Petitioner's revision application under Section 264 accepted after prompt fee payment following notice

Gujarat HC allowed petitioner's writ petition challenging rejection of revision application under Section 264 for non-payment of mandatory Rs. 500 fee. Court held that petitioner's payment of fee on 04.02.2023, immediately after receiving notice dated 03.02.2023, constituted sufficient compliance with Section 264(5) provisions. The revision application remained within prescribed time limits even considering the fee payment date as filing date. HC distinguished respondent's cited precedent where no fees were paid, noting petitioner here promptly paid upon objection, regularizing the application. Court quashed the impugned order and remanded matter to respondent to decide revision on merits within 12 weeks after providing hearing opportunity.

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Issues:
Challenge to order dated 23.03.2023 passed by Commissioner of Income Tax (Exemption) for A.Y. 2020-21 under Article 227 of the Constitution of India. Rejection of Revision Application under Section 264 of the Income Tax Act, 1961 due to non-payment of mandatory fee of Rs. 500 at the time of filing.

Analysis:
The petitioner, a Trust, challenged the Assessment Order passed by the Assessing Officer, which determined the income at Rs. 2,70,65,416 after additions under Section 11 (1) and Section 11 (2) (a) of the Act due to non-furnishing of reply to show-cause notice. The demand of Rs. 1,32,76,821 was raised. The Revision Application under Section 264 was filed to revive and amend the Assessment Order. However, the respondent rejected the application citing non-payment of the mandatory fee of Rs. 500 at the time of filing, despite later payment and request for condonation of delay.

The respondent's rejection was based on the strict interpretation of Section 264(5) of the Act, deeming the fee payment mandatory without provision for condonation of delay. The respondent cited precedents where non-payment of fees led to dismissal of appeals. The petitioner argued that payment on the day of notice receipt fulfilled the requirement, and the application was within the time limit even if the payment date was considered as the filing date.

The Court found the respondent's interpretation erroneous, as the fee was paid promptly after objections were raised, complying with Section 264(5). The Court distinguished the cited cases where fees were not paid, unlike in the present case. The Court held that the Revision Application should have been considered on merits rather than dismissed on technical grounds. Consequently, the impugned order was quashed, and the matter remanded for a decision on merits within 12 weeks.

In conclusion, the petition challenging the rejection of the Revision Application due to non-payment of mandatory fee was disposed of in favor of the petitioner, emphasizing compliance with fee payment requirements and the need for substantive consideration of the application on its merits.

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