2025 (9) TMI 636 - AT - Income Tax

Assessee barred from separate appeal after merits disposal; s.264 delayed four years leads to dismissal of second appeal

Madison Teamworks Film Promotions and Entertainment Private Limited Versus Deputy Commissioner of Income Tax, Circle 10 (2) (2), Mumbai

ITAT upheld dismissal of the second appeal by CIT(A), holding the assessee was barred from pursuing a separate appellate remedy after the first appeal ... Dismissal of Second Appeal by the CIT(A) - Rejection for application of revision / rectification u/s 264 by the CIT / PCIT on the ground that assessee has the appellate remedy and pursuing the same - Delay in filing the application filed u/s 264 - Assessee sought deletion of addition made by the AO u/s 2(22)(e) on the ground that the same amount had been assessed to tax in the hands of the shareholder of the Assessee- Company as deemed dividend - Double taxation. HELD THAT:- The scheme of the Act does not providing filing separate appeals against the same assessment order. In case the first appeal preferred by the Assessee against the Assessment Order, would have been pending, the Assessee would have been within its right to raise additional ground. Even in case, where the first appeal preferred by the Assessee was dismissed on account of technical reasons, as was the case in the judicial precedent cited by Authorised Representative noted in paragraph 6 above, Assessee would have a case for challenging the action of the CIT(A) in subsequent appeal. As in the present case it is admitted position that the first appeal preferred by the Assessee against the Assessment Order, was disposed off on merits (and not on account of technical reasons such as non-payment of taxes). Therefore, the judicial precedent cited on behalf of the Assessee is of no aid to the Assessee Assessee has filed the second appeal on 24/12/2019 after expiry of more than 4 years from the date of passing of the Assessment Order, dated 30/10/2015. In identical facts and circumstances, the PCIT had declined to condone the delay in filing the application filed under Section 264 of the Act and admittedly the Assessee has chosen not to challenge the same. Therefore, we do not find any infirmity in the order passed by the CIT(A) dismissing the second appeal preferred by the Assessee holding that under the scheme of the Act the Assessee was barred from availing appellate remedy by filing second appeal before CIT(A). ISSUES PRESENTED AND CONSIDERED 1. Whether a second appeal under Section 246A may be entertained by the Commissioner (Appeals) against the same assessment order after an earlier appeal against that order has been disposed of on merits. 2. Whether rejection of a revision application under Section 264 on grounds of limitation/availability of alternative remedy bars filing a subsequent appeal under Section 246A raising new grounds; and whether the Commissioner (Appeals) is bound by the view expressed by the Principal Commissioner declining revision but suggesting filing an appeal with an application for condonation of delay. 3. The extent to which factual or legal developments after disposal of a first appeal justify reopening appellate remedy (distinguishing cases where the first appeal was disposed on merits from those disposed for technical/ procedural reasons). ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of a second appeal under Section 246A after the first appeal was disposed on merits Legal framework: Under the scheme of the Income-tax Act, an assessee aggrieved by an assessment order may prefer an appeal under Section 246A to the Commissioner (Appeals). The statutory scheme contemplates a single appellate remedy against a given assessment order; appellate rights are to be exercised within prescribed time and ordinarily exhausted once an appeal is finally adjudicated. Precedent treatment: The Tribunal and the Principal Commissioner relied on established authority (as cited in the administrative orders) recognising that repeated appeals against the same assessment order are not permissible where the first appeal was decided on merits. Judicial decisions that permit re-agitation arise where the first appeal was dismissed on technical grounds-those precedents were distinguished. Interpretation and reasoning: The Court examined the factual posture that the assessee had earlier filed an appeal which was decided on merits and had accepted some additions in that appeal (i.e., deemed dividend addition was not contested in the first appeal). The Tribunal emphasized the statutory architecture disallowing multiple appeals on the same assessment order and reasoned that permitting successive appeals with new grounds would subvert finality and the statutory time-bound appellate structure. The Court noted that the first appeal's adjudication on merits meant the assessee had exhausted its appellate remedy before the Commissioner (Appeals) in respect of that assessment order. Ratio vs. Obiter: Ratio - Where a first appeal against an assessment order has been disposed of on merits, a later second appeal under Section 246A against the same assessment order raising new grounds is not maintainable. Obiter - observations on policy and finality of assessment proceedings. Conclusion: The second appeal was held not maintainable; dismissal of the appeal on that ground was upheld. Issue 2: Effect of rejection of revision under Section 264 and advisory suggestions to file appeal with condonation - is the Commissioner (Appeals) bound? Legal framework: Section 264 confers revisionary power on specified officers to revise orders prejudicial to the revenue; however, revision is discretionary and distinct from the statutory appellate remedy under Section 246A. Where a revision under Section 264 is rejected (including on limitation or availability of alternative remedy), the assessee retains such remedies as are available under law, subject to limitations. Precedent treatment: The PCIT's order cited established principles that revision under Section 264 is not an alternative to appeal and is available only when the appellate channel is not available. The Tribunal noted authorities (mentioned in the record) distinguishing cases where revision was dismissed on procedural grounds from cases where a prior appeal was adjudicated on merits. Interpretation and reasoning: The Tribunal accepted the PCIT's determination that revision was not maintainable because the assessee had an alternative remedy (appeal) and that the revision application was time-barred. The Tribunal further held that any suggestion by the PCIT to file an appeal with condonation of delay was advisory in nature and not binding on the Commissioner (Appeals). Thus, the mere fact that the PCIT suggested filing an appeal with a condonation application does not create an entitlement to a fresh appeal when the first appeal had already been decided on merits. The Tribunal also observed that the assesseee did not challenge the PCIT's Section 264 order by appropriate writ jurisdiction, and chose instead to file a second appeal which the statutory scheme does not permit in these circumstances. Ratio vs. Obiter: Ratio - A revisionary order rejecting relief under Section 264 on grounds of availability of appeal/limitation does not entitle an assessee to a second appeal under Section 246A where a prior appeal was decided on merits; advisory remarks in a Section 264 order are not binding on the Commissioner (Appeals). Obiter - procedural options available after a Section 264 rejection (e.g., writ remedy) and commentary on what the PCIT could suggest. Conclusion: The rejection of revision under Section 264 and the PCIT's advisory suggestion did not render the subsequent second appeal maintainable; the Commissioner (Appeals) was not bound to admit such an appeal or condone delay on that basis. Issue 3: Distinction between appeals dismissed on technical grounds and appeals decided on merits - when may new grounds be entertained? Legal framework: Appellate law recognises that where an initial appeal is dismissed for technical or procedural defects, the assessee may have grounds to re-agitate the claim (subject to judicial precedents and condonation of delay). Conversely, where the initial appeal is adjudicated on merits, re-agitation by filing a fresh appeal is inconsistent with finality. Precedent treatment: The Tribunal acknowledged that cited coordinate-bench decisions permitting a fresh appeal applied to factual matrices where the first appeal was dismissed on technical grounds. Those authorities were held inapplicable to cases where the first appeal was decided on merits. Interpretation and reasoning: The Court differentiated the present facts from precedents relied upon by the assessee: because the first appeal had been contested only on certain additions and was decided on merits (not dismissed on procedural grounds), the assessee could not raise the previously unstated ground in a fresh appeal. The Tribunal emphasized that the law allows additional grounds to be raised in an appeal while it is pending, but does not allow repeated fresh appeals after final adjudication on merits. Ratio vs. Obiter: Ratio - New grounds cannot be agitated by instituting a fresh appeal after a prior appeal has been finally disposed of on merits; precedents allowing fresh appeals where earlier appeals were dismissed on technical grounds are distinguishable and do not support re-litigation in such cases. Obiter - guidance on how the distinction operates in practical appellate strategy. Conclusion: The authorities relied upon by the assessee were distinguished; the factual distinction (first appeal decided on merits) determinatively rendered the second appeal impermissible. Overall Conclusion (binding ratio) Once an appeal under Section 246A against an assessment order has been finally adjudicated on merits, an assessee cannot maintain a second appeal under Section 246A against the same assessment order raising new grounds; a rejected revision under Section 264 (on limitation/alternative remedy) and advisory suggestions therein do not cure this bar and do not bind the Commissioner (Appeals). The appropriate course, where Section 264 is dismissed and the first appeal was disposed on merits, is to seek remedies available under law (including writ jurisdiction) rather than to institute a second statutory appeal under Section 246A.