2017 (9) TMI 175 - HC - Income Tax

Revision under Section 264 - scope of revision - Held that - The order passed under Section 264 of the Act is a detailed order with reasons and after considering the law laid down by the Supreme Court in the various decisions as mentioned in the order itself, it cannot be said by any stretch of imagination that it is a cryptic order. From perusal of the order impugned, it is clear that despite several opportunities, the petitioner did not avail any opportunity to account for the deposit of ₹ 16,31,700/- in his saving account. As result, ex-parte assessment order was framed. Petitioner was also given notice to pay the penalty, this too was not also availed of by the petitioner and it is only when the penalty order was passed and recovery proceedings started, the petitioner filed a revision under Section 264 of the Act. If we acceed to submissions of Shri Purohit, then in each case assessee will allow to proceed exparte and after limitation for filing appeal is over ask for quashing of exparte assessment order by invoking Section 264 of the Act. This cannot be the lagislature in proving remedy Under Section 264 of the Act.

Summary

Issues:
Validity of order under Section 264 of the Income Tax Act, 1961.

Analysis:
The judgment concerns a petition filed under Article 227 of the Constitution of India to challenge the validity of an order passed by the Principal Commissioner of Income Tax-II, Jabalpur under Section 264 of the Income Tax Act, 1961. The petitioner, an individual, had a total deposit of ?16,31,700 credited in his saving account during the Financial Year 2009-10. An ex-parte assessment order was issued against the petitioner, holding him liable to pay tax and penalty under relevant sections of the Act. The petitioner claimed that he became aware of this assessment order only upon receiving the demand notice and subsequently challenged it in revision under Section 264 before the Principal Commissioner. The revision petition was dismissed, leading to the present petition before the High Court.

During the hearing, the Senior Counsel for the petitioner argued that the Principal Commissioner had a wide jurisdiction to ensure justice between the parties, and it was his duty to pass an appropriate order or remand the matter for fresh assessment when necessary material was presented. The counsel cited various legal precedents to support his arguments, including a Supreme Court decision and two judgments of the Gujarat High Court.

After considering the arguments, reviewing the available material, and examining the order passed by the Principal Commissioner, the High Court found no infirmity or illegality in the impugned order. The Court noted that the revisional authority had analyzed the facts in detail before dismissing the revision petition. It was observed that the order under Section 264 was detailed, supported by reasons, and in compliance with the legal principles laid down by the Supreme Court. The Court highlighted that despite multiple opportunities, the petitioner failed to explain the deposit in his account, leading to the ex-parte assessment order and penalty notice. The Court emphasized that allowing such challenges under Section 264 after missing appeal deadlines would defeat the legislative intent of the provision.

Ultimately, the High Court concluded that the petitioner was responsible for his predicament due to non-compliance with notices from the Assessing Officer. As a result, the Court found no merit in the petition and dismissed it accordingly.