POWERS of revision U.S. 264 OF Pr.CIT/ CIT are wider and condonation of delay is to be liberal to advance the purpose of justifiable orders etc.

[DEVKUMAR KOTHARI]

Recent judgment of honorable Bombay High Court reported as :

2024 (1) TMI 1039 - BOMBAY HIGH COURT HINDALCO INDUSTRIES LIMITED VERSUS UNION OF INDIA, PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, MUMBAI read with many other judgments referred to therein.

Relevant Provisions considered 

Sections  115WD (FBT),  119  ,  143(1), 264 of Income-tax Act,1961 in relation to provisions of  Fringe Benefit Tax (FBT)

 

Principals considered :

Rules of reason and justice.

Principal of advancing  substantial justice.

‘Sufficient cause' should be given a liberal construction.

    While allowing ( or disallowing)  condonation, some of important  points to be considered are  delegence (or  negligence),  action ( or  inaction)  , bonafide ( or  malafide) , earlier  proceedings and delays caused by other authority in other proceedings and procedures etc..

Power of revision is given to grant relief in case of over assessment.

That power can be exercised  on his own motion  by CIT and on application of assessee.

Power can also be exercised to rectify a mistake causing over assessment. Power of revisionary  authority is not limited to powers of AO and in revision a rectification can also be made of mistake committed by the AO.

Powers are coupled with duty to do justice according to the  rules of reason and justice.

 

The case relates to AY 2009-10  for which the assessee had filed its return of Fringe Benefit Tax (FBT) .

Now we are in year 2024, therefore, it is necessary to go through S.264, as it stands now and to find out if there is any change which effects applicability of the judgment after 2009-10.

Section 264 at present reads as follows ( with highlights added for relevant provisions covered in the judgement)

 

Revision of other orders.

264. (1) In the case of any order other than an order to which section 263 applies passed by an authority subordinate to him, the ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.

(2) The ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner shall not of his own motion revise any order under this section if the order has been made more than one year previously.

(3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier :

Provided that the ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.

(4) The ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner shall not revise any order under this section in the following cases-

(a) where an appeal against the order lies to the ¹[Deputy Commissioner (Appeals)] ²[or to ¹²[the Joint Commissioner (Appeals) or the Commissioner (Appeals)]] or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal ³[to ¹²[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] or] to the Appellate Tribunal, the assessee has not waived his right of appeal; or

(b) where the order is pending on an appeal before the ⁴[Deputy Commissioner (Appeals)]; or

(c) where the order has been made the subject of an appeal ⁵[to ¹²[the Joint Commissioner (Appeals) or the Commissioner (Appeals)] or] to the Appellate Tribunal.

(5) Every application by an assessee for revision under this section shall be accompanied by a fee of ⁶[five hundred] rupees.

⁷[(6) On every application by an assessee for revision under this sub-section, made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision.

Explanation.-In computing the period of limitation for the purposes of this sub-section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.

(7) Notwithstanding anything contained in sub-section (6), an order in revision under sub-section (6) may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, ⁸[*******] the High Court or the Supreme Court.]

Explanation 1.-An order by the ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee.

Explanation 2.-For the purposes of this section, the ⁹[Deputy Commissioner (Appeals)] shall be deemed to be an authority subordinate to the ¹⁰[Principal ¹¹[Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner.

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Notes :  amendements applicable after 01.04.2009-

10. Inserted vide THE FINANCE (No. 2) ACT, 2014 w.e.f. 1st day of June, 2013.

11. Inserted vide THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 dated 29-09-2020 w.e.f. 01-11-2020

12. Substituted vide THE FINANCE ACT, 2023 dated 31-03-2023 w.e.f. 01-04-2023 before it was read as, "the Commissioner (Appeals)"

 We find that amendments effective after 01.04.2009 are only in relation to new designations or now posts created for  Pr.CIT , CCIT and DCIT(A) / Jt.CIT(A)

Furthermore , the case related to ley of Fringe Benefit Tax (FBT), which is covered by the Chapter XII- H covering sections 115W- 115WM. The levy of FBT was for a short duration starting from assessment year 2006-07 vide S. 115WA and was applicable till assessment year 2009-10. The levy was discontinued from assessment year 2010-11 and subsequent years vide S. 115WM.

Therefore, so far provisions relating to  procedures , jurisdiction, power and scope of revision u.s. 264 is concerned, the law is same as was in assessment year 2009-10 to which the WP related and decision was givne by the High Court.

Thus in all other respects provisions remain the same as were considered by the High Court and the ruling is applicable even from assessment year 2010-11 and subsequent years. Besides in the judgement some fundamental rules are discussed and applied and thise are relevant today also.

Matter of Hindalco (supra.)

Assessee filed application u.s.264 with a petition for condonation of delay. Ld. Pr. CIT did not allow the  petition for two reasons namely

   a. there was a substantial delay in filing the application and

     b. that the intimation under Section 143(1) of the Act was not an assessment order.

 The High Court condoned delay in filing of petition befoePR. CIT  and also held that , that the intimation under Section 143(1) of the Act is  an  order, which can be revised by the revisionary authority u/s 264.

The Court followed SMITA ROHIT GUPTA, VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-1, THANE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 3, THANE, THE UNION OF INDIA - 2023 (9) TMI 220 - BOMBAY HIGH COURT in which it  was held that  provisions of Section 264 and the power available to the Commissioner to exercise under Section 264 was not subject to the power of the Assessing Officer to make adjustment under Section 143(1) of the Act. The Court held that power of the Commissioner under Section 264 is rather wide and even the errors committed could be rectified.

In relation to condonation High Court referred to  observation of  the Hon’ble Gujarat High Court in DIGVIJAY CEMENT COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [1993 (9) TMI 23 - GUJARAT HIGH COURT] that the power conferred on commissioner is wider in terms. The revisional power is coupled with a duty to exercise it in the interests of justice of the parties and the revisional authority must act according to the rules of reason and justice.

The High Court also considered, discussed and applied to many other judgements of the Supreme Court and High Courts and directed the Pr. CIT to consider the appliation u.s.264 and decide on merit.

Learning from this case:

Attempt should be made to make applications , appeal , petition etc. as soon as possible and avoid delay in filing of the same.

In the application a prayer can be made that applicant seek permission to  raise   additional , explanatory and new contentions and grounds to seek relief , further relief and request to allow all relief and benefit allowable, even if the same has not been claimed due to lack of information, knowledge , shortage of time etc.

Readers are requested to read the judgment and various judgments referred therein and provide fed back through discussion form to share knowledge and experience.