2022 (9) TMI 1381 - HC - Income Tax

Revision u/s 264 - Period of limitation - challenging the proceedings issued for the assessment year 2017-18, the petitioner preferred an appeal before the second respondent. Pending appeal, an application for revision, intimation under Section 143(3) of the I.T. Act came to be made under Section 264 - Whether an application under Section 264 of the I.T. Act cannot be entertained pending appeal, an order came to be passed rejecting the request for revision of intimation? - HELD THAT - Commissioner cannot revise an order under Section 264(4) where an appeal is filed against an order to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal or where the order is pending on an appeal before the Deputy Commissioner (Appeals) or where the order has been made subject, of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal. Having regard to the above, the question of Commissioner (Appeals) considering the request of the petitioner would not arise. Petitioner would submit that a direction may be given to the first respondent to consider the revision of the petitioner under Section 263 on merits, by treating the appeal filed by the petitioner as withdrawn. It is to be noted here that an order under Section 264 is required to be passed within a period of one year from the end of Financial Year, in which, the application is made by the petitioner for revision. In the instant case, last date of passing of order was 31.03.2022. That being the position, the question of giving a direction to the Commissioner for passing of an order under Section 264 of the I.T. Act beyond the said period would not arise. Hence, we are of the view that such a request cannot be granted. Having regard to the provision of law referred to above, an order cannot be passed by treating something which is not in existence. Hence, the first relief sought for by the petitioner in the writ petition cannot be granted. Direction to the second respondent to decide the appeal filed by the petitioner by considering the application for withdrawal of petitioner and to dispose of the appeal expeditiously - At first blush, the request made by the petitioner appeared to be quite probable, but a close perusal of the provisions of the Act and the counter filed would show that even if the request of the petitioner for withdrawal of the appeal is accepted, a direction to the Commissioner (Appeals) to pass an order under Section 264 cannot be granted for the reasons stated supra. However, the relief sought for by the petitioner for expeditious disposal of the appeal can be considered, and accordingly a direction is given to the appellate authority to disposal of the appeal in accordance with law, as early as possible. We feel that it would be just and proper for the petitioner to get the Appeal adjudicated on merits before the Appellate Authority.

Summary

Issues:
1. Jurisdiction of the Commissioner to consider revision under Section 264 of the Income Tax Act when an appeal is pending.
2. Validity of rejecting the revision application under Section 264 of the Income Tax Act.
3. Consideration of withdrawal of appeal and expeditious disposal by the Appellate Authority.

Analysis:

1. The petitioner, a Society under Registration Act, filed income tax returns claiming exemption under Section 11 of the Income Tax Act for the assessment year 2017-18. The assessment was completed under Section 143(3) of the I.T. Act, making an addition of a significant amount diverted by the petitioner to another institution. An appeal was filed against this order, which was pending before the National Faceless Appeal Centre [NFAC].

2. The petitioner applied for revision under Section 264 of the IT Act and simultaneously sought withdrawal of the appeal. The Commissioner rejected the revision application citing the pending appeal as a reason. The respondents argued that the remedy under Section 264 is alternative and cannot be availed when an appeal is pending. The Commissioner passed the rejection order within the stipulated time frame, which the respondents contended did not warrant interference.

3. The Court examined Section 264(4) of the I.T. Act, which prohibits revision when an appeal lies to the Deputy Commissioner (Appeals) or the Appellate Tribunal, or when the order is pending on appeal. Considering this provision, the Court concluded that the Commissioner cannot revise the order when an appeal is pending, thus dismissing the petitioner's request for revision.

4. The Court acknowledged the petitioner's request for withdrawal of the appeal and expeditious disposal by the Appellate Authority. While the withdrawal could not lead to a revision under Section 264, the Court directed the Appellate Authority to dispose of the appeal promptly. The Court emphasized that withdrawal of the appeal does not automatically grant the right to seek revision under Section 264.

5. In the final disposition, the Court directed the Appellate Authority to adjudicate the appeal on its merits and closed the writ petition without any costs. The judgment clarified that the withdrawal of the appeal does not entitle the petitioner to seek revision under Section 264 of the I.T. Act. Any pending miscellaneous petitions were also ordered to be closed.