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of <h1>Section 264 revision orders not appealable to Tribunal, only Section 246 appeal remedy available</h1> <h3>Rajalingam Nagarathinam, Represented by his Power Agent, Mr. Nagarathinam Versus The Principal Commissioner of Income Tax, The Deputy Director of Income Tax, Central Processing Centre, Bangalore. The Deputy Commissioner of Income Tax, Circle- 1, Trichy.</h3> Rajalingam Nagarathinam, Represented by his Power Agent, Mr. Nagarathinam Versus The Principal Commissioner of Income Tax, The Deputy Director of Income ... Issues Presented and ConsideredThe core legal questions considered by the Court are:Whether an intimation issued under Section 143(1) of the Income Tax Act, 1961, can be challenged or rectified under Section 264 of the Act.The legal consequences of failure to file Form 67 within the prescribed time for claiming foreign tax credit (FTC) under Rule 128 of the Income Tax Rules, 1962.The scope and limitations of the powers of the Commissioner under Section 264 of the Income Tax Act, 1961, particularly regarding revision of orders that are intimations under Section 143(1).The availability and applicability of alternative remedies, including appeal under Section 246 and condonation of delay under Section 249(3), for the petitioner aggrieved by the non-grant of foreign tax credit.The interpretation of statutory provisions related to revision and rectification of income tax orders and the procedural requirements for claiming FTC.Issue-wise Detailed Analysis1. Challenge to Intimation under Section 143(1) via Section 264Legal Framework and Precedents: Section 143(1) of the Income Tax Act mandates the processing of income tax returns and issuance of intimation based on such processing. The Supreme Court in a precedent held that an intimation under Section 143(1) is not an assessment order. Section 264 empowers the Commissioner to revise certain orders, but the scope is limited.Court's Interpretation and Reasoning: The Court emphasized that judicial decisions relied upon by the petitioner concerning assessment orders under Sections 143(3) or 147 cannot be extended to intimation orders under Section 143(1). The intimation is a mechanical process strictly governed by the Act and does not allow for revision under Section 264. The Court noted the express embargo in Section 264(4)(a) which restricts revision where an appeal is available but not yet filed or the time for appeal has not expired.Key Evidence and Findings: The petitioner failed to file Form 67 before the end of the assessment year, a prerequisite for claiming FTC. The intimation under Section 143(1) disallowed the FTC on this ground. The petitioner's attempt to rectify this via Section 264 was rejected by the Principal Commissioner.Application of Law to Facts: Since the intimation under Section 143(1) is not an assessment order, revision under Section 264 is impermissible. The petitioner's failure to file Form 67 on time was a procedural non-compliance affecting entitlement to FTC. The Court upheld the rejection of the revision application.Treatment of Competing Arguments: The petitioner argued that the failure to file Form 67 was a ministerial oversight and sought rectification. The Court rejected this, holding that the statutory framework does not permit revision of an intimation under Section 143(1) through Section 264, regardless of the nature of the failure.Conclusion: The Court concluded that the impugned order rejecting revision under Section 264 against the intimation under Section 143(1) is legally valid and sustainable.2. Failure to File Form 67 and its Impact on Foreign Tax CreditLegal Framework: Rule 128 of the Income Tax Rules, 1962, mandates filing of Form 67 to claim FTC for income earned abroad. Timely filing is essential to bifurcate income and claim credit.Court's Reasoning: The petitioner's failure to file Form 67 before the end of the assessment year precluded entitlement to FTC. The Court recognized this as a procedural requirement that cannot be waived or overlooked in the absence of statutory provision allowing such waiver.Application of Law to Facts: The petitioner's income was earned partly in India and partly in the Netherlands. The failure to file Form 67 timely led to denial of FTC and consequent tax demand. The Court found no error in the respondents' refusal to grant FTC on this ground.Competing Arguments and Treatment: The petitioner contended that the failure was inadvertent and ministerial, and that the petitioner was otherwise entitled to refund. The Court acknowledged the oversight but held that procedural compliance is mandatory and cannot be excused via revision under Section 264.Conclusion: The Court upheld the disallowance of FTC due to non-filing of Form 67 within the prescribed time.3. Availability of Alternative Remedies and Condonation of DelayLegal Framework: Section 246 of the Income Tax Act provides for appeals against intimation under Section 143(1). Section 249(3) allows the appellate Commissioner to condone delay in filing appeals. The Limitation Act principles apply to condonation of delay.Court's Interpretation and Reasoning: The Court observed that the petitioner's remedy was not under Section 264 but under Section 246 by filing an appeal against the intimation. The Court emphasized that the appellate Commissioner has the power to condone delay in filing such appeals under Section 249(3). Applying the Limitation Act principles, the Court found that the petitioner was entitled to condonation of delay due to the nature of the oversight.Key Findings: The petitioner had pursued an incorrect remedy under Section 264 but was not left remediless. The Court directed the petitioner to file an appeal under Section 246 within 30 days from receipt of the order, with the appellate authority to consider the appeal on merits and condone delay if justified.Competing Arguments: The petitioner argued for rectification under Section 264; the Court clarified the procedural correctness and directed the petitioner to follow the appropriate appellate route.Conclusion: The Court held that the petitioner's proper recourse is an appeal under Section 246 and granted opportunity to file the same with condonation of delay.4. Scope of Powers under Section 264 and Faceless Revision SchemeLegal Framework: Section 264 empowers revision of certain orders but excludes intimation under Section 143(1). Section 264A introduces faceless revision schemes to enhance efficiency and transparency.Court's Reasoning: The Court reiterated the limited scope of Section 264 and the inapplicability to intimation orders. It noted the faceless revision scheme under Section 264A but clarified that no directions apply beyond March 31, 2022, and that the scheme does not extend revision powers to intimation under Section 143(1).Application to Facts: The petitioner's attempt to invoke Section 264 for revision of intimation was found contrary to statutory limitations and the scheme's scope.Conclusion: The Court confirmed that Section 264 does not permit revision of intimation orders and that the faceless revision scheme does not alter this principle.Significant Holdings'The order against which the assessee has preferred revision application is not an assessment order u/s 143(3)/147 of the Act, but it is intimation u/s 143(1) of the Act which was issued just by processing the ITR filed by the assessee. Hence, the judicial decisions relied on by the assessee can not be applied to the processing of the ITR u/s 143(1). As per the specific provisions of the section 143(1), the intimation is issued by the A.O./CPC strictly as per the provisions of the Act.''The scope of the power under Section 264 of the Income Tax Act, 1961, is circumscribed by the language in it. It does not permit an assessee to file an application for rectification against an intimation under Section 143(1) of the Income Tax Act, 1961.''Considering the fact that the petitioner has also pursued an alternate remedy though by mistake under Section 264 of the Income Tax Act, 1961, applying the Principle under Section 14 of the Limitation Act, the petitioner would be entitled for condonation of the delay.''The only remedy available to the petitioner is under Section 246 of the Income Tax Act, 1961 as per which an appeal is maintainable against an intimation under Section 143(1) of the Income Tax Act, 1961.'Core principles established include:An intimation under Section 143(1) is not an assessment order and cannot be revised under Section 264.Failure to file Form 67 timely precludes entitlement to foreign tax credit.The proper remedy against an intimation under Section 143(1) is an appeal under Section 246, not revision under Section 264.Delay in filing appeal may be condoned by the appellate Commissioner under Section 249(3), applying Limitation Act principles.Faceless revision schemes under Section 264A do not extend revision powers to intimation orders under Section 143(1).Final determinations on each issue confirm the rejection of revision under Section 264, uphold the disallowance of FTC due to non-filing of Form 67, and direct the petitioner to file appeal under Section 246 within 30 days with the possibility of condonation of delay.
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