High Court upholds tax assessment, emphasizes use of Appellate Forum over revision

The High Court dismissed the writ petition challenging the impugned order under Section 264 of the Income Tax Act, 1961, and subsequent order under Section 154 for the assessment year 2018-19. The court emphasized that the petitioners should have utilized the statutory Appellate Forum instead of opting for revision under Section 264. It highlighted the broader powers of the Appellate Authority compared to the Revisional Authority and ruled that the Commissioner cannot act as an Appellate Authority in a revision. The court noted the petitioners' attempt to avoid paying taxes through tactical litigation and dismissed the petition.

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Issues:
Challenge to impugned order under Section 264 of the Income Tax Act, 1961 and subsequent order under Section 154 arising from assessment order under Section 143(3) for assessment year 2018-19.

Analysis:
The petitioners challenged the impugned order of the Commissioner dated 15th December, 2021, under Section 264 of the Income Tax Act, 1961, and a subsequent order under Section 154 dated 17th January, 2022, related to the assessment order passed under Section 143(3) dated 14th June, 2021, for the assessment year 2018-19, where a taxable amount of Rs. 22,03,56,600 was determined. The petitioners had not paid any amount towards the demand. This was the second round of litigation initiated by the petitioners before the High Court.

In the first round of litigation, a writ petition was dismissed by the court without going into the merits of the assessment order. The court highlighted that the Commissioner of Income Tax (Appeal) has wide powers to review both facts and questions of law, which the petitioners failed to utilize. Despite the availability of the statutory Appellate Forum, the petitioners chose to invoke Section 264 for revision, which is not appealable, even though there was no limitation to file an appeal at that time.

The court emphasized that the power of the Appellate Authority is broader than the Revisional Authority. The Commissioner, in exercising the discretionary power of revision under Section 264, cannot act as an Appellate Authority to re-evaluate facts and evidence. The court referred to Explanation I below Section 264(7) of the Income Tax Act, which states that an order declining to interfere will not be deemed prejudicial to the assessee.

The court observed that the petitioners, after the dismissal of the earlier petition, chose to avoid paying the tax determined in the assessment order by opting for revision under Section 264. The court noted that the petitioners were attempting to tactfully seek interference in the assessment order through the court, which both the Commissioner and the High Court had previously refused.

Considering the facts, circumstances, submissions of the parties, and the conduct of the petitioners, the court declined to entertain the writ petition and dismissed it.

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