2019 (2) TMI 1393 - HC - Income Tax

Revision u/s 263 - Petitioner s grievance that the Tribunal remanded the proceedings before the CIT(A), in the present case, the powers are exercised by the Principal Commissioner which is not in consonance with the directions of the Tribunal - Rectification application - HELD THAT - We request the Tribunal to pass an early order on the application for rectification filed by the department. The same may be disposed of preferably within two months from the date of receipt of copy of this order. The apprehension of the Counsel for the Revenue about limitation can be easily put to rest. Once the Tribunal passes an order on the rectification application of the department and rectifies its concluding portion of the order by remanding the proceedings before the Commissioner instead of CIT(A), the directions would take effect from the date of the order on rectification application. Any reference to limitation for passing revisional order may, therefore, to be from said date. We notice that the order of the Tribunal was passed on 27th November, 2017 but the department claims that the same was served on 14th March, 2018 and the rectification application was filed sometime in July, 2019 which would be within six months from the date of communication. Request the Tribunal to hear the rectification application on merits without raising question of limitation.

Summary

Issues:
Challenge to notice under Section 263 of the Income Tax Act, 1961 and revisional order passed by the Principal Commissioner based on Tribunal's order dated 27th November, 2017.

Analysis:
1. The Petitioner challenged a notice dated 28th November, 2018 issued by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, which conveyed the intention to grant a fresh hearing and pass an order based on the Tribunal's order dated 27th November, 2017. The Petitioner also contested the revisional order passed by the Principal Commissioner on 20th December, 2018 following the said notice.

2. The issues stem from the Tribunal's order dated 27th November, 2017, where the Petitioner Assessee had appealed against the earlier revision order by the Principal Commissioner dated 30th March, 2017. The Tribunal found a breach of natural justice in the Commissioner's order and remanded the proceedings back to the "Learned CIT(A)" for a fresh hearing and disposal.

3. The Petitioner's contention was that the powers exercised by the Principal Commissioner in passing the revisional order were not in line with the Tribunal's directions, as the Tribunal had remanded the proceedings before the CIT(A), not the Principal Commissioner.

4. It was highlighted that the Department had applied for rectification of a mistake arising from the Tribunal's order dated 27th November, 2017, which was still pending. Therefore, it was argued that the Principal Commissioner should not have passed the revisional order until the rectification was addressed.

5. The Revenue's stance was that the Tribunal's order referred to the Commissioner as the revisional authority, except for a typographical error mentioning CIT(A) in paragraph 9. They argued that the Principal Commissioner had the jurisdiction to pass the fresh order to prevent time bar issues.

6. The High Court observed that the Tribunal's order contained typographical errors, with the reference to CIT(A) being an inadvertent mistake. However, the Court emphasized that Revenue Authorities should not interpret the Tribunal's order without rectifying such errors through the appropriate channels.

7. Consequently, the High Court set aside the impugned order and notice of revision passed by the Principal Commissioner based on the identified error. They directed the Tribunal to promptly address the rectification application filed by the Department to clarify the authority responsible for the proceedings. The Court alleviated concerns about time limitations once the rectification was made, urging the Tribunal to handle the application without raising issues of limitation.

8. The Petition was disposed of with the above observations and directions, ensuring clarity in the proceedings based on the Tribunal's corrected order.