Revisional Authority cannot act as Appellate Authority” set aside by Hon’ble Division Bench & Allowed Writ petition

Unisource Hydro Carbon Services Private Limited & Anr. Vs Union of India & Ors. (Calcutta High Court)

The Hon’ble Justice T.S. Sivagnanam And The Hon’ble Justice Hiranmay Bhattacharyya, passed judgement on 22.04.2022 and 02.05.2022 and allowed the Writ petition and set aside the order of the Learned Single Judge passed by the Hon’ble Justice Nizamuddin in WPA no. 2852 of 2022 and also set aside the order of the Principal Commissioner of Income Tax and restored the revision petition to the file of said Principal Commissioner of Income Tax, Kolkata and directed to give adequate opportunity of hearing after giving opportunity of personal hearing in case no. MAT 337 of 2022 With CAN 1 of 2022 , Unisource Hydro Carbon Services Private Limited & anr. vs. Union of India & ors. Matter argued by Mr. Himangshu Kumar Ray, Advocate for the Petitioner and Smt. Smita De Das for the Respondents.

And

Also in order dated 02.05.2022, The Rectification order dated 17.01.2022 passed by the PCIT, Kolkata-700001, also set aside and Penalty order dated 05.02.2022 also set aside. Matter argued by Mr. Himangshu Kumar Ray, Advocate for the Petitioners and Smt. Smita De Das for the Respondents.

Note: Learned Single Bench of Calcutta High Court passed the on 02.03.2022 in WPA 2852 of 2022 and said that the Revisional Authority cannot act as Appellate Authority to go to the merits of Assessment: Calcutta HC

“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. ……………… “

Conclusion : Hon’ble Division bench allowed the Writ petition and set aside the order of Learned Single bench and also the order of PCIT, Kolkata with direction to restore the Revisional application under section 264 of the Income Tax Act, 1961, to hear the matter after giving adequate opportunity of hearing.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

Heard learned Advocates appearing for the parties.

In this writ petition, petitioners have challenged the impugned order of the Commissioner dated 15th December, 2021 under its discretionary power under Section 264 of the Income Tax Act, 1961 and subsequent order under Section 154 of the Act dated 17th January, 2022 arising out of the assessment order passed under Section 143 (3) of the Act, dated 14^th June, 2021, relating to assessment year 2018-19 wherein taxable amount of Rs. 22,03,56,600/- was determined and it is admitted position that till date petitioner has not paid a single penny in respect of the aforesaid demand. This is the second round of litigation initiated by the petitioners before this Court. In the first round of litigation, writ petition, being WPA 11041 of 2021 was dismissed by this court by an elaborate order dated 25^th August, 2021 and since the aforesaid writ petition was dismissed without going into the merits of the impugned assessment order dated 4^th June, 2021, was an appealable order before the Commissioner of Income Tax (Appeal) which has a very wide power to go into both on facts and on question of law while the High Court in exercise of its jurisdiction under Article 226 of the Constitution of India cannot act as an Appellate Authority over the assessment order on merits, facts and evidence involve in an assessment proceeding which is the job of the Appellate Authority, that is, Commissioner of Income Tax (Appeal) which the petitioner avoided to avail even after dismissal of the earlier Writ Petition when doors of the Appellate Forum was opened to the writ petitioners since the aforesaid writ petition was dismissed only on the ground that there was no violation of principle of natural justice. In spite of availability of statutory Appellate Forum, petitioners has chosen to invoke Section 264 of the Income Tax Act for exercising the discretionary power of revision against the assessment order in question which is not Appealable though at the time of filing the revisional application there was no bar of limitation to file the appeal.

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.

Considering the facts and circumstances of the case I am of the view that petitioners after dismissal of the earlier petition by this Court against the same assessment order without filing any statutory Appeal before the Commissioner of Income Tax (Appeals) with sole intention of avoiding the payment of huge amount of tax determined in assessment order have deliberately chosen the forum of revision under Section 264 of the Act with a view to make out a case to come up before this Court again under Article 226 of the Constitution of India tactfully indirectly to get interference in assessment order which the Commissioner in exercising the power under Section 264 of the Act has refused and this Court has also refused in the first round of litigation in WPA No. 11041 of 2021.

Considering the facts and circumstances of the case as also the submission of the parties and conduct of the petitioners, I am not inclined to entertain this writ petition and, accordingly, this writ petition, being WPA 2852 of 2022 is dismissed.

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On 22.04.2022 Hon’ble Division Bench of Calcutta High Court set aside the order of Learned Single bench and allowed Writ petition and also set aside the revision order dated 15.12.2021 and restored the Revision application in the original file and directed the PCIT, Kolkata-1 to provide adequate opportunity of hearing

Further Order on 02.05.2022

This matter has been listed under the caption “To Be Mentioned”.

We have heard Mr. Himangshu Kr. Ray, learned Advocate for the appellants and Ms. Smita Das De, learned Advocate appearing for the respondents.

It is pointed out by the learned Advocate appearing for the appellants that this Court while allowing the appeal has set aside the order dated 15^th December, 2021 but there are two other orders, which were also subject matter of challenge; one being rectification of revision order dated 17^th January, 2022 and consequential penalty order dated 5th February, 2022 and prays that these orders may also be set aside.

As we have allowed the appeal and set aside the order dated 15^th December, 2021, it goes without saying that the rectification of revision order dated 17^th January, 2022 as well as the penalty order dated 5^th February, 2022, which are all consequential orders, are also required to be set aside. Accordingly, the appeal stands allowed and the order passed by the PCIT, Kolkata – 1 dated 15^th December, 2021 under Section 264 of the Act of 1961 is set aside. The order dated 17^th January, 2022 rejecting the rectification application is also set aside and the penalty order dated 5^th February, 2022 is also set aside and the revision petition is also restored to the file of the said authority.

The other orders and directions given in our order dated 22^nd April, 2022 shall remain unaltered and shall be complied with by the concerned authority.

This order shall form part of the order dated 22^nd April, 2022.