2022 (9) TMI 363 - HC - Income Tax

Revision of orders u/s 264 - request for withdrawal of revision application was rejected - period of limitation u/s 264 - HELD THAT - Option has been given to the assesssee to avail the remedy of revision u/s 264 of the Act within a period of one year provided the assessee has not filed an appeal and the period of limitation for preferring appeal has expired. In the instant case, against the order of assessment dated 16.12.2018, petitioners preferred revision petition on 15.03.2019 within one year of limitation provided for filing revision and also after the expiry of period of limitation for preferring an appeal. It is trite law that whenever a litigant invokes a particular remedy available under a Statute, then the authority before whom the lis is preferred and pending, is ordinarily duty bound to decide the same on merits. It is also settled in law that the aggrieved person who initiates lis has a right to withdraw the same before it is finally decided. This right of withdrawal is absolute but it is subject to the fact that withdrawal can be declined if there are cogent reasons. In the instant case, petitioners sought to expressly withdraw the revision petition filed u/s 264 of the Act. This prayer for withdrawal was made when the revision petition u/S 264 of the Act was pending. Thus by not allowing the prayer for withdrawal and proceeding to decide the revision on merits, the revisional authority wrongly exercised jurisdiction vested in it. This Court, thus, deems it appropriate to set aside the impugned order dated 10.10.2019 passed by respondent No.2 and remand the matter to the revisional authority to re-consider the application for withdrawal said to be filed by the petitioners on 07.10.2019, as expeditiously as possible.

Summary

Issues:
- Application for withdrawal of revision petition under Section 264 of the Income Tax Act, 1961
- Jurisdiction of the revisional authority to allow withdrawal and its implications on statutory remedies like appeal

Analysis:
1. The case involved two petitions bearing W.P. No.4671/2020 and W.P. No.4673/2020 with a common question of law. The petitioners' grievance was against an assessment order where they allowed the period for filing an appeal to expire and then moved an application under Section 264 of the Act for revision. The revisional authority dismissed the revision on the grounds of maintainability, citing a Bombay High Court judgment.

2. The petitioners argued that once they applied for withdrawal of the revision petition, the revisional authority should have allowed the withdrawal without delving into the merits. They contended that the facts of their case differed from the Bombay High Court judgment relied upon by the revisional authority, as they had cooperated in the assessment proceedings.

3. The Senior Standing Counsel for the Income Tax Department justified the impugned order by stating that the petitioners should have pursued the remedy of appeal within the stipulated time frame, which had now lapsed, precluding them from reverting to that remedy.

4. Section 264 of the Income Tax Act provides for revisional jurisdiction to the Principal Commissioner or Commissioner to review orders passed by subordinate authorities. The provision imposes limitations on entertaining revision petitions, such as when an appeal lies against the order or when the order is pending appeal before the Commissioner or Appellate Tribunal.

5. The provision under Section 264 is an extraordinary remedy available to the assessee in addition to the appeal remedies under the Act. The assessee must file for revision within one year if no appeal has been filed or if the appeal period has expired.

6. The Court emphasized that the authority must decide a pending matter on its merits when invoked by a litigant. However, the litigant retains the right to withdraw the matter before a final decision, subject to valid reasons.

7. In this case, the revisional authority erred by not allowing the withdrawal of the revision petition and proceeding to decide on the merits. The Court set aside the impugned order and remanded the matter for reconsideration of the withdrawal application.

8. The Court clarified that it did not assess the justification for withdrawal, leaving it to the revisional authority's discretion. The revisional authority was granted the option to dismiss the withdrawal application with valid reasons.

9. The Court directed compliance with the order within 60 days and disposed of the petition.