Commissioner cannot refuse to entertain a revision petition filed by the assessee under Section 264 of the Act if it is maintainable on the ground that a similar issue has arisen for consideration in another year and is pending adjudication in appeal or another forum.
Section 263 of the Income Tax Act, 1961 (`the Act’) deals with revision by Principal Commissioner or Commissioner of orders prejudicial to Revenue and section 264 of the Act deals with the revision of other orders. A recent decision of Delhi High Court is helpful for assessees.
In Paradigm Geophysical Pty. Ltd. vs. CIT (International Taxation)[ W.P.(C) 6052/2017, decided on 13.11.2017], briefly, the Petitioner being a non-resident company and a tax resident of Australia, was engaged in the business of providing and developing software enabled solutions to the oil and gas industry and annual maintenance services in relation to the solutions supplied by it. For the A.Y. 2012-13, the petitioner had filed return declaring total income of 1,97,16,140/-, inter alia, applying provisions of 44BB of the Act. Assessing Officer (AO) issued notice for scrutiny assessment and thereafter issued draft assessment order dated 05.03.2015, proposing to tax the receipts as Royalty/ Fee from Technical Services. No objections were filed and consequently the final assessment order dated 11.05.2015 was passed by the AO under section 144C(3)(b)/143(3) of the Act confirming the addition/ adjustment proposed in the draft Assessment Order. Total Income of petitioner for the AYs was computed by applying Section 44DA of the Act at Rs. 4,92,90,360/- as against Rs.1,97,16,140/- offered to tax by the petitioner by applying provisions of 44BB of the Act. As the petitioner had not filed any objections under Section 144C(2), recourse to sub section 4 of Section 144C was not required. In other words, no directions were passed by the Dispute Resolution Panel (`DRP’) in respect of the draft Assessment Order. The petitioner did not file any appeal against the final assessment order dated 11.05.2015 passed by the AO, making the aforesaid addition.
On 01.02.2016, the petitioner filed a Revision Petition under Section 264 of the Act before the Jurisdictional Commissioner of Income Tax (International Taxation)-3, New Delhi (‘Commissioner’ for short). The ground raised was that the AO had wrongly denied and not applied Section 44BB and had incorrectly invoked and applied Section 44DA of the Act. The petitioner placed reliance on ONGC vs. CIT (2015) 376 ITR 306 (SC) and CBDT Circular no. 1862 on the applicability of section 44BB of the Act.
The Commissioner raised certain queries on 20.01.2017. In response, the petitioner clarified that for the Assessment Year 2012-13 they had not availed of remedy by way of appeal against the assessment order and had invoked alternate statutory remedy by way of Revision under Section 264 of the Act.
The Commissioner, vide order dated 06.03.2017 had declined to interference with the final assessment order primarily on the ground that a similar issue had arisen for consideration in other Assessment Years in which the alternate remedy of appeal was availed by the petitioner. For the AYs 2011-12 and 2013-14, the petitioner had filed appeals before the appellate authority but no appeal was preferred for the AY 2012-13, the year in question. Hence the Revision Petition under section 264 of the Act for the AY 2012 – 13 was not maintainable.
The Learned Judges of the Delhi High Court observed that a Revision Petition under section 264 of the Act can be filed against any order (including an assessment order) passed by a subordinate officer, which is otherwise appealable before Commissioner (Appeals) under section 246A of the Act or under section 253 of the Act before the Tribunal, where such appeal has not been filed and limitation period for invoking remedy has expired and the assessee has waived his right to appeal. The statutory bar is that Revision Petition cannot be entertained when an appeal has been filed before Commissioner (Appeals) or before the Tribunal in respect of such order or if no such appeal has been filed, the time limit for filing such appeal has not expired. Right to file an appeal should be waived for a revision petition to be maintainable. The objective and purpose is to ensure that the Assessee does not assail the same order before two forums and that it can elect between either filing an appeal or a revision. The Assessee cannot avail of both remedies against the same order for the same AY. If the time period for filing the appeal has not expired, the revision cannot be entertained – only to ensure that after filing of Revision, the assessee does not thereafter file an appeal. Even thereafter, the requirement is that the assessee should have waived his right to appeal.
It was not the case of the respondents or the reason given by the Commissioner that time for preferring appeal had not expired. It is the admitted case that time for filing appeal against the assessment order for AY 2012-13 had expired. The assessee had waived his right to file appeal. Clause (a) is therefore not attracted. Clause (b) to Section 264(4) of the Act is also not attracted in the present case and it is not the case of the Revenue that the petitioner has filed an appeal for 2012-13 before Dy. Commissioner (Appeals). The petitioner has also not filed any appeal against the said order before the Commissioner (Appeals) or the Tribunal to attract the negative stipulation in clause (c) to Section 264 (4) of the Act. The present case therefore, does not fall under clauses (a) to (c) of Section 264 (4) of the Act.
Under the Act, each AY is separate and the assessee files the return for each year and assessment order is passed. Strict principles of res judicata do not apply, though principle of consistency is applied. Commissioner cannot refuse to entertain a revision petition filed by the assessee under Section 264 of the Act if it is maintainable on the ground that a similar issue has arisen for consideration in another year and is pending adjudication in appeal or another forum. Negative stipulations are clearly not attracted. When a statutory right is conferred on an assessee, the same imposes an obligation on the authority. New and extraneous conditions, not mandated and stipulated, expressly or by implication, cannot be imposed to deny recourse to a remedy and right of the assessee to have his claim examined on merits.
The Jurisdictional Commissioner no doubt is an administrative authority to the subordinate officers including AO, nevertheless the Act has conferred revisionary power on the said Commissioner. He cannot refuse to exercise the said power because the assessing officer was his subordinate and under his administrative control. The Commissioner while exercising power under Section 264 of the Act exercises quasi judicial powers and he must pass a speaking and a reasoned order. He cannot abdicate his authority on the ground that a similar issue has arisen and is subject matter of appellate proceedings in other years. This would be clearly contrary to the provisions of Section 264 of the Act.
The impugned order no doubt reflects and states that the contention of the petitioner was incorrect and merits rejection but it does not assign and give any reason for the said conclusion. The impugned order cannot be sustained as it does not examine the contention on merits while recording the decision. The Commissioner must give and assign reasons for taking a particular view, even if he accepts the findings and reasons recorded by the assessing officer and does not agree with the contention raised by the assessee. This court is, therefore, deprived and is unable to fathom the reasons and ground which were in the mind of the Commissioner. The order of the Commissioner should have contained reasons for the conclusions arrived at and ought to have dealt with the issue on merits as required under Section 264 of the Act.
Learned counsel for the petitioner had submitted that the petitioner had filed an appeal for AY 2011-12 on this issue and vide order dated 28.04.2017, the Tribunal has ruled in favour of the Assessee. In the succeeding AY 2013-14, Commissioner (Appeals) had ruled in its favour.
The Delhi High Court allowed the writ petition and the order dated 06.03.2017 was set aside and quashed. The matter was remanded to the Commissioner to decide the Revision Petition afresh and in accordance with law.