JUDGMENT
Bhargav D. Karia, J. – Heard learned advocate Mr. Manish Shah for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Patel waives service of notice of rule for the respondent.
3. Having regard to the controversy arising in this petition in narrow compass with the consent of the learned advocates, the matter is taken up for hearing.
4. The petitioner is an individual nonresident having PAN: BSHPP1404K issued under the provisions of the Income Tax Act,1961 [for short ‘the Act’].
5. It is the case of the petitioner that the petitioner came to India from USA to purchase jewelry for his daughter’s wedding and withdrew amount of Rs. 8 Lakh from NRE Account of the petitioner i.e. 4 Lakh on 06.01.2016 and another 4 Lakh on 15.02.2016.
5.1 It is the case of the petitioner that thereafter, the petitioner and his wife became severely ill and left India to go to USA and could not deposit the unutilized cash amount in their bank account and the cash amount was kept with the relative of the petitioner.
5.3 It appears that due to demonetization from 08.11.2016, the wife of the petitioner came to India and deposited the amount of Rs. 6,33,500/- on 29.11.2016 in the bank account.
5.4 The respondent No.2 Assessing Officer issued notice under section 142(1) of the Act on 09.03.2018 for the Assessment Year 2017-18. However, according to the petitioner the same was not received and therefore, not complied with. It appears that thereafter, notice under section 142(1) was issued on 16.04.2019 which was also as per the say of the petitioner not received and therefore not complied. Thereafter, notice dated 29.04.2019 was issued by Email which was replied by the petitioner by Email dated 28.05.2019 and bank statements from Yes Bank was attached to the said reply. The petitioner also informed that during his visit in 2016 funds were withdrawn from the NRE account and thereafter, the petitioner had gone back to USA and unused funds was deposited in NRO account subsequently. The petitioner also replied to another notice dated 18.06.2019 on 26.07.2019. Thereafter, notice dated 06.09.2019 was replied on 10.09.2019 and notice dated 20.09.2019 was replied on 23.09.2019.
5.5 However, it is the case of the petitioner that the Assessing Officer without considering the replies filed by the petitioner framed best judgement assessment under section 144 of the Act by making addition of cash deposit amount of Rs. 6,33,500/- in NRO account.
5.6 The petitioner was not aware about the Assessment Order passed on 23.12.2019.
5.7 The petitioner thereafter filed revision application under section 264 of the Act after the recovery proceeding was initiated by the respondent-authorities along with all the documents containing the bank statement of NRE and NRO accounts in name of the petitioner.
5.8 Respondent No.1 by impugned order dated 07.03.2022 rejected the revision application filed on 18.12.2020 filed by the petitioner by observing as under:
“5. The contentions raised by the assessee in his revision application as mentioned at paragraph 2 above and the submission filed in response to the notice u/s. 263 the Act have duly been considered and gone through and the same are not found tenable in view of the facts that the assessee is an individual residing in USA. During the course of assessment proceedings, the issue before the AO was to examine the source and taxability of cash deposit in assessee’s Yes bank NRO Account No.000990400002011 amounting to Rs.6,33,500/- during the demonetization period. In the assessment order dated 23.12.2019, the AO has elaborately discussed that the assessee completely failed to explain his contention that he withdrew cash for purchase of jewellery, which could have been done through digital means, be it card swapping, UPI or net banking. Further, the assessee contended that he had withdrawn cash of Rs.8 lacs out of which he could spent only an amount of Rs.1.76 lacs and the remaining unspent amount of Rs.6.33 lacs was deposited back on account of demonetization of high value old currency. During the course of assessment proceedings, the AO has offered ample opportunities to the assessee to explain the source of deposits with bank and establish a link between the cash withdrawn and deposited. However, the assessee neither produced bill/vouchers of spent amount of Rs,1.76 lacs nor could he satisfactorily explain why cash of Rs.6.33 lacs remained unspent around 9 months. During the revision proceedings also, the assessee did not explain this issue satisfactorily with valid documentary evidences. The assessee being a prudent person staying in USA is expected to be well aware of digital mode of transaction. It is highly improbable that a person of his stature will keep such huge amount of cash for 9 months only for the purpose of buying jewellery. The assessee as also contended that he could not purchase jewellery as desired by him as there was nationwide strike of goldsmiths during the period of his visit to India. This contention of the assessee seems to be afterthought. The assessee withdrew cash on 06/02/2016 and 15/02/2016 whereas the jewellers went on strike from 02/03/2016. So, the assessee had sufficient time to buy jewellery even if the assessee’s argument, regarding cash withdrawal for jewellery is considered. But the facts &t the case clearly indicate that the argument of the assessee is just an afterthought to just his cash balance. This contention of the assessee is also found baseless on the basis of the media reports available to show that the call for strike during the said period was given by the local jewellers and their association but various branded jewellary show-rooms remained operative during the said strike period and therefore, he could have purchased jewellery from there if his intention was to do so. In Vadodara nearby all major national jewellery houses like Tanishq, Kalyan, Malabar Gold etc. are located and thus assessee’s contention that he could not purchase jewellery due to jewellers strike is found incorrect. Further, as mentioned above, the AO has, given sufficient opportunities to justify his case with documentary evidences but there was no compliance on the part of the assessee which compelled the AO to pass ex-parte order u/s 144 of the IT.Act, 1961. If the assessee was not satisfied with this order of the AO, he could have filed appeal before the learned ClT(Appeals),within the prescribed time limit or with condonation of delay in filing the appeal in time, seeking for necessary relief in the matter. However, the assessee did not prefer the same probably well aware of the weakness of his justification and arguments but has sought for revision of the order passed by the AO by filling the revision application.”
Being aggrieved, the petitioner has preferred this petition.
6. Learned advocate Mr. Manish Shah submitted that the petitioner is a non-resident Indian staying at USA and had come to India in 2016 and withdrew cash from the NRE account. It was submitted that the cash withdrawn from NRE account cannot be the subject matter of taxation as it belong to the petitioner and out of the said amount, the wife of the petitioner had redeposited cash of Rs. 6,33,500/- in the NRO account of the petitioner in view of the demonetization which has come into effect from 08.11.2016.
6.1 It was submitted that the respondent-Assessing Officer as well as Revisional Authority could not have sustained the addition as it is apparent from the facts of the case as well as the documents placed on record in form of bank statement and the Emails sent by the petitioner from time to time so as to add the amount of cash deposit of Rs. 6,33,500/- in the NRO account as the source of the same was explained.
6.2 It was submitted that the revisional authority could not have rejected the revision application on assumption and presumption by observing that the petitioner could have purchased the jewellery from other jewellers and could not have kept the cash with the relative while going back to USA.
6.3 It was submitted that it is petitioner’s personal choice and wish to conduct his affairs and the respondent authorities cannot make addition on the basis of such presumption.
6.4 It was further submitted that the respondent no.1 ought to have considered the documents placed on record and the facts of the case while exercising the revisional jurisdiction under section 264 of the Act.
6.5 In support of his submissions, reliance was placed on the decision of Hon’ble Bombay High Court rendered in Paramod Agrawal reported in Pramod R. Agrawal v. Principal Commissioner of Income Tax reported in 464 ITR 367 (Bombay).
7. Per contra, learned Senior Standing Counsel Mr. Varun Patel submitted that the petitioner did not comply with the notices issued by respondent No.2 in the year 2018 to furnish the return and therefore, respondent No.2 had no option but to pass an assessment order under section 144 of the Act. It was submitted that the petitioner has failed to provide any explanation as noted by the Assessing Officer as well as the Commissioner while exercising revisional jurisdiction in form of bill or any documents for purchase of the jewellery of Rs. 1.76 Lakhs and further failed to explain why the cash of Rs. 6.33 Lakh remained unspent for about nine months.
7.1 It was therefore, submitted that no interference is called for while exercising writ jurisdiction under Article 227 of the Constitution of India in the facts of the case.
8. Considering the submissions made by learned advocates for the respective parties and material placed on record it is not in dispute that the petitioner had come to India in the month of February 2016 and withdrew the cash amount of Rs. 8 Lakh on two different dates from the NRE account in the name of the petitioner. It is also not in dispute that the wife of the petitioner came to India on 29.11.2016 and deposited the amount of Rs. 6,33,500/- in the NRO account. These facts were also made known to the Assessing Officer by Emails dated 26.07.2019 and 10.09.2019 of the petitioner in response to the Email containing notices under section 142(1) of the Act.
9. It appears that the respondent Assessing Officer without considering the reply filed by the petitioner made the best judgement assessment under section 144 of the Act by making addition of Rs. 6,33,500/- observing that the petitioner had nothing to say in the matter as the petitioner did not make any reply ignoring the aforesaid reply filed by the petitioner.
10. It appears that as the petitioner was residing at USA, the assessment order dated 23.12.2019 was not received and only when the petitioner received a letter from Yes Bank regarding prohibitory orders freezing the bank account of the petitioner, the petitioner filed revision application on 18.12.2020 as the time to file appeal challenging the best judgement assessment order had already lapsed.
11. The Revisional authority, instead of taking into consideration the undisputed facts which were available on record at the time of passing of the assessment order, had made observations which were not warranted as it is for the petitioner to withdraw the amount from the NRE account and utilize such amount as per his wish. Revisional authority could not have rejected revision application by making observation based on presumption as to what the petitioner ought to have done or could not have done with regard to amount which was withdrawn from the NRE account which was again deposited back in the NRO account to make the addition of the amount as income of the petitioner. The petitioner was therefore required to be assessed after taking into consideration above facts. It also appears that no income was earned by the petitioner which was liable to be taxed under the provisions of the Act. The petitioner was not required to file any return of income and accordingly the petitioner had rightly not filed return of income for the year under consideration. In such circumstances, the Assessing Officer ought to have taken into consideration explanation tendered by the petitioner to pass Assessment Order under section 144 of the Act.
12. The Revisional authority ought to have taken into consideration that the Assessing Officer has to pass best judgement assessment order in absence of the return filed by the petitioner after taking into account all relevant material which has been gathered and after giving opportunity of hearing to the assessee. In the facts of the case, it appears that though the Assessing Officer has been provided with all the material facts along with relevant documents, no opportunity of hearing was granted as required as per the provision of section 144 of the Act. Be that as it may, revisional authority ought to have taken into consideration the facts that the petitioner could not file appeal within the prescribed time limit as the petitioner was staying in the USA at the relevant time and was not aware about the assessment order which was passed under section 144 of the Act. The petitioner, therefore, has filed the revision under section 264 of the Act. The Hon’ble Bombay High Court, while considering the revisional powers to be exercised under section 264 of the Act in case of Pramod Agrawal (supra) which would applicable in the facts of the case also, has held as under:
“6. The petitioner was, therefore, advised to file an application under section 154 of the Act to respondent No. 3, which the petitioner made on November 4, 2015. In the said application, the petitioner explained the entire history of the case and also referred to the orders passed in favour of the other coowners and requested respondent No. 3, to rectify the previous orders passed by him by allowing the deduction of indexed cost of improvement of Rs. 2,95,859, being renovation expenses incurred in the year 1990. The petitioner had claimed in the application that the allowance of the said cost was not claimed in the original return of income and the same should be allowed as it was a rectifiable defect under section 154 of the Act.
7. This application of the petitioner was rejected by respondent No. 3 by an order dated December 8, 2015. The rejection was on the ground that such claim was made first time in the application under section 154 of the Act and it was never brought to the notice of respondent No. 3 earlier or Commissioner of Income-tax (Appeals). Aggrieved by the said order of respondent No. 3 passed under section 154 of the Act, the petitioner filed the application under section 264 of the Act before respondent No. 1. The petitioner elaborately explained its case and the same came to be rejected by an order dated March 22, 2017, which is impugned in this petition.
8. Mr. Gandhi submitted that the impugned order requires to be quashed and set aside and the matter be remanded to respondent No. 1 because respondent No. 1 has not really appreciated the scope of section 264 of the Act. Mr. Gandhi submitted that section 264 of the Act confers wide jurisdiction on the Commissioner and proceedings under section 264 are intended to meet the situation faced by an aggrieved assessee who is unable to approach the appellate authority for relief and has no other alternate remedy available under the Act. Mr. Gandhi submitted that even though there might be an embargo on the Assessing Officer, there is no such embargo on the power of the appellate authority or as in the case of revisional authority. Mr. Gandhi submitted that the power under section 264 of the Act is intended to prevent miscarriage of justice and courts have consistently taken a view that conferment of the powers under section 264 of the Act is to enable the Commissioner to provide relief to the assessee, where the law permits the same. This power would even cover the situation, where the assessee because of 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 filed under section 264 of the Act. In the case at hand, the error was discovered and raised before respondent No. 3 in the application filed under section 154 of the Act. Mr. Gandhi relied upon the following judgments : Hindustan Diamond Company Pvt Ltd. v. CIT1, Smita Rohit Gupta v. Pr. CIT judgment dated August 28, 2023 in Writ Petition No. 6964 of 2022, Asmita A. Damle v. CIT, Selvamuthukumar v. CIT, Shah Brothers v. Pr. CIT and Vijay Gupta v. CIT.
9. Mr. Suresh Kumar submitted that the Assessing Officer-respondent No. 3 was justified in rejecting the application under section 154 of the Act because the assessee could not take recourse to his ignorance. The assessee should have been aware that other co-owners have also made such claim for improvement cost and in any event should have been aware that such improvement cost have been incurred and claimed in the return of income. The assessee could have claimed this even in two appeals he had filed before the Commissioner of Income-tax (Appeals). Mr. Suresh Kumar further submitted that the Assessing Officer could have rectified a mistake which was apparent from the record or rectify any order passed under the provisions of the Act. But the power under section 154 is not extended to a situation when it is not apparent from the record because the claim was never made before the Assessing Officer while the scrutiny was going on and the assessment order under section 143(3) of the Act was passed. Therefore, the Assessing Officer was correct in rejecting the application filed by the assessee under section 154 of the Act.
9. 1 Moreover, since the assessee had already filed an appeal against the assessment order, the assessee could not have filed an application under section 264 of the Act. Further, the application under section 264 of the Act was filed more than one year after the order under section 143(3) of the Act was passed and, therefore, there was no infirmity in the order impugned in this petition.
10. We would agree with Mr. Gandhi that there was no delay in filing the application under Section 264 of the Act because the application under Section 264 of the Act was against the order passed under Section 154 of the Act and not Section 143(3) of the Act. The order under Section 154 of the Act was passed on 8th December 2015 and the application under Section 264 of the Act was filed on 18th January 2016, within one year.
11. The other submission of Mr. Suresh Kumar also cannot be accepted in view of the wide powers conferred on respondent no.1 under Section 264 of the Act. As held by this court in Smita Gupta (supra), Section 264 confers wide jurisdiction on the Commissioner. The proceedings under Section 264 of the Act are intended to meet a situation faced by an aggrieved assessee, who is unable to approach the Appellate Authorities for relief and has no other alternate remedy available under the Act. The Commissioner is bound to apply his mind to the question whether petitioner was taxable on that income and his powers are not limited to correct the error committed by the subordinate authorities but could even be exercised where errors are committed by assessee. It would even cover situation where assessee because of an error has not put forth 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 of the Act. Paragraphs 7 and 8 of Smita Gupta (supra) read as under:
“7. The provisions of Section 264 and the power available to the Commissioner to exercise under Section 264 of the Act came up for consideration before the Division Bench of this Court in Hindustan Diamond Company Pvt. Ltd. v. CIT 2. The Division Bench was pleased to observe that exercise of power under Section 264 was not subject to the power of the Assessing Officer to make adjustment under Section 143(1) of the Act. The Court held that power of the Commissioner under Section 264 is rather wide and even the errors Meera Jadhav 8/12 904-wp-2435-17.doc committed could be rectified. Paragraph 6 of the Hindustan Diamond Company Pvt. Ltd. (supra) reads as under:
6. Having heard the Counsel on both sides, we are of the opinion that the Commissioner was not justified in rejecting the revision application of assessee. As rightly contended by Mr. Inamdar, Section 264 confers wide jurisdiction on the Commissioner. Proceedings under Section 264 are intended to meet the situation faced by an aggrieved assessee who is unable to approach the appellate authority for relief and has no other alternate remedy available under the Act. In the light of the decision of the Apex Court in the case of Bharat Earth Movers (supra), the provision for Leave Encashment being a current liability assessee is entitled for deduction of that amount. The Assessing Officer had accepted the return, ignoring the request of assessee for deduction of the above amount. Therefore, the relief which was not granted by the Assessing Officer could be granted by the Commissioner under Section 264. Before allowing such deduction if any further enquiry was required to be done, the Commissioner could have either himself enquired or directed the Assessing Officer to do the needful. However, the Commissioner has declined to exercise power under Section 264 because of amendment to Section 143(1) by Finance Act, 1999. Powers of the Assessing Officer to make prima facie adjustments under Section 143(1), done away with by Finance Act, 1999 (with effect from 1st June, 1999) does not in any way effect the right of the Commissioner under Section 265 of the Act to grant relief to assessee if available to assessee as per the decision of the Apex Court. Exercise of powers under Section 264 is not subject to the power of the Assessing Officer to make adjustments under Section 143(1) of the Income-tax Act. Therefore, relief can be granted to assessee under Section 264 even if the power of adjustment under Section 143(1) is taken away from the Assessing Officer.”
(emphasis supplied)
8. Section 264 of the Act also came up for consideration before the Hon’ble Delhi High Court in Vijay Gupta v CIT Delhi-III 3 where paragraph 35 reads as under:
“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 assessees. It would even cover situations where 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.”
(emphasis supplied)
12. In Asmita Damle (supra) also the court held that the Commissioner while exercising revisionary powers under Section 264 of the Act has to ensure that there is relief provided to assessee where the law permits the same. Paragraphs 3 and 4 read as under:
“3. In view thereof, assessee filed the application under Section 154 for rectification of the assessment order. This application was rejected. Against that order, the petitioner filed a revision under Section 264 of the Act to the Commissioner of Income Tax, for refund. The Commissioner of Income Tax, by the impugned order held that there was no mistake apparent from record. He held that the provisions of Section 264 were not attracted.
4. There is no dispute regarding the petitioner’s entitlement to the benefit. The only question is whether the petitioner is entitled to enforce that remedy in the manner in which she has done. In a similar matter, a Division Bench of this Court in the case of Devdas Rama Mangalore v/s The Commissioner of Income Tax26 and Ors in writ petition no.2422 of 2013 dated 15 th January 2014, granted complete relief, including an order of refund. The only difference between this case and that case is that, in that case, the petitioner had made an application for condonation of delay under Section 119 (2)(b) of the Income Tax Act, which was rejected, in view of the circular issued by the CBDT. In the case before us, the course adopted was under Section 264 of the Act. In view of the judgment of the Division Bench of this Court in Hindustan Diamond Company Pvt Ltd v/s Commissioner of Income Tax reported in (2003) 175 Taxation 91 (Bom), the course adopted by the petitioner in the facts and circumstances of the present case was valid.”
13. In Selvamuthukumar (supra) paragraphs 6 to 11 and 13 read as under:
“6. The language of section 264 provides ample powers to the Commissioner of Income Tax to make or cause such inquiry to be made as he thinks fit in dealing with an application for Revision under section 264. This would include taking into consideration relevant material that would have a bearing on the issue for consideration, which, in this case, includes the order under section 144A of the Act dated 31.12.2007.
7. Mr. Swaminathan would object on the ground that the inquiry contemplated under section 264 is restricted to the record of any proceeding under this Act and has, necessarily to refer to the specific assessee alone. He would also refer to Section 263 dealing with Meera Jadhav 10/12 904-wp-2435-17.doc revision of orders prejudicial to the revenue and to the explanation thereto wherein ‘Record’ is defined as being all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner. In the absence of such definition in section 264, he would urge that ‘record’ for the purpose of section 264 would be limited to such records as were available at the time of assessment. We are not impressed with the distinction. The necessity for the insertion of a definition of ‘record’ by the Finance Act 1988 has been explained in a Circular issued by the Central Board of Direct Taxes No. 528 dated 16.12.1998 to the following effect.
‘39.1 Under the existing provisions of section 263 of the Income-tax Act, the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of revenue, he may pass an order enhancing or modifying the assessment or cancelling the same with a direction to make it afresh. The provisions as presently worded have given rise to two areas of controversy. The first is relating to the interpretation of the word “record” and the second is regarding the issue relating to merger of the order of the Assessing Officer with the order of the appellate authority. Courts have held in some cases that the word ‘record’ occurring in section 263 could not mean the record as it stood at the time of examination by the CIT but the record as it stood at the time when the order was passed by the Assessing Officer. Limiting the power of the CIT only to the situation that was existing at the time of making the assessment is to make the provision too restrictive, as many times information comes on record from various sources which indicate that the order of the Assessing Officer is erroneous and prejudicial to the interests of revenue. The above interpretation of the term “record” by some court besides being against the legislative intent also defeats the very objective sought to be achieved which is to revise the orders on the basis of records as is available to the CIT at the time of examination. With a view to clarifying the legislative intent of the term “record”, a definition of the term “record” has been inserted in the Explanation to subsection (1) of section 263 by the Finance Act to include all records relating to any proceedings under the Act available at the time of examination by the CIT. This has been carried out for removal of doubts.”
(emphasis supplied)
8. Useful reference can also be made to a judgment of the Supreme Court in the case of Commissioner of Income Tax v. Sri. Manjunathesware Packing Products and Camphor Works ITR 53 (SC)), wherein the Supreme Court, while considering the import of the word ‘record’ in section 263 of the Act states as follows:–
‘If the material, which was not available to the Income-tax Meera Jadhav 11/12 904-wp-2435-17.doc Officer when he made the assessment could thus be taken into consideration by the CIT after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him.’
9. The view of the department as reflected in the above Circular is thus to the effect that what constitutes ‘record’ cannot be limited to the return of income or order of assessment, but should be extended to include information from other sources that would impact the issue in question.
10. Mr. Swaminathan would refer to the judgment of the Division Bench of the Andhra Pradesh High Court in M.S Raju v. Deputy Commissioner of Income Tax ( 298 ITR 373 (Andhra Pradesh)) which has expressed a view to the effect that the import of the word ‘record’ as set out in the Circular (supra) would be restricted to the power under section 263 only and not section 264. The distinction noted by the Division Bench in that case was that the power of revision under section 263 of the Act was intended to be exercised in cases where the interests of revenue were prejudiced and it was for this reason that the inquiry of the Commissioner of Income Tax was not limited only to material available before the assessing officer, but also material obtained subsequently. The power under section 264 of the Act is, in fact as wide a power, and one that is intended to prevent miscarriage of justice. Courts have consistently taken a view that the conferment of powers under section 264 of the Act is to enable the Commissioner to provide relief to an assessee, where the law permits the same.
Reference may be made to the decisions of the Gujarat High Court in C. Parikh and Co. v. Commissioner of Income Tax ITR 610 (Gujarat)); Ramdev Exports v. Commissioner of Income Tax(Gujarat)); Kerala High Court in Parekh Brothers v. Commissioner of Income Tax and Calcutta High Court in Smt. Phool Lata Somani v. Commissioner of Income Tax ITR 216 (Calcutta)). In this view of the matter, we see no reason to take a different view on the interpretation of the word ‘record’ occurring in section 264 of the Act from that expressed by the Central Board of Direct Taxes in the Circular extracted above. The order under section 144A dated 31.12.2007 is thus part of the record and ought to have been take into consideration in deciding the petition under section 264 of the Act.
11. In fact the objection raised by the Department is hyper technical and runs counter to the stand taken by it in the assessment of this appellant in the three earlier assessment orders. Thus even applying the principles of consistency the treatment accorded to an issue arising in a continuing transaction should be consistent for the entire period in question.
12** ** **
13. Mr. Swaminathan would submit that the appellant ought to have filed a revised return under section 139(5) since there was sufficient time available and not having done so, he cannot seek remedy under section 264 of the Act. He would urge that both reliefs cannot run concurrently and one can be availed of only when the other is exhausted as otherwise an assessee who misses the time limit for Meera Jadhav 12/12 904-wp-2435-17.doc filing a revised return would take recourse to the provisions of section 264 and seek a revision.”
13. The respondent-Assessing Officer as well as the Commissioner while exercising revisional proceedings was therefore required to consider the facts of the case in light of the replies and the documents placed on record by the petitioner in response to the notices issued under section 142(1) of the Act as the Courts have consistently taken a view that the powers under section 264 of the Act is to enable the Commissioner to provide relief to an assessee as the law permits the same.
14. This Court, in case of C.Parikh & Co. v. Commissioner of Income Tax, Baroda reported in (Gujarat) has also observed as under:
“7. The only question which arises for our determination is whether the Commissioner, in exercise of powers under s. 264, could have given relief to the petitioner in respect of the under-totalling of the purchases to the extent of Rs. 20,000. Section 264(1) which is relevant for our purpose reads as under:
“264. (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 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.”
8. 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 he 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. Subsection (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 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 limitations 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 detects 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 within the power of the Commissioner to admit such a ground in revision. The Commissioner was also not right in holding that the over-assessment did not arise from the order of 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 overassessment. 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 overassessment, 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 “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.”
15. In view of the above conspectus of law and foregoing reasons, the petition succeeds and is accordingly allowed and the impugned order dated 07.03.2022 as well as assessment order dated 23.12.2019 is quashed and set aside. The matter is remanded back to the Assessing Officer for de novo consideration. The Assessing Officer shall provide a personal hearing to the petitioner and shall pass fresh de novo order in accordance with law. Such exercise shall be completed within a period of 12 weeks from the date of receipt of copy of this order. Rule is made absolute to the aforesaid extent. No order as to cost.