2026 (2) TMI 374 - HC - Income Tax

Declaration that a tax return is invalid under section 139(9) constitutes an order revisable under section 264; petition restored for fresh consideration.

A declaration that a taxpayer's return is invalid under the tax statute constitutes an 'order' capable of revision; the respondent incorrectly treated the ... Order revisable u/s 264 - declaration of the Return of Income of the Petitioner as invalid - HELD THAT:- 1st Respondent has completely misdirected himself when he held that declaring the Petitioner’s Return as invalid [by the CPC] is not an order as contemplated under Section 264. In fact, the 1st Respondent referred to the definition of the word ‘order’ to be a mandate, precept, command or authoritative direction. Despite noting the aforesaid definition (in the dictionary), the 1st Respondent went on to hold that the so-called communication addressed by the CPC to the Petitioner was not an order as contemplated under Section 264. We are clearly of the view that a declaration given u/s 139(9) of the IT Act is clearly an order which is revisable u/s 264. It is certainly a mandate, or at the very least, an authoritative direction. What is interesting to note is that in the case of TPL-HGIEPL Joint Venture Vs. Union of India [2025 (3) TMI 1441 - BOMBAY HIGH COURT] it was the case of the Revenue itself that any declaration given under Section 139(9) of the IT Act was certainly revisable under Section 264. In fact, this submission of the Revenue was accepted by this Court and the Writ Petition filed by the Petitioner therein was not entertained, relegating the said Petitioner to invoke the remedy under Section 264. We are clearly of the view that the order passed by the 1st Respondent is unsustainable in law and has to be quashed and set aside. It is accordingly so ordered. Revision Application filed by the Petitioner is now restored to the file of the 1st Respondent for a de novo consideration. Issues: Whether a declaration under Section 139(9) of the Income-tax Act, 1961 that a return is invalid constitutes an 'order' revisable under Section 264 of the Income-tax Act, 1961, and whether the revisional authority erred in holding that such a declaration is not an order and dismissing the revision application as not maintainable.Analysis: The Court examined the character and legal effect of a communication under Section 139(9) declaring a return invalid and the scope of revisional power under Section 264. The Court held that a declaration under Section 139(9) is a mandate or authoritative direction affecting legal rights and obligations and therefore falls within the meaning of 'order' for the purposes of Section 264. The Court noted precedent where similar communications were treated as revisable and emphasised that revisional jurisdiction is the appropriate forum to undertake detailed scrutiny of returns, accounts and related material. The Court found that the Revisional Authority misdirected itself by treating the CPC communication as non-reviewable and by dismissing the revision application as not maintainable without considering the substance. The Court also stressed requirements of natural justice, including providing an effective opportunity of hearing and passing a reasoned order on merits rather than merely remanding back to the CPC.Conclusion: The declaration under Section 139(9) of the Income-tax Act, 1961 is an 'order' within the meaning of Section 264 and is revisable under Section 264. The impugned order dismissing the revision application as not maintainable is quashed and set aside; the revision application is restored for de novo consideration and the Revisional Authority is directed to afford hearing and pass a reasoned order within the specified timeframe.