The Gujarat High Court in a recent case directed the assessee, who failed to claim ‘Long Term Capital Loss’ in its Income Tax return, to seek revision under Section 264 of the Income Tax Act, 1961. The Court reiterated that a Commissioner has to decide an assessee’s revision application under the said section.
Surat Trade and Mercantile Limited , the petitioner had filed a revision application under Section 264 before the Commissioner, claiming that the person, who was responsible for filing return of income, forgot to claim LTCG of Rs. 121.88 lakhs, arising on account of extinguishment of certain shares.
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The revision came to be rejected by the Principal Commissioner on the ground that intimation under section 143(1) of the Act was already issued and merely because the petitioner had erroneously not claimed the LTCG in the return of income, it cannot be allowed a second inning to revise the return of income.
The High Court held that the Commissioner is supposed to consider merits of the case while entertaining a revision petition filed under section 264 of the Act. The court observed the case Pramod R. Agrawal v. Principal Commissioner of Income Tax (2023) where the Bombay High Court considered various judgments on the scope of power under section 264 of the Act. In Asmita Damale v. CIT, the High 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. It was also held the Commissioner has to take into consideration relevant material that would have a bearing on the issue for consideration.
A division bench of Justices Bhargav D. Karia and Mauna M. Bhatt reiterated that a Commissioner has to decide an assessee’s revision application under Section 264, on merits, as the provision empowers the Income Tax Commissioner to revise certain orders.
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In light of the precedent, the court disposed of with direction to the Principal Commissioner Surat to decide afresh assessee’ revision petition within 12 weeks, after giving opportunity of hearing to the petitioner to submit requisite documents.
Advocate Tushar Hemani and Advocate Vaibhavi K Parikh appeared for Petitioner. Karan Snaghani and Advocate Kalpana K Raval appeared for Respondent.
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