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2016 Supreme(Del) 1486
IN THE HIGH COURT OF DELHI AT NEW DELHI
BADAR DURREZ AHMED & SANJEEV SACHDEVA, JJ.
VIJAY GUPTA – Petitioner
Versus
COMMISSIONER OF INCOME TAX DELHI-XIII AND ANR. – Respondents
WP (C) 1572/2013
Decided On : 23-03-2016
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.
The main legal point established in the judgment is that the powers conferred under section 264 of the Income Tax Act are wide and cover situations where errors are committed by assesses. The court also emphasized the duty of the assessing officer to assist and guide the assessee and not to take advantage of any error or mistake committed by the assessee.
Headnote:
Income Tax - Capital Gains - Section 264 - Summary of Acts and Sections: Income Tax Act, 1961, Section 264
Fact of the Case:
The petitioner sought to quash an order under section 264 of the Income Tax Act, 1962 for the assessment years 2008-09 and a direction to refund the income tax amounting to Rs.2,96,58,825 for assessment years 2008-09 paid by the petitioner. The petitioner sold shares received as a gift and declared the gains as short-term capital gains. The assessing officer levied tax at 30% instead of 10% as computed by the petitioner. The petitioner filed an application under section 154 contending that the gains were long-term capital gains exempt from tax under section 10(38) of the Act. The application was partly rectified, but the assessing officer rejected the application for refund. The petitioner approached the Commissioner of Income Tax under section 264, which was rejected on technical grounds.
Finding of the Court:
The court found that the rejection of the application on technical grounds was unjustified and set aside the impugned order. The court directed the Commissioner to consider the application afresh on merits and dispose of the same within a period of eight weeks.
Issues: The issues revolved around the computation of capital gains, the rejection of the application for refund, and the technical grounds for rejecting the application under section 264.
Ratio Decidendi: The court held that the powers conferred under section 264 of the Act are wide and cover situations where errors are committed by assesses. The court also emphasized the duty of the assessing officer to assist and guide the assessee and not to take advantage of any error or mistake committed by the assessee. The court further clarified that the intimation under section 143(1) qualifies as an order for the purposes of section 264 of the Act.
Final Decision: The impugned order was set aside, and the Commissioner was directed to consider the application afresh on merits and dispose of the same within a period of eight weeks.
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 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 gains 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.
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 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 acquisit
