CIT can not dismiss revision petition/s 264 on the ground that issue was subject of appeal for other years

Commissioner can not dismiss revision petition/s 264 on the ground that in assessee’s case similar issue was subject matter of appellate proceedings in other years – High Court

 revision petition/s 264

ABCAUS Case Law Citation:
ABCAUS 2125 (2017) (11) HC

The Issue:
The petitioner had invoked the writ jurisdiction of the Hon’ble high Court challenging the order passed by the Jurisdictional Commissioner of Income Tax, dismissing its revision petition filed under section 264 of the Income tax Act, 1961.

Important Case Laws Cited/relied upon by the parties:
ONGC vs. CIT (2015) 376 ITR 306 (SC)

Brief Facts of the Case:
The petitioner company had filed its return of income inter alia, applying provisions of 44BB of Income Tax Act, 1961 (`the Act’). The Assessing Officer (AO) issued notice for scrutiny assessment and thereafter issued draft assessment order proposing to tax the receipts as Royalty/ Fee from Technical Services. No objections were filed by the assessee and consequently the final assessment order was passed by the AO u/s 144C(3)(b)/143(3) confirming the addition/ adjustment proposed in the draft Assessment Order. The AO computed the total income of the petitioner by applying Section 44DA of the Act.

The petitioner did not file any objections under Section 144C(2) or any appeal against the final assessment order.

Later, the petitioner filed a Revision Petition under Section 264 of the Act before the Jurisdictional Commissioner of Income Tax (CIT). The ground raised was that the AO had wrongly denied and not applied Section 44BB and had incorrectly invoked and applied Section 44DA of the Act. The petitioner company placed reliance on the decision of the Hon’ble Supreme Court and CBDT Circular no. 1862 on the applicability of section 44BB of the Act.

The CIT however declined to interference with the final assessment order primarily on the ground that a similar issue had arisen for consideration in preceding Assessment Years in which the alternate remedy of appeal was availed by the petitioner. For the Assessment Years, the petitioner had filed appeals before the appellate authority but no appeal was preferred for the Assessment Year in question.

The CIT reasoning and observation was that the petitioner, for some unexplained reasons, deliberately did not file an appeal against the assessment order for the relevant Assessment Year though it had filed appeals for other years. He held that this was an attempt to invoke Section 264 of the Act as a backdoor entry to file an appeal. Hence, the Revision petition should be dismissed. Accordingly he dismissed the Revision Petition as not maintainable under section 264 of the Act.

Observations made by the High Court:
The Hon’ble High Court observed that that the reasoning adopted by the CIT could not be sustained for it was contrary to the legislative mandate of Section 264 of the Act and the revisionary power conferred on the Commissioner.

The Hon’ble High Court observed that in terms of the provisions of section 264,  a Revision Petition u/s 264 of the Act can be filed against any order (including an assessment order) passed by a subordinate officer, which is otherwise appealable before Commissioner (Appeals) under section 246A of the Act or under section 253 of the Act before the Tribunal, where such appeal has not been filed and limitation period for invoking remedy has expired and the assessee has waived his right to appeal.

The Hon’ble High Court opined that the statutory bar is that Revision Petition cannot be entertained when an appeal has been filed before Commissioner (Appeals) or before the Tribunal in respect of such order or if no such appeal has been filed, the time limit for filing such appeal has not expired. Right to file an appeal should be waived for a revision petition to be maintainable. The objective and purpose is to ensure that the Assessee does not assail the same order before two forums and that it can elect between either filing an appeal or a revision. The Assessee cannot avail of both remedies against the same order for the same Assessment Year. If the time period for filing the appeal has not expired, the revision cannot be entertained – only to ensure that after filing of Revision, the assessee does not thereafter file an appeal. Even thereafter, the requirement is that the assessee should have waived his right to appeal.

The Hon’ble High Court noted that admittedly the time for filing appeal against the assessment order had expired. The assessee had waived his right to file appeal. Therefore Clause (a) to Section 264(4) was not attracted, clause (b) to Section 264(4) of the Act was also not attracted in the present case and it is not the case of the Revenue that the petitioner has filed any appeal to attract the negative stipulation in clause (c) to Section 264 (4) of the Act. Therefore, the case did not fall under clauses (a) to (c) of Section 264 (4) of the Act.

The Hon’ble High Court observed that under the Act, each Assessment Year is separate and the assessee files the return for each year and assessment order is passed. Strict principles of res judicata do not apply, though principle of consistency is applied. Commissioner cannot refuse to entertain a revision petition filed by the assessee under Section 264 of the Act if it is maintainable on the ground that a similar issue has arisen for consideration in another year and is pending adjudication in appeal or another forum. Negative stipulations are clearly not attracted. When a statutory right is conferred on an assessee, the same imposes an obligation on the authority. New and extraneous conditions, not mandated and stipulated, expressly or by implication, cannot be imposed to deny recourse to a remedy and right of the assessee to have his claim examined on merits.

The Hon’ble High Court clarified that the Jurisdictional Commissioner no doubt is an administrative authority to the subordinate officers including assessing officer, nevertheless the Act has conferred revisionary power on the said Commissioner. He cannot refuse to exercise the said power because the assessing officer was his subordinate and under his administrative control. The Commissioner while exercising power under Section 264 of the Act exercises quasi judicial powers and he must pass a speaking and a reasoned order. He cannot abdicate his authority on the ground that a similar issue has arisen and is subject matter of appellate proceedings in other years. This would be clearly contrary to the provisions of Section 264 of the Act.

The Hon’ble High Court opined that in view of scheme of the relevant provisions, Commissioner must give and assign reasons for taking a particular view, even if he accepts the findings and reasons recorded by the assessing officer and does not agree with the contention raised by the assessee. This Hon’ble High Court expressed its inability to fathom the reasons and ground which were in the mind of the Commissioner and opined that the order of the Commissioner should have contained reasons for the conclusions arrived at and ought to have dealt with the issue on merits as required under Section 264 of the Act.

Decision/ Conclusion/Held:
The writ petition was allowed and the impugned order of the Commissioner was set aside and quashed. The matter was remanded to the Commissioner to decide the Revision Petition afresh and in accordance with law.

revision petition/s 264

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