2019 (8) TMI 808 - HC - Income Tax

High Court overturns Income Tax order under section 264 for lack of merit examination.

Ramshree Education of Technology Samiti, Gwalior Versus Principal Commissioner of Income Tax & others

The High Court set aside the order passed by the Principal Commissioner of Income Tax under section 264 of the Income Tax Act, citing a lack of thorough ... Revision u/s 264 - CIT dwelt the issue cryptically - HELD THAT:- Though true it is that the exercise of power under section 264 is confined to; (i) to have exercised a jurisdiction not vested in it by law; or (ii) to have failed to exercise a jurisdiction so vested; or (iii) to have acted in the exercise of its jurisdiction illegally or with material irregularity. The Revisional Authority is however expected to dwell on the issue by adverting to merit. Apparently, the impugned order does not deal with the issue in right perspective and in consonance with the stipulation contained under section 264 of 1961 Act. - Matter restored before the CIT for the decision afresh in accordance with law. Issues:Challenge against order passed by Principal Commissioner of Income Tax under section 264 of Income Tax Act, 1961.Analysis:1. The petition challenged the order dated 26.9.2018 passed by the Principal Commissioner of Income Tax under section 264 of the Income Tax Act, 1961, citing a mechanical and casual approach by the Revisional Authority in dealing with the revision.2. The revision pertained to the assessment order passed by ACIT, Circle 1, Gwalior on 22/12/2016 for the accounting year 2009-10, and a demand order dated 26/12/2016 directing the petitioner to deposit a specified amount.3. A previous challenge against the order dated 22.12.2016 was dismissed on 19.3.2018, but in a subsequent writ petition, it was noted that the Revisional Authority did not address the issue of non-service of notices under relevant sections of the Income Tax Act, leading to the order being set aside on 20.8.2018 for reconsideration.4. On remand, the Revisional Authority briefly considered the issue of notice service, citing a Delhi High Court case to support its decision, but the High Court found the order lacking in addressing the issue in line with the provisions of section 264 of the Income Tax Act.5. The High Court clarified that the exercise of power under section 264 is limited to specific circumstances, emphasizing the need for the Revisional Authority to thoroughly examine the merits of the case.6. Given the failure of the impugned order to address the issue appropriately, the High Court set it aside and directed the matter to be reconsidered by the Revisional Authority in compliance with the law, emphasizing expeditious resolution within 30 days.7. The High Court explicitly stated that it did not express any opinion on the merits of the case, concluding the petition without imposing any costs.