsel for the petitioner submitted that  intimation under section 143 (1) of the Act,  was never served on the petitioner and that  therefore,   the  Commissioner   of  Income  Tax     was  not   correct   in holding,  that  the  revision  application  was   filed  beyond  the  period  of limitation.  He submitted that the petitioner had offered the said income to tax erroneously and the Commissioner of Income Tax therefore, in exercise of his revisional jurisdiction, should have granted the reliefs as RNG 4/6 1-wp.170.19 prayed for in the revision application.

6.

On the other hand, Mr.Suresh Kumar learned counsel for the revenue, opposed the application contending that intimation under section 143 (1) was duly served on the petitioner and in any case, the petitioner could not have waited for several years for filing the revision application.

6.1.

In the present case, we are prepared to proceed on the basis that intimation   under   section   143   (1)   of   the   Act,   was   not   served   on   the petitioner. We also recognize the right of the petitioner, to persuade the Commissioner of Income Tax, to delete the income declared in the return, if it would otherwise, not taxable.

7.

The question in the present petition, is one of limitation in filing the revision petition before the Commissioner of Income Tax.  Sub­ section (3) of section 264 of the Act, envisages the period of limitation of one year for filing a revision application from the date on which, the order under revision is communicated to the applicant or which he otherwise came to know of it, or whichever is earlier.  This period of limitation thus, commences not from the date of the order but, from the date of its communication or knowledge whichever is earlier.

RNG 5/6 1-wp.170.19

8.

In the present case,  it is not disputed that once the petitioner filed the return of income, the scrutiny assessment thereof, would become time­barred upon expiry of the period prescribed under the statute.  This would happen sometime in the year 2010. 9. In the circumstances,   the knowledge that the department does not propose to take the return of income for scrutiny assessment, can be attributed to the petitioner.   If the petitioner had any dispute with the department   accepting   his   return   as   per   declaration   made   in   it,   the petitioner   had   to   file   an   appropriate   revision   application   before   the Commissioner of Income Tax,   within a period of one year thereafter, and at   any   rate,   explaining   the   delay   caused   in   filing   such   a   revision application beyond the said period.   In the present case, the revision application was filed  seven years later. By no stretch of  imagination, such long period can be ignored.   The petitioner simply, cannot take shelter   of   non­communication   of   the   intimation   or   acceptance   under section 143 (1) of the Act.  If,  the petitioner wanted to dispute his own declaration in the return, he had to take appropriate steps before the Commissioner of Income Tax within the period of limitation prescribed which in the present case, is not done.

RNG 6/6 1-wp.170.19

10.

In the result, petition is dismissed. (M.S.SANKLECHA, J) (AKIL KURESHI, J)

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