Assessee Who Forgot To Claim 'Long Term Capital Loss' In Income Tax Return Can Seek Revision U/S 264: Gujarat High Court

A division bench of Justices Bhargav D. Karia and Mauna M. Bhatt also reiterated that a Commissioner has to decide an assessee's revision application under Section 264, on merits.

The provision empowers the Income Tax Commissioner to revise certain orders. This revision can be initiated by the authority or upon application by the assessee.

In the case at hand, 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.

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.

At the outset, 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.

“Respondent therefore ought to have considered the claim of the petitioner for loss on account of extiguishment of the value of shares,” it held.

The bench relied on 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. For instance, 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.

The decision was followed by the Gujarat High Court in Jindal Worldwide Limited vs. The Principal Commissioner of Income Tax wherein, in similar circumstances, the Principal Commissioner was directed to reconsider the claim, which was left out in the original proceeding, on merits.

In light of the above, the present proceedings were 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.

Appearance: Senior Advocate Tushar Hemani and Advocate Vaibhavi K Parikh for Petitioner; Senior Standing Counsel Karan Snaghani and Advocate Kalpana K Raval for Respondent

Case title: Surat Trade and Mercantile Limited v. Principal Commissioner Of Income Tax Surat 1 & Anr.

LL Citation: 2024 LiveLaw (Guj) 156

Case no.: R/SPECIAL CIVIL APPLICATION NO. 9157 of 2024.