In a recent ruling, the single bench of the Kerala High Court held that, while exercising the powers conferred under section 264 of the Income Tax Act, 1961, the Commissioner of Income Tax can consider a fresh claim for deduction even without a revised return.
A brief perusal of the facts would reveal that the assessee is a Government-company and a sick industrial unit proceeding for re-habilitation under a Scheme approved by the Board for Industrial and Financial Reconstruction (BIFR).The grievance of the assessee was that their claim for deduction towards provision for arrears of salary and wages payable to the officers and staff as per the Long Term Settlement was disallowed by the Assessing Authority. Against the said assessment order, the assessee preferred a Revision petition before the Commissioner of Income Tax, which was rejected on ground that a fresh claim for deduction can be allowed only by way of filing a revised return. Though the order was challenged before the CIT(A), no relief was granted. Being aggrieved, the assessee approached the High Court alleging that the Commissioner failed to exercise its jurisdiction.
The substantial question of law raised before the Court was that whethera claim for deduction for the above said payment is permissible, in the absence offiling a revised return?.
The assessee relied upon the decision of the division bench of the Kerala High Court, in Parekh Brothers v. Commissioner of Income Tax,in which it was held that while considering the scope and power of the Commissioner under Section 264 of the Act held that even though a mistake was committed by the assessee and it was detected by him after the order of assessment and the order of assessment is not erroneous, still it is open for the assessee to filea revision before the Commissioner under Section 264 of the Income Tax Act and claim appropriate relief.
Justice A M Shaffique while quoting the decision of the division bench of the Kerala High Court in the case, Parekh Brothers, the Court held that the Commissioner has jurisdiction to pass orders even if a revised return is not filed. Accordingly, the matter was disposed with an order directing the Commissioner to re-hear the matter afresh without a revise return.
Read the full text of the Judgment below.
