2010 (7) TMI 1097 - HC - Income Tax

Summary

Issues involved:
The issues involved in this case include the rejection of a revision application under section 264 of the Income Tax Act, the timing of the application, and the question of delay in filing the application.

Revision Application under Section 264:
The petitioner filed a revision application under section 264 of the Income Tax Act seeking relief for the assessment year 2003-04. The petitioner claimed that certain expenditures disallowed while computing total income led to an incorrect income declaration. The application was initially filed on 19.12.2008 but was withdrawn and refiled on 13.4.2009 after a show cause notice was issued regarding the premature filing. The respondent contended that the application was barred by limitation as more than four years had passed since the intimation was served upon the assessee.

Timing of Application and Allegations of Delay:
The petitioner argued that the intimation under section 143(1) of the Act was served on them for the first time on 27.3.2009, contrary to the respondent's claim that it was served in 2005. The Commissioner held that the application under section 264 was filed after a lapse of about six years, citing the petitioner's failure to file a revised return earlier. The petitioner contended that they filed the application promptly after receiving the intimation in 2009 and that there was no reason to believe there was any delay.

Principles of Natural Justice and Decision of the Court:
The Court found that the Commissioner's decision to reject the application based on a delay of six years was unjust as the petitioner was not given an opportunity to explain or seek condonation of any delay. The Court held that the lack of a hearing on the question of delay violated principles of natural justice. Consequently, the impugned order dated 03.12.2009 was quashed and set aside, and the revision application was restored to the Commissioner for a fresh decision in accordance with the law, with specific instructions to address the delay issue as a preliminary matter after providing the petitioner with a fair hearing.