2024 (10) TMI 490 - HC - Income Tax

Rejection of Revision u/s 264 - non-payment of mandatory fee of Rs. 500 at the time of filing - HELD THAT - Sub-section (5) of Section 264 thus prescribes for payment of fees for preferring the Revision Application. When the petitioner has already paid the fees on 04.02.2023 when the notice dated 03.02.2023 was served upon the petitioner there is sufficient compliance of provisions of Section 264 (5) of the Act coupled with the fact that the Revision Application filed by the petitioner was within the time period even if the date of filing is to be considered as 04.02.2023. The decision relied upon by respondent No. 1 is not applicable in the facts of the case as in the said case no fees were paid as stipulated by the statutory provision and whereas in the facts of the present case the petitioner paid the fees immediately on raising the objections by the respondent No. 1 and by payment of such fees the objections raised is removed regularizing the Revision Application filed by the petitioner. Respondent No. 1 ought to have considered the Revision Application on merits rather than dismissing the same on technical grounds. The impugned order passed by the respondent No. 1 u/s 264 of the Act for the A.Y. 2020-21 is hereby quashed and set aside. The matter is remanded back to the respondent No. 1 to decide the Revision Application on merits in accordance with law after giving an opportunity of hearing to the petitioner within 12 weeks from the date of receipt of copy of this order.

Summary

Issues:
Challenge to order dated 23.03.2023 passed by Commissioner of Income Tax (Exemption) for A.Y. 2020-21 under Article 227 of the Constitution of India. Rejection of Revision Application under Section 264 of the Income Tax Act, 1961 due to non-payment of mandatory fee of Rs. 500 at the time of filing.

Analysis:
The petitioner, a Trust, challenged the Assessment Order passed by the Assessing Officer, which determined the income at Rs. 2,70,65,416 after additions under Section 11 (1) and Section 11 (2) (a) of the Act due to non-furnishing of reply to show-cause notice. The demand of Rs. 1,32,76,821 was raised. The Revision Application under Section 264 was filed to revive and amend the Assessment Order. However, the respondent rejected the application citing non-payment of the mandatory fee of Rs. 500 at the time of filing, despite later payment and request for condonation of delay.

The respondent's rejection was based on the strict interpretation of Section 264(5) of the Act, deeming the fee payment mandatory without provision for condonation of delay. The respondent cited precedents where non-payment of fees led to dismissal of appeals. The petitioner argued that payment on the day of notice receipt fulfilled the requirement, and the application was within the time limit even if the payment date was considered as the filing date.

The Court found the respondent's interpretation erroneous, as the fee was paid promptly after objections were raised, complying with Section 264(5). The Court distinguished the cited cases where fees were not paid, unlike in the present case. The Court held that the Revision Application should have been considered on merits rather than dismissed on technical grounds. Consequently, the impugned order was quashed, and the matter remanded for a decision on merits within 12 weeks.

In conclusion, the petition challenging the rejection of the Revision Application due to non-payment of mandatory fee was disposed of in favor of the petitioner, emphasizing compliance with fee payment requirements and the need for substantive consideration of the application on its merits.