2010 (8) TMI 595 - HC - Income Tax

Revision of the order - The petitioner is a private limited company carrying on business of manufacturing of textile cotton yarn - Petitioner filed a revision petition under Section 264 of the Act on 05.12.2007 before the Revisional Authority the Commissioner of Income Tax I Coimbatore - The first respondent passed an order dated 02.03.2009 u/s 264 of the Act rejecting the application of the petitioner seeking to revise the order dated 07.11.2006 on the ground that the revision petition is barred by limitation and that the order sought to be revised is not within the revisional power as per Section 264(4) of the Act - The judgment of a Division Bench of this Court in KADRI MILLS (COIMBATORE) LTD. VS. COMMISSIONER OF INCOME-TAX the first reason assigned in the impugned order dated 02.03.2009 relating to limitation is erroneous - The first respondent is correct in holding that the application seeking revision of order is hit by Section 264(4)(c) of the Act - The petitioner as he chose to file appeal against the order dated 07.11.2006 before the Commissioner of Income Tax (Appeals) and Commissioner of Income Tax (Appeals) rejected the appeal. Therefore he cannot seek to revise the order that was appealed against.

Summary

Issues:
1. Revision of assessment order under Section 154 of the Income-tax Act, 1961.
2. Application for revision under Section 264 of the Act.
3. Barred by limitation under Section 264(2) of the Act.
4. Application maintainability under Section 264(4)(c) of the Act.

Analysis:

The petitioner, a private limited company engaged in textile cotton yarn manufacturing, challenged the assessment order passed by the second respondent for the assessment year 1997-1998 under Section 143(3) of the Income-tax Act, 1961. Subsequently, the petitioner appealed before the Commissioner of Income Tax (Appeals) and further to the Income Tax Appellate Tribunal. The second respondent then issued revised orders under Section 154 of the Act, leading to a series of rectification orders and revised assessment orders. The Income Tax Appellate Tribunal allowed the appeal, resulting in another revised assessment order determining the total income, including long term capital gain. The petitioner sought rectification of mistakes in the revised assessment order, leading to subsequent appeals and revision petitions.

The main issue in the judgment revolved around the rejection of the petitioner's application seeking to revise the order under Section 154 of the Act. The first respondent rejected the application on grounds of limitation and maintainability under Section 264 of the Act. The first reason for rejection, based on limitation under Section 264(2) of the Act, was found to be erroneous as the application seeking revision was made within one year from the date of communication of the order sought to be revised. However, the first respondent correctly held that the application was hit by Section 264(4)(c) of the Act, as the petitioner had already filed an appeal before the Commissioner of Income Tax (Appeals) against the order dated 07.11.2006. The judgment emphasized that seeking revision after an appeal had been dismissed is impermissible under Section 264(4)(c) of the Act.

The judgment also referred to the KADRI MILLS (COIMBATORE) LTD. case, highlighting the applicability of previous legal precedents to the present case. Despite an error in the reasoning behind the rejection based on limitation, the court upheld the rejection of the revision application under Section 264(4)(c) of the Act. The petitioner's attempt to revise an order that had already been subject to appeal was deemed impermissible, leading to the dismissal of the writ petition. The judgment concluded that the petitioner could not seek revision of an order that had been appealed against, thereby emphasizing the limitations imposed by Section 264(4)(c) of the Act on revising orders that have already been part of the appellate process.