2014 (10) TMI 945 - HC - Income Tax

Revision u/s 264 - Commissioner of Income Tax power to entertain the application for revision under section 264 from an Intimation u/s 143(1) - Held that - In the present facts taking into account the conduct of the Commissioner of Income Tax in ignoring the binding decision of this Court we do not consider it appropriate to consider the submissions made on behalf of the revenue when the order of the Commissioner is ex facie in defiance of the decisions rendered by this Court in Anderson Marine Ltd. (2003 (12) TMI 47 - BOMBAY High Court) wherein this Court had held that Section 264 would be applicable even in respect of Intimation issued under Section 143(1) of the Act post 1 June 1999. In an appropriate case we would consider the submission on behalf of the revenue. Accordingly the impugned order dated 20 April 2006 is set aside and the application is restored to the Commissioner of Income Tax with a direction to pass an appropriate order in accordance with law. Commissioner of Income Tax directed to dispose of the petitioner s application under section 264 of the Act as expeditiously as possible and preferably within 8-weeks from today.

Summary

Issues:
Challenge to order under Section 264 of the Income Tax Act based on rejection of revision application due to intimation not being considered an order.

Detailed Analysis:
1. The petitioner filed a return of income for A.Y. 2003-04, declaring total income with dividend income and unabsorbed carried forward business loss. However, the petitioner did not adjust/set off the business loss from dividend income due to a mistake.

2. The Assessing Officer accepted the return and refunded excess tax to the petitioner. Later, the petitioner realized the mistake and filed a revision application under Section 264 of the Act, accompanied by an application for condonation of delay.

3. The Commissioner of Income Tax condoned the delay and considered the revision application. During the hearing, it was argued that an intimation under Section 143(1) should be amenable to revisional jurisdiction under Section 264, citing relevant court decisions.

4. The Commissioner, however, held that post the deletion of the Explanation to Section 143(1) in June 1999, an intimation ceases to be an order for Section 264 purposes. The Commissioner relied on a Karnataka High Court decision to dismiss the revision application.

5. The petitioner pointed out binding decisions of the High Court where an intimation under Section 143(1) was considered an order for Section 263 purposes. The Commissioner disregarded these decisions and dismissed the revision application.

6. Section 263 and 264 of the Act both deal with revision of orders by Assessing Officers. The petitioner argued that if an intimation is considered an order for Section 263, the same principle should apply for Section 264.

7. The High Court observed that the Commissioner was duty-bound to follow the decisions of the High Court, as declared in a Supreme Court case. The decisions cited by the petitioner should have been followed, and any challenge should have been made before a higher forum.

8. The impugned order was set aside, and the application was restored to the Commissioner with a direction to pass an appropriate order in accordance with the law. The Commissioner was directed to dispose of the application expeditiously.

9. The High Court allowed the petition, emphasizing that the Commissioner should follow binding decisions and not ignore them, as it leads to undue harassment to the assessee and chaos in the administration of justice. No costs were ordered in the case.