Opinion Of Eminent Legal Luminaries On Controversial Issues

When Can Assessee Apply For Revision U/s. 264?

QUERY: An Assessee, inadvertently due to mistake of Law, made a wrong Choice of option in computing the Long Term Capital Gains on Sale of Ancestorial House Property by deducting from the Sale Price, the value of the House Property as on 1-4-1981 as per the Valuation Report and paid Tax @10%.

The Learned Assessing Officer completed the Assessment under Section 143(1) of the Income-tax Act, 1961, and made demand for interest under Section 234B and Section 234C of the Income-tax Act, 1961.

Then, it was discovered that, had the Assessee deducted the indexed value of the House Property from the Sale Proceeds and paid Tax @ 20%. There would have been substantial Refunds.

The Assessee made an Application under Section 154 of the Income-tax Act, 1961, for rectification of the mistake of law committed by the Assessee in making wrong choice because of ignorance, which was rejected by the Learned Assessing Officer.

The Learned Commissioner of Income Tax (Appeals) also rejected the Assessee’s Appeal on the grounds that, that mistake would have been rectified by submitting a Revised Return. Since the time for filing of Revised Return of Income has expired, the Assessee has no remedy.

May we request you to suggest the Remedy in this particular situation, as per the Spirits and Legislations and Departmental Circular No. 14(XL 35) of 1955 dated 1-4-1955, which both the Assessing Officer as well as the Learned Commissioner of Income Tax (Appeals) rejected on the grounds that, the Circular being issued prior to 1961, is obsolete under what provisions of law CBDT may be approached for granting the relief.

I shall appreciate your considered response, at an early date.
ANSWER: From the facts it is not clear for which assessment year the intimation was issued under section 143(1) of the Act and whether assessment under section 143(3) is pending or not? Further date of intimation is also not mentioned.

Be that as it may, section 264 of the Income- tax Act, 1961 provides for revision of the order by the Commissioner, if the assessee applies within one year from the date on which the order in question was communicated, unless the assessee was prevented by sufficient cause. In such a case the Commissioner may admit the belated application.

After June 1, 1999, the intimation under section 143(1) is not an order of assessment for the purpose of section 264.
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