Appeal rejected for non-compliance with law, setting aside order and remitting for reconsideration.

The Court held that an appeal filed without complying with mandatory provisions is not valid, rendering it non-est in the eye of the law. The rejection of the appeal by the 2nd respondent as void ab initio prevented the 1st respondent from exercising Revision power under Section 264. The Court referred to precedents from Madras and Kerala High Courts and Circular No.367 issued by the CBDT, emphasizing the binding nature of CBDT circulars. Consequently, the Court allowed the Writ Petition, set aside the 1st respondent's order, and remitted the matter for reconsideration within three months, without awarding costs.

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Issues:
Challenge to the correctness of proceeding under Section 264(6) of the Income-tax Act, 1961 for the Assessment Year 1997-98.

Analysis:
The petitioner contested the Order of Assessment passed by the 3rd respondent and subsequent dismissal of appeal by the 2nd respondent. The petitioner then sought Revision under Section 264 of the Act, focusing on the issue of proceeds from the sale of agricultural land being subjected to Long Term Capital Gains. The 1st respondent rejected the Revision application citing provisions of Section 264(4) of the Act, which precludes revision in case of an order subject to appeal. The petitioner argued against this rejection, emphasizing that the appeal dismissed by the 2nd respondent was void ab initio due to non-payment of admitted tax, hence not a valid appeal under Section 251 of the Act.

The Court deliberated on whether the rejection of the appeal by the 2nd respondent as void ab initio could prevent the 1st respondent from exercising Revision power under Section 264. It was established that an appeal filed without complying with mandatory provisions is not validly presented and is considered non-est in the eye of the law. The Court referenced precedents from Madras and Kerala High Courts to support the interpretation that an order must be the subject of an "effective" appeal to preclude revision. The Circular No.367 issued by the CBDT was also considered, emphasizing the binding nature of CBDT circulars on the Revenue.

In light of the legal principles and precedents, the Court concluded that the impugned order by the 1st respondent, refusing to exercise Revisional power, cannot be sustained. The Writ Petition was allowed, setting aside the 1st respondent's order and remitting the matter back for reconsideration. The 1st respondent was directed to dispose of the Revision petition within three months, following due process and legal requirements. Pending miscellaneous petitions were closed, and no costs were awarded in the final order.

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