2021 (12) TMI 210 - HC - Income Tax

Validity of Revision u/s 264 - Reopening of assessment u/s 147 - Whether revision under Section 264 of the 1961 Act is an alternate remedy to the remedy of regular appeal provided under Section 246 of the 1961 Act or not? - HELD THAT - Prescription of waiver of right of appeal as sine qua non for entertaining revision leads to an inevitable conclusion that the remedy available under Section 264 of the 1961 Act is an alternate remedy to the appeal. The provision itself provides for the cases in which the authority shall not revise any order which are enumerated in sub-Section 4. It is not the case of respondents that the case of the petitioner is barred on any of the aforesaid counts. Thus, in our view, the revisional authority erred in dismissing the revision petition filed by the petitioner merely on the ground that the same was not maintainable . As already held hereinabove, remedy under Section 264 of the 1961 Act is an alternate remedy to the appeal under Section 246 of the 1961 Act. Once the petitioner chose to revoke the revisional jurisdiction, the authority was under obligation to decide the same in accordance with the provisions of Section 264 of the 1961 Act only - See Paradigm Geophysical Pty. Ltd 2017 (11) TMI 1157 - DELHI HIGH COURT Whether the authority ought not have proceeded to give findings on merits after holding that revision was not maintainable? - We need to observe that it is a trite law that in case the Court wishes to non-suit the litigant on the issue of maintainability, it ought not enter into the merits of the case as held in Nawab Shaqafath Ali Khan Ors. Versus Nawaz Imdad Jah Bahadur Ors. 2009 (3) TMI 1023 - SUPREME COURT . However, in the present case(s), the revisional authority has not only dismissed the revision petition as not maintainable but has also non-suited petitioner(s) on the merits of the case. Keeping in view the aforesaid discussions, we hold that the impugned order is erroneous on both the counts. Consequently, we deem it appropriate to set aside the orders passed by the revisional authority in all the three petitions. The matter is remanded to the Commissioner to decide the revision petitions afresh in accordance with law.

Issues Involved:
1. Whether revision under Section 264 of the Income Tax Act, 1961 is an alternate remedy to the remedy of regular appeal provided under Section 246 of the Income Tax Act, 1961.
2. Whether the authority ought not to have proceeded to give findings on merits after holding that revision was not maintainable.

Detailed Analysis:

Issue 1: Whether revision under Section 264 of the Income Tax Act, 1961 is an alternate remedy to the remedy of regular appeal provided under Section 246 of the Income Tax Act, 1961.

The court examined the scope and applicability of Section 264 of the Income Tax Act, 1961. The provision allows the Commissioner to revise any order passed by a subordinate authority, either on his own motion or on an application by the assessee. The court noted that the prescription of waiver of the right of appeal as a sine qua non for entertaining revision under Section 264 leads to the conclusion that this remedy is an alternate to the appeal under Section 246. The court emphasized that the Commissioner’s power of revision is subject to certain conditions:
1. The order must be passed by an authority subordinate to the Principal Commissioner or Commissioner.
2. The Commissioner cannot exercise his revisional jurisdiction if an appeal against the order lies to the Deputy Commissioner (Appeals) or the Commissioner (Appeals) unless the assessee has waived his right to appeal.
3. Revisional power cannot be exercised during the pendency of an appeal to the Deputy Commissioner (Appeals).
4. The Commissioner cannot exercise revisional power if the order has been made the subject of an appeal to the Commissioner (Appeals) or the Appellate Tribunal.

The court referred to case law, including the decisions of the Delhi High Court in Paradigm Geophysical Pty. Ltd vs Commissioner of Income Tax and the Karnataka High Court in Nataraju (HUF) vs Pr. Commissioner Income Tax, which support the view that revision under Section 264 is an alternate remedy to appeal. The court concluded that the revisional authority erred in dismissing the revision petitions on the ground of non-maintainability, as the remedy under Section 264 is indeed an alternate to the appeal under Section 246.

Issue 2: Whether the authority ought not to have proceeded to give findings on merits after holding that revision was not maintainable.

The court observed that it is a well-established principle that if a court decides to non-suit a litigant on the issue of maintainability, it should not delve into the merits of the case. This principle was upheld in the Supreme Court case Nawab Shaqafath Ali Khan & Ors. vs Nawaz Imdad Jah Bahadur & Ors. However, in the present case, the revisional authority not only dismissed the revision petitions as not maintainable but also addressed the merits of the case, which was inappropriate.

Conclusion:

The court held that the impugned orders were erroneous on both counts. Consequently, the court set aside the orders passed by the revisional authority in all three petitions and remanded the matters to the Commissioner to decide the revision petitions afresh in accordance with the law. The court clarified that it had not expressed any view on the merits of the case, and the revisional authority should decide the cases in accordance with the law.

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