2017 (1) TMI 1672 - HC - Income Tax

Review petition - whether review lies in relation to an order passed under Section 260A of the Income Tax Act, 1961? - HELD THAT - Review petition is maintainable. As decided in MEGHALAYA STEELS LTD. 2015 (8) TMI 525 - SUPREME COURT and AUTOMOBILE CORP. OF GOA LTD. 2016 (8) TMI 650 - SUPREME COURT on a cursory reading of section 260A(7), the said section does not purport in any manner to curtail or restrict the application of the provisions of the Code of Civil Procedure. Section 260A(7) only states that all the provisions that would apply qua appeals in the Code of Civil Procedure would apply to appeals under section 260A. That does not in any manner suggest either that the other provisions of the Code of Civil Procedure are necessarily excluded or that the High Court s inherent jurisdiction is in any manner affected

Summary

Issues:
1. Review of an order passed under Section 260A of the Income Tax Act, 1961.
2. Maintainability of the review petition.
3. Consideration of prevailing CBDT Circular No. 21 of 2015 regarding tax effect in appeals.
4. Impact of a review application on the appeal proceedings.

Issue 1: Review of an order under Section 260A:
The Revenue sought a review of an order passed under Section 260A of the Income Tax Act, 1961. The question arose whether a review lies in relation to such an order. The Court was referred to a Supreme Court judgment in Commissioner of Income-Tax vs. Meghalaya Steels Ltd., where it was held that Section 260A(7) does not restrict the application of the Code of Civil Procedure to appeals under Section 260A. Another Supreme Court case, Commissioner of Income-Tax vs. Automobile Corp. of Goa Ltd., supported this view. Based on these authorities, the Court held that the review petition is maintainable.

Issue 2: Maintainability of the review petition:
The Court considered the submission that if the review application is allowed, the entire appeal would revive in its original form. The Court noted the CBDT Circular No. 21 of 2015, which specifies that if the tax effect of a dispute is below ?20 lakhs, the Revenue should not proceed with the appeal unless under exceptional circumstances. As the tax effect of the two assessment years involved was below ?20 lakhs, the Court relied on a previous Bench decision to explain that upon granting a review, the original decree or order stands recalled, and the matter is reheard. In light of these submissions, the counsel for the Revenue indicated that they did not wish to press the review petition.

Conclusion:
Considering the arguments presented and the prevailing CBDT Circular, the Court dismissed the review petition as not pressed. The judgment highlighted the principles governing the review of orders under Section 260A and the impact of such reviews on appeal proceedings, emphasizing the importance of tax effect in determining the course of action for the Revenue.