High Court quashes order challenging Income Tax Act Intimation, citing lack of reasoning and breach of natural justice.

The High Court quashed the order under Section 264 of the Income Tax Act, 1961, dismissing the Revision Application challenging an Intimation under Section 143(1) for Assessment Year 2011-12. The Court found the order to be nonspeaking, ignoring evidence of determinate shares and past practices, breaching natural justice. The Court remanded the proceedings for reevaluation, leaving the issue of the Commissioner's jurisdiction open for reconsideration. The impugned order was set aside, and the Revision Application was restored for fresh disposal, with all contentions open for further consideration.

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Issues:
Challenge to order under Section 264 of the Income Tax Act, 1961 regarding Intimation under Section 143(1) for Assessment Year 2011-12.

Analysis:
The petition challenges the order dated 18th March, 2015, passed under Section 264 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax, dismissing the Revision Application filed by the petitioners in respect of an Intimation under Section 143(1) for the Assessment Year 2011-12. The petitioners, an Association of Persons (AOP), had been filing Returns of Income since Assessment Year 2005-06, with tax payable on the income allocated among AOP members. An Intimation under Section 143(1) issued on 7th August, 2014, indicated a tax liability of &8377; 8.32 lakhs, deviating from past practice due to e-filing. The petitioners filed a Revision Petition under Section 264, seeking revision of the Intimation. The impugned order upheld the tax liability, stating that the shares of AOP members were indeterminate, necessitating assessment under Section 167B. The petitioners argued that evidence of determinate shares since 2006-07 was ignored, and the order should be quashed for not considering submissions.

The Senior Counsel for the petitioners contended that the impugned order was nonspeaking, disregarding evidence of determinate shares and past practice accepted by the Revenue. The order was criticized for ignoring submissions and not justifying a departure from consistent views. The Revenue's Counsel supported the order, citing Sections 67A and 86 of the Act, and argued that the Intimation under Section 143(1) was not challengeable under Section 264. The High Court found the impugned order to ignore past practices and held that a change in view must be justified if departing from consistency. Referring to legal precedents, the Court emphasized the importance of consistency in tax matters. The order was deemed a breach of natural justice for being nonspeaking.

The Court further noted that Sections 67A and 86, relied upon by the Revenue, were not referenced in the impugned order. Consequently, the Court quashed the order, remanding the proceedings to the Commissioner for reevaluation in light of the submissions. The issue of the Commissioner's jurisdiction to entertain Revision Applications under Section 264 from Intimations under Section 143(1) was left open for reconsideration. The impugned order was set aside, and the Revision Application was restored to the Commissioner for fresh disposal in accordance with the law, with all contentions left open for further consideration.

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