2009 (5) TMI 40 - HC - Income Tax

Commissioner could not have refused to entertain the revision on the ground that it is not a substitute of appeal, though there may be many more reasons, on which exercise of the discretionary jurisdiction can be refused but such reasons have to be germane to the issue and valid CIT committed manifest error of law in refusing to entertain the revision on the ground that petitioner should have availed the remedy of appeal, particularly when for some assessment years appeals were filed CIT is directed to reconsider the revisions u/s 264 and pass fresh orders, as per his own discretion, in accordance with law

Summary

Issues:
1. Jurisdiction of the Assistant Commissioner of Income Tax to issue notice under Section 148.
2. Validity of assessment order due to transfer of case.
3. Commissioner of Income Tax's refusal to entertain revision under Section 264.
4. Interpretation of Section 264 as a substitute for appeal.
5. Discretion of the Commissioner to entertain revision.

Jurisdiction Issue:
The case involved two writ petitions challenging orders passed by the Commissioner of Income Tax for assessment years 1999-2000 and 2001-02. The petitioner argued that the Assistant Commissioner of Income Tax had no jurisdiction to issue the notice under Section 148, as the Income Tax Officer, Ward, was authorized for that matter. The case was transferred to the correct officer during assessment proceedings, but the petitioners claimed that this transfer did not validate the initiation of proceedings, rendering the assessment order without jurisdiction.

Validity of Assessment Order:
Apart from the jurisdiction issue, a common plea was raised that the Commissioner of Income Tax erred in refusing to entertain revision under Section 264, stating that revision is not a substitute for appeal. The petitioners contended that Section 264 allows for revision without necessarily appealing, provided certain conditions are met. The Commissioner's refusal was based on the assumption that the petitioners had chosen to file appeals in other assessment years, potentially leading to conflicting judgments. The petitioners argued that the question of law had already been decided by a Division Bench, making the Commissioner's assumption incorrect.

Interpretation of Section 264:
The Court clarified that Section 264 grants the Commissioner the discretion to entertain revisions in addition to the right of appeal, as long as the conditions specified in Sub-Section (4) are met. The Commissioner's belief that revision is not a substitute for appeal was deemed incorrect. The Court emphasized that valid reasons for refusing discretionary jurisdiction must be relevant to the issue at hand.

Discretion of the Commissioner:
The Court set aside the Commissioner's orders and directed a reconsideration of the revisions under Section 264, allowing the Commissioner to exercise discretion in accordance with the law. The judgment highlighted that while revision is not a substitute for appeal, there are valid reasons beyond this aspect that can influence the discretionary jurisdiction of the Commissioner.

In conclusion, the High Court ruled in favor of the petitioners, emphasizing the importance of correctly interpreting the provisions of Section 264 and allowing the Commissioner to exercise discretion in revising orders, independent of the appeal process.