Court Directs Principal Commissioner to Reconsider Double Taxation Error Under Section 264
In a significant ruling, the Telangana High Court has quashed an order by the Principal Commissioner of Income Tax, which had resulted in the double taxation of M/s. Premier Solar Power Tech Private Limited. The court found that the company was unjustly taxed on the same income for two consecutive assessment years, 2020-21 and 2021-22, amounting to Rs. 6,85,02,377.
The judgment, delivered by a division bench comprising Justices P. Sam Koshy and Narsing Rao Nandikonda, highlighted the Principal Commissioner's failure to correct the erroneous double taxation despite clear evidence. The court emphasized the wide and beneficial powers vested in the Commissioner under Section 264 of the Income Tax Act, 1961, to rectify such errors, regardless of whether they stem from the assessee or the department.
The petitioner, represented by Mr. Karan Talwar, contended that the taxation authority's refusal to revise the order was in violation of Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by the authority of law. The petitioner further argued that the double taxation occurred due to timing issues in the department's assessment orders, which were beyond the company's control.
The court's decision underscored the duty of tax authorities to assist taxpayers in securing legitimate reliefs and not to take advantage of an assessee's mistakes. The judgment referenced several precedents, including the Bombay High Court's ruling in the Swaminarayan Mandir Trust case, which supported the use of Section 264 to correct taxpayer errors.
Setting aside the impugned order, the court directed the Principal Commissioner to reassess the case and provide relief to the petitioner. The decision marks a critical reminder of the judiciary's role in ensuring fair taxation practices and preventing unjust enrichment of the exchequer.
Bottom Line :
Income Tax Act, 1961 Section 264 Double taxation of the same income across different assessment years - Principal Commissioner obligated to grant relief under Section 264 for correcting over-assessment or double taxation, irrespective of whether the error arises from the assessee's voluntary act or the department's actions.
Statutory provision(s): Income Tax Act, 1961 Sections 264, 139(5); Constitution of India, 1950 Article 265
