Case Digest: Revision u/s 264 of Income Tax Act

If a Principal Commissioner or Commissioner of the Income Tax Department believes that the errors in the Assessing Officer's order-passing have jeopardized the revenue interests, the officer has the authority to amend, repeal, or enhance the terms of the income tax order. Although while revising the order under Section 264 of the Income Tax Act, 1961 the taxpayer should verify the time limit prescribed under this Act. The time limit for revising the order should be within two years of passing the assessment order. Further the issue of imposing obligation on the assessee is not covered by Section 264 of the statute. It is merely a portion of the machinery area. It cannot be interpreted in a limited way. Section 264 gives the CIT the authority to give the Assessing Officer instructions. Revision Order by CIT valid if necessary enquiry has been conducted: ITAT- JNS Instruments Ltd vs Pr. CIT CITATION: 2021 TAXSCAN (ITAT) 185 The Delhi Bench of Income Tax Appellate Tribunal (ITAT) ruled that the Revision Order by CIT valid if necessary enquiry has been conducted. The coram of Accountant Member Prashant Maharishi and Judicial Member, Sudhanshu Shrivastava observed that CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings and connected matters recorded are erroneous. SOP Guidelines issued by CBDT Not Applicable to Unlisted Scrips: ITAT Quashes Revision Order- Pantime Finance Company Pvt. Ltd. vs ITO CITATION: 2023 TAXSCAN (ITAT) 602 The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) while quashing the revision order observed that Standard Operating Procedures guidelines issued by Central Board of Direct Tax ( CBDT ) are not applicable to unlisted scripts. The division bench of the ITAT comprising M.Balaganesh, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) allowed the appeal filed by the assessee and observed that, “Revision order passed by the PCIT only says that Aditi and Finance Pvt Ltd is a penny stock and that SOP guidelines issued by CBDT had not been followed by the AO while framing the reassessment. Non-mentioning of DIN invalidates Revision Order for Violation of Procedure given in CBDT Circular: ITAT- Shri H K Suresh vs Principal Commissioner of Income Tax CITATION: 2022 TAXSCAN (ITAT) 1795 The Banglore Bench of the Income Tax Appellate Tribunal ( ITAT ) has recently held that non-mentioning of Document Identification Number ( DIN ) as per the instruction of the Central Board of Direct Taxes ( CBDT ) in Circular 19/2019 dated 14.08.2019 invalidates the revision order and consequently set aside the impugned order. The Tribunal Bench of Judicial Member George George K and Accountant Member Padmavathy S observed that, ‘the order under Section 263 of the Income Tax Act neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals” and held that, the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular and quashed it. Section 264 can be Triggered for Making Corrections When Assesee Fails to Claim Amenable Deduction under Income Tax Act: Delhi HC- PUNEET DHANDA vs PRINCIPAL COMMISSIONER OF INCOME TAX & ANR. CITATION: 2023 TAXSCAN (HC) 1576 The Delhi High Court held that Section 264 of the Income Tax Act, 1961 can be triggered for making corrections when the assessee fails to claim amenable deduction under the Income Tax Act, 1961. A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia held that “if a particular deduction is amenable within the periphery of the Act and inadvertently an assessee has not claimed the same, Section 264 can be triggered for making such correction. “ Revisional Assessment is invalid If not passed within Two Years of Original Assessment: ITAT grants Relief to Jindal Steel [ In a Relief to Jindal Steel and Power, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed a revisional assessment passed under section 263 of the Income Tax Act, 1961, for the reason that the same is passed beyond two years of the conclusion of the original assessment. The Tribunal held that “the limitation should also start from the original assessment. In this case, as original assessment order u/s 143(3) of the act was passed on 16.01.2014, the revision thereof could have been taken up to 31.3.2016. Impugned order u/s 263 of that was passed on 26/2/2019, therefore it is clearly beyond the limitation prescribed u/s 263 (2) of the act. Thus the impugned order is barred by limitation and hence quashed.” Income Tax Commissioner can allow a fresh claim for deduction without a revised return u/s 264 of the Income Tax Act: Kerala HC In a recent ruling, the single bench of the Kerala High Court held that, while exercising the powers conferred under section 264 of the Income Tax Act, 1961, the Commissioner of Income Tax can consider a fresh claim for deduction even without a revised return. Justice A M Shaffique while quoting the decision of the division bench of the Kerala High Court in the case, Parekh Brothers, the Court held that the Commissioner has jurisdiction to pass orders even if a revised return is not filed. Accordingly, the matter was disposed of with an order directing the Commissioner to re-hear the matter afresh without a revised return. Revisional Authority cannot act as Appellate Authority to go to the merits of Assessment: Calcutta HC- Unisource Hydro Carbon Services Private Limited & Anr. vs Union of India & Ors. CITATION: 2022 TAXSCAN (HC) 140 The Calcutta High Court has held that the revisional authority, while considering a writ petition filed by Unisource Hydro Carbon Services Private Limited & Anr, held that the revisional authority, while exercising its power under section 264 of the Income Tax Act cannot act as an appellate authority and go into the merits of the assessment by re-appreciating the facts and evidence and all materials. Justice Md. Nizamuddin observed that “It is a well-settled principle of law that power of Appellate Authority is much wider than the Revisional Authority and the Commissioner in exercise of his discretionary power of revision under Section 264 of the Act cannot act as an Appellate Authority and go into the merits of the assessment by re-appreciating the facts and evidence and all materials. Further in view of Explanation I below Section 264 (7) of the Income Tax Act, 1961, clearly says that any order of the Commissioner under Section 264 of the Act declining to interfere will be deemed not to be an order prejudicial to the assessee.” Calcutta HC Allows Revision to Rectify Mistake of Offering Exempted Income to Tax by an Old Lady- Ena Chaudhuri vs Assistant Commissioner of Income Tax CITATION: 2023 TAXSCAN (HC) 210 The Calcutta High Court (HC) allowed the revision application under section 264 of the Income Tax Act,1961 to rectify the mistake of offering exempted income to tax by an old lady. A single-member bench consisting of Justice Md. Nizamuddinheld that “a mere typographical error committed by the assessee cannot cost them payment of excess tax as collected by the Revenue. Certainly, the denial for repayment of such excess collection would amount to great injustice to the Assessee.“ Failure of Income Tax Dept to dispose Revision Application u/s 264 of I-T Act within 1 year: Delhi HC directs Disposal within 8 weeks- VICTORIOUS H GRAND vs PR COMMISSIONER OF INCOME TAX 20 & ANR. CITATION: 2023 TAXSCAN (HC) 872 In a recent ruling, a Division Bench of Delhi High Court directed the Income Tax Officers not to take any coercive steps till the disposal of the pending revision application under section 264 of Income Tax Act, 1961. the bench stated that “the writ petition is disposed of with a direction to respondent no.1 to dispose of petitioner’s revision application, if not already disposed of, at the earliest, though not later than eight (8) weeks from the date of receipt of a copy of the order passed today.” Revisional Order passed in violation of Natural Justice, hence Invalid: Calcutta HC- Unisource Hydro Carbon Services Private Limited & Anr vs Union of India & Ors. CITATION: 2022 TAXSCAN (HC) 334 While overruling a decision in writ petition filed by Unisource Hydro Carbon Services Private Limited & Anr, against the single judge bench decision held that the revisional order passed in violation of the principles of natural justice shall be invalid. The division bench of Mr. Justice T. S. Sivagnanam and Mr. Justice Hiranmay Bhattacharyya observed that the order was primarily challenged on the ground of violation of principles of natural justice and as the appellant was not granted adequate and effective opportunity by the assessing officer and, therefore, the assessing officer had committed a jurisdictional error. Relief to Aishwarya Rai Bachchan: Revisional Jurisdiction cannot be invoked on ground of an Invalid Re-Assessment by AO, says ITAT- Aishwarya Rai Bachchan vs Pr. CIT-8 CITATION: 2022 TAXSCAN (ITAT) 244 In a Relief to Aishwarya Rai Bachchan, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the Commissioner of Income Tax cannot invoke his revisional jurisdiction under section 263 of the Income Tax Act, 1961 merely on ground of an invalid re-assessment order passed by the Assessing Officer. Quashing the Revisional order, the Tribunal held that “When an assessment framed by the ld. AO is unsustainable in the eyes of law, the said invalid and illegal order cannot be subject matter of section 263 proceedings. On this count also, the revision order passed by the ld. PCIT u/s.263 of the Act deserves to be quashed.” Income Tax Officer has No Power to Exercise Revisional Jurisdiction: Allahabad HC The Allahabad High Court has ruled that the revisional jurisdiction cannot be exercised by the Income Tax Officer under the provisions of section 263 of the Income Tax Act, 1961. A division bench of Justice Abhinava Upadhya and Justice Ashok Kumar confirmed that the Income Tax Officer has no authority for revision since the same was solely vested upon the Commissioner of Income Tax and Principal Commissioner of Income Tax Kerala HC upholds Revision Proceedings to correct wrong Rate of Tax applied to benefit assessee in Assessment Order- PRESTIGE MARKETING DIVISION vs PRINCIPAL COMMISSIONER OF INCOME TAX CITATION: 2023 TAXSCAN (HC) 1828 The Kerala High Court upheld the revision proceedings to correct wrong rate of tax applied to benefit assessee in assessment order A Division Bench comprising Justice Dr AK Jayasankaran Nambiar and Justice Kauser Edappagath observed that “We see no reason to doubt the correctness of the findings of the Single Judge, who has relied on various decisions of the Supreme Court to come to his conclusion. We also find that, at any rate, the right of the appellant to challenge the order proposed to be passed by the Assessing Officer pursuant to the revision order passed in accordance with Section 263 of the Income Tax Act has been reserved to the appellant. The appellant therefore cannot be seen as prejudiced in any manner.” Relief to Indian Overseas Bank: Madras High Court quashes Revision Proceedings by Commissioner as it was Time-Barred- The Commissioner of Income Tax vs M/s.Indian Overseas Bank CITATION: 2021 TAXSCAN (HC) 567 In a major relief of Indian Overseas Bank, the Madras High Court quashed the revision proceedings by the Commissioner as it was time-barred. The division bench of Justice T.S. Sivagnanam and Justice Sathi Kumar Sukumara Kurup held that the jurisdiction under Section 263(1) of the Act was exercised with reference to an issue, which was covered in the original assessment order dated 28.12.2006 and it was not an issue, based on which, the reopening of assessment was made under Section 143 of the Act. For all purposes, the period prescribed under Sub-Section (2) of Section 263 of the Act should commence from 31.3.2007 and the two years’ period would come to an end on 31.3.2009. As it is not in dispute that the proceedings under Section 263 of the Act were initiated well beyond the said date, the exercise of such power has to be held to be without jurisdiction and barred by limitation Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Case Digest: Revision u/s 264 of Income Tax Act

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