Whether an intimation u/s 143(1) is amenable to revisional jurisdiction u/s 264?
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Short note of today's case law for quick reference:
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[2024] 466 ITR 376 (Bom)
[IN THE BOMBAY HIGH COURT]
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GOPAL VAZIRANI
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PRINCIPAL COMMISSIONER OF INCOME-TAX AND ANOTHER
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K. R. SHRIRAM and DR. MS. NEELA GOKHALE JJ.
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March 14, 2024.
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1. For A.Y. 2011-12, the assessee declared long term capital gains on sale of? shares computed the gains taking into account the proportion of total sales consideration including the sum kept in escrow, which has not been received by the promoters.
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2. The assessee’s return was processed u/s 143(1) of the Act accepting the returned income.
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3. Subsequent to the sale of shares of the company, certain statutory and other liabilities arose in the company for the period prior to the sale of shares.
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4. Under the agreement, this amount was withdrawn from the escrow account and the promoters, therefore, did not receive this amount.
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5. The assessee filed an application for revision u/s 264 of the Income-tax Act, 1961 contending that what the assessee received was less than what was mentioned in the return of Income and therefore the capital gains had to be recomputed reducing the proportionate amount from the amount deducted from the escrow account.
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6. The assessee’s application u/s 264 of the Act was rejected by the Principal Commissioner on the ground that the intimation u/s 143(1) was not an order amenable to revisional jurisdiction under section 264.
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7. On writ petition, High Court held that an intimation u/s 143(1) is amenable to revisional jurisdiction u/s 264.
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8. That the court having already held in an identical matter, capital gains has to be calculated on the basis of the actual consideration received, and that the assessee had not received his proportionate share to the extent reduced from the escrow account, the matter was remanded to the Principal Commissioner to pass a fresh order on the assessee’s application on the basis that the capital gains on the transfer of shares of the company should be computed after reducing proportionate amount withdrawn from the escrow account from the full value of consideration and allow the refund of additional tax paid with interest.