2018 (7) TMI 1322 - HC - Income Tax

Powers of revision u/s 264 - condonation of delay - Held that - It was only after Assessing Officer, by his order dated 25th March, 2016 held that, this deduction of ₹ 4.25 crores relates to Assessment Year 2012-13 and therefore could not be allowed in the Assessment Year 2013-14 that the petitioner was compelled to file the Revision Petition so as to claim the deduction. This to ensure that, in atleast one of the two assessment years it gets the benefit of deduction. It is to be noted that the petitioner filed its Revision Application on 22nd April, 2016 i.e. within a month of the order of the Assessing Officer dated 25th March, 2016 relating to Assessment Year 2013-14. In the aforesaid circumstances, the reason in filing the Revision Application is for reasonable cause and should have been condoned by the respondent no.2-Principal Commissioner of Income-tax. We do not accept the contention of the Revenue that restoring the application under Section 264 of the Act the Principal Commissioner of Income-tax-respondent no.2 would be an exercise in futility. There are issues to be adjudicated and it is best that the Authority under the Act, discharges his obligation. At this stage, we make no comments on the merits of the Revision Application which is before the Principal CIT-respondent no.2. We set aside the impugned order dated 23rd March, 2018 and after condoning the delay in filing the Revision Application, we restore the petitioner s Revision Application dated 22nd April, 2016 before the respondent no.2-Principal Commissioner of Income-tax for disposal on merits after following the principles of natural justice. All contentions kept open.

Summary

Issues:
Challenge to order rejecting Revision Application under Section 264 of the Income-tax Act, 1961 for Assessment Year 2012-13 as time-barred and dismissed on merits.

Analysis:
1. The petitioner, engaged in sugar manufacturing, paid commission to Societies under the Sugarcane Act until January 2012. Expecting a waiver for February and March 2012, the petitioner did not claim deduction for the accrued liability in Assessment Year 2012-13. However, the waiver did not materialize, and the State Government demanded payment in June 2012. Consequently, the petitioner claimed deduction in Assessment Year 2013-14, but it was rejected by the Assessing Officer for being related to the previous year. An Appeal and a Revision Application under Section 264 were filed, along with a delay condonation request.

2. The Principal Commissioner rejected the delay condonation application, stating it could have been claimed in a revised return for Assessment Year 2012-13 filed in 2013. The High Court noted that the Commissioner erred in deciding on the merits without allowing the delay condonation. Citing a similar case, the Court emphasized the importance of first addressing the delay issue before considering the merits.

3. The petitioner's argument for the delay was based on the Assessing Officer's decision in 2016, prompting the need for the Revision Application. The petitioner filed the Revision Application promptly after the Officer's order, seeking to avail the deduction benefit in one of the assessment years. The Court found the delay reasonable and directed the Principal Commissioner to reconsider the application after condoning the delay.

4. The Revenue contended that the claim for deduction was not made in the original or revised returns for Assessment Year 2012-13, thus not maintainable under Section 264. Citing precedents, the Court noted that appellate authorities can entertain claims not made before the Assessing Officer, emphasizing the wider powers of revision under Section 264.

5. The Court rejected the Revenue's argument, highlighting the broad scope of revisional powers under Section 264. Referring to decisions from other High Courts, the Court directed the Principal Commissioner to pass a fresh order after considering the parties' arguments and relevant decisions.

6. The Court allowed the petition, setting aside the Principal Commissioner's order, and restored the Revision Application for further consideration on merits, emphasizing adherence to principles of natural justice.

Conclusion:
The High Court allowed the petition, directing the Principal Commissioner to reconsider the Revision Application after condoning the delay, ensuring a fair opportunity for the petitioner to present its case on merits. The Court emphasized the broad revisional powers under Section 264 and the importance of following principles of natural justice in such proceedings.