Kerala HC Quashes Order: Failure to Dispose Rectification Application Timely u/s 154

Premier Exports International Vs ACIT (Kerala High Court)

In the case of Premier Exports International vs ACIT, the Kerala High Court addressed the rejection of a rectification application under Section 154 of the Income Tax Act. The court intervened due to failure to dispose of the application within the specified time.

Premier Exports International filed an application (Ext.P3) for rectification of an order (Ext.P2) under Section 154 of the Income Tax Act, which was rejected by Ext.P5. The rejection was based on the finding that no orders could be passed on rectification as per the provisions of sub-section (7) of Section 154.

The petitioner argued that the Central Board of Direct Taxes (CBDT) circular (Ext.P6) mandates the disposal of applications filed in time, regardless of not meeting the specified time under sub-section (7) of Section 154.

Considering the submissions, the Kerala High Court quashed the order (Ext.P5) and directed the 2nd respondent to pass fresh orders on the rectification application (Ext.P3), taking into account the provisions of the CBDT circular (Ext.P6).

The Kerala High Court’s decision emphasizes the importance of adhering to procedural timelines while considering rectification applications under Section 154 of the Income Tax Act. The intervention of the court ensures that rectification applications are not dismissed solely due to procedural delays, but are instead considered on their merits in accordance with CBDT directives.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner filed Ext.P3 application for rectification of Ext.P2 order under Section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The said application of the petitioner has been rejected by Ext.P5 on the finding that no orders can be passed on rectification in terms of the provisions contained in sub-section (7) of Section 154 of the Act.

2. The learned counsel appearing for the petitioner would submit that in terms of Ext.P6 circular issued by the Central Board of Direct Taxes, applications which were filed in time have to be disposed of on merits notwithstanding the fact that the same has not been disposed of within the time specified in sub-section (7) of Section 154 of the Act.

3. The learned Standing Counsel would submit that the matter can be considered in terms of Ext.P6 circular.

Taking into consideration the submissions of the learned counsel for the petitioner and the learned Standing Counsel appearing for the respondent Department, Ext.P5 order is quashed. The 2^nd respondent is directed to pass fresh orders on Ext.P3 application also taking note of the provisions contained in Ext.P6 circular.