2014 (11) TMI 945 - HC - Income Tax

Revision u/s 264 - Application for revision was rejected on the ground of delay by the CIT - Earlier the application of rectification rejected by AO Held that - The order dated 13 December 2011 of the AO rejecting the rectification application is bereft of any reasons - The AO is obliged to deal with the submissions of the assessee in its rectification application before rejecting the application for rectification - the manner the assessee has been dealt with by the Respondent Revenue is to say the least most unfair - the Authorities under the Act being creatures of Statutes are obliged to follow the statutory periods provided under the Act and cannot set up periods of limitation different from that provided under the Act - the AO while passing the order dated 13 December 2011 on the rectification application has given no reasons whatsoever in support of its conclusion that the intimation dated 21 November 2008 under Section 143(1) of the Act calls for no rectification - It is only when the AO gives reasons in support of his order in the context of the application before him could the same be tested by higher forums such as the CIT while dealing with an application for revision u/s 264 - the orders of the CIT dated 27 March 2014 and 17 July 2014 passed u/s 264 of the Act is set aside and on a rectification application made - the order dated 13 December 2011 of the AO rejecting the rectification application to Intimation u/s 143(1) is also set aside thus the matter is remitted back to the AO Decided in favour of assessee.

Summary

Issues:
Challenge to orders of Assessing Officer and Commissioner of Income Tax regarding rectification applications under Income Tax Act, 1961.

Analysis:
1. The petition challenged three orders:
(a) Order of Assessing Officer rejecting rectification application under Section 143(1) of the Act dated 13 December 2011.
(b) Order of Commissioner of Income Tax rejecting revision application under Section 264 from the Assessing Officer's order dated 13 December 2011 on 27 March 2014.
(c) Order of Commissioner of Income Tax rejecting rectification application to the order dated 27 March 2014 on 17 July 2014.

2. The Assessing Officer rejected the rectification application on 13 December 2011 without providing any reasons, violating principles of natural justice. Lack of reasoning in the order rendered it invalid. The Commissioner of Income Tax also erred in rejecting the revision application on grounds of delay, ignoring statutory provisions. The Commissioner's rejection of the rectification application on 17 July 2014 was unjustified, as there were clear errors apparent from the record regarding filing deadlines and available time for rectification applications.

3. The High Court found the treatment of the petitioner by the Revenue authorities to be unfair. The authorities failed to adhere to statutory periods provided under the Act and imposed arbitrary limitations. The Assessing Officer's lack of reasoning and the Commissioner's dismissal of applications based on incorrect timeframes were deemed unacceptable. The Court emphasized the importance of following statutory provisions and ensuring due application of mind before rejecting rectification applications.

4. Consequently, the High Court set aside the orders of the Commissioner of Income Tax dated 27 March 2014 and 17 July 2014, along with the Assessing Officer's order dated 13 December 2011. The proceedings were restored to the Assessing Officer for a fresh decision on the rectification application dated 18 June 2009 in compliance with the law. The Court also directed the petitioner to provide necessary documents if not available with the Assessing Officer for consideration of the rectification application.

5. The petition was allowed, and no costs were imposed. The judgment highlighted the importance of following legal procedures, providing reasoned orders, and upholding principles of natural justice in administrative decisions under the Income Tax Act, 1961.