Limitation period for revision Petition 264 starts with service of intimation u/s 143(1) and not from the date when assessee comes to know about the processing of the return – High Court
The expression ‘the date on which he otherwise came to know of it’ as per section 264(3), refers to the date on which the assessee actually have a copy of the intimation.
ABCAUS Case Law Citation:
ABCAUS 2010 (2017) (07) HC
Assessment Year : 2012-13
Important Case Laws Cited/relied upon:
Vijay Gupta v. CIT 386 ITR 643 (Del)
Parikh & Co. v. CIT  4 Taxman 224 (Guj.)
Brief Facts of the Case:
The Petitioner was a proprietor. He was also the Director of a company. As per a MOU entered into between the Petitioner and the company, certain assets and liabilities of the proprietorship concern of the assessee were taken over by the Company.
For the relevant assessment year, the Company filed its return of income excluding the interest on certain Fixed Deposit (FDRs) which were transferred to the Petitioner in terms of the MoU. However the said interest of FDRs was included by the Petitioner in his return of income for the AY in question.
The Petitioner’s return was processed under Section 143(1) of the Income Tax Act, 1961 (Act) on 6th December, 2013. However, The return filed by the Company was picked up for scrutiny. The assessment was completed by the Assessing Officer (AO) under Section 143(3) of the Act whereby, inter alia, interest on the FDRs was added to the income of the Company as unaccounted interest. The CIT(A) dismissed the appeal of the Company and upheld the addition of the interest in its hands. The CIT(A), nevertheless, observed that the Petitioner here (Proprietor) could seek consequential relief from the AO and that the AO should consider such pleas ‘sympathetically’.
The Petitioner sought a copy of the intimation under Section 143(1) of the Act in respect of his return. The same was provided to him by email on 13th April, 2015. On 9th June, 2015 the Petitioner filed an Revision Petition/application under Section 264 of the Act before the Principal Commissioner of Income tax (PCIT) inter alia on the ground that the interest on FDRs could not have been taxed twice, once in his hands and again in the hands of RBSPL. He accordingly prayed for revision of the intimation under Section 143(1) by deleting the addition of interest on FDRs in his income.
However PCIT dismissed the revision petition only on the ground that it was time barred. The PCIT noted that the return of income was filed on 29.09.2012 and the same was processed u/s 143(1) on 06.12.2013 by CPC Bangalore. The refund arising on such processing was paid/encashed by the assessee on 25.04.2014. Thus, the PCIT took the starting date for the limitation period as 25.04.2014 on the premise that the assessee had come to know about the processing of his return which resulted into refund.
Contention of the Respondent Revenue:
The attention of the Court was drawn to Section 264(3) of the Act which states that the revision application should be made within one year from:
(i) the date on which the order in question was communicated to the Petitioner/Assessee; or
(ii) the date on which he otherwise came to know of it, whichever is earlier
Thus it was contended that since the Petitioner came to know of the fact of his return having been processed under Section 143(1) when he received the refund amount on 25th April, 2014, the one year period for filing a revision petition under Section 264 began running from that date. Since the revision petition was admittedly filed only on 9th June 2015, it was delayed by 45 days.
Contentions of the Petitioner Assessee:
On the other hand, it was submitted that a revision application could not have been filed by the Petitioner till such time the intimation under Section 143(1) was communicated to him. On 25th April, 2014 all that happened was that the refund amount got credited to his account. While at the highest it could be said that on that date the Petitioner may have known the fact of his return having been processed, he could not have known the contents of the intimation under Section 143(1) that intimation was admittedly communicated to the Petitioner only on 13th April, 2015.
Observations made by the High Court:
The Hon’ble High Court observed that There was merit in the contention of the Petitioner. When Section 264(3) uses the expression to ‘the date on which he otherwise came to know of it’, it refers to the date on which the Petitioner actually had a copy of the intimation. He could either get it from the Department or get it from any other source. In other words, it would not be sufficient that the Petitioner came to know of the fact that his return had been processed. Till such time the Petitioner had a copy of the intimation under Section 143(1) of the Act, the limitation period under Section 264 (3) of the Act would not begin to run. Considering that Section 264 is a provision intended to benefit the Assessee, no other interpretation is possible on a plain reading of it.
Referring to its own decision, Hon’ble High Court stressed that Section 264 (3) did not place any restriction on the power of the CIT to give relief to an Assessee in a case where the Assessee detects mistakes in his return as a result of which he is over assessed
Consequently, the Court opined that in the instant case, the PCIT was in error in holding that the revision petition was time barred.
The Hon’ble High Court further observed that observe that where in a given case, the PCIT is of the view that a certain petition is time barred, then in terms of the proviso to Section 264(3), the PCIT should also examine whether there was any justifiable reason for such delay. He need not wait for an application to be filed by an Assessee for that purpose. He may put the Assessee on notice of this fact and require the Assessee to show sufficient cause for the delay. This may avoid needless multiplicity of the proceedings, particularly, when the delay is not substantial and can be explained by the Assessee.
The order of PCIT was sets aside and the Petitioner’s revision application was restored to PCIT file for disposal on merits in accordance with law