Revision u/s 264 Passed Without Waiver of Appeal Rights - Whether Appeal Before CIT(A) Still Maintainable

[Fahiyaz Ahmmed]

Dear Experts,

An assessee filed revision u/s 264 during the period available for filing appeal before CIT(A) and without waiving the statutory right of appeal. By oversight, the Commissioner entertained and allowed the revision petition.

Whether such revision order becomes defective or without jurisdiction in view of section 264(4)? Further, can the assessee still maintain appeal before CIT(A) after such mistaken revision order?

[YAGAY andSUN]

Section 264(4) of the Income-tax Act, 1961 places an express statutory bar on exercise of revisional jurisdiction by the Commissioner in cases where the order is appealable before the CIT(A) and either:

(i) the time for filing such appeal has not expired, or

(ii) the assessee has not waived the right of appeal.

Therefore, where the assessee files a revision petition during the subsistence of the appeal period and without expressly waiving the statutory appellate remedy, the Commissioner lacks jurisdiction to entertain the revision petition. Any order passed in contravention of Section 264(4) is vulnerable to challenge as being without jurisdiction and legally unsustainable.

The defect is not merely procedural but goes to the root of the Commissioner's authority to assume revisional jurisdiction. The embargo under Section 264(4) is mandatory in nature. Consequently, an order passed ignoring such statutory prohibition may be regarded as nullity or voidable in law, depending upon facts and judicial interpretation applicable in the jurisdiction.

As regards maintainability of appeal before CIT(A), the mere filing or even erroneous allowance of revision petition does not automatically extinguish the statutory appellate remedy where there was no conscious and express waiver of appeal rights by the assessee. Since the revision itself was incompetent ab initio due to the statutory bar, the assessee may contend that the appellate remedy survives.

However, practical difficulty may arise because two parallel remedies against the same order are ordinarily impermissible. The assessee may therefore have to disclose the complete facts before the CIT(A) and contend that the revisional order was passed without jurisdiction under Section 264(4), and hence cannot operate as a bar against appeal.

The issue would ultimately depend upon:

(i) whether any express or implied waiver of appellate remedy can be inferred from conduct of the assessee,

(ii) whether the revision order has attained finality, and

(iii) the judicial view regarding effect of an order passed contrary to Section 264(4).

In principle, however, where statutory conditions precedent for invoking Section 264 were absent, the revisional order itself suffers from jurisdictional infirmity, and the assessee can legitimately argue that the appeal before CIT(A) remains maintainable.

[Ryan Vaz]

Yes, there is a strong legal view that the revision order passed under Section 264 may be regarded as without jurisdiction or legally vulnerable if:

• the statutory appeal remedy before CIT(A) was still available, and
• the assessee had not waived such appellate remedy.

Section 264(4) creates a statutory embargo on exercise of revisional jurisdiction in such circumstances.

However, whether the assessee can still maintain appeal before CIT(A) after obtaining favorable revision relief becomes procedurally complex. In practice, once the assessee has invoked and obtained benefit under Section 264, appellate authorities may treat the assessee as having elected an alternate remedy, particularly if the revision order has attained finality.

[Fahiyaz Ahmmed]

Thank you, Sir, for your valuable guidance and professional insight

[DEV KUMAR KOTHARI]

I appreciate the query and replies, I agree with them.

However, it appears that first appeal is intended after the revision order u.s. 264 has been passed.

During the period of filing of revision petition and issue of order u.s. 264 it is most likely that the limitation for filing appeal was over. Therefore, department is likely to assume that by conduct, right to appeal was waived by tax payer/ applicant.

Whether, any opportunity of hearing was allowed by CIT, written or oral submissions were made, application was elaborate. hearing took place before CIT are also relevant.

If yes, then it further makes case for implied waiver of right to appeal.

AI Summary

Revisional jurisdiction under section 264 may fail where appeal rights remain unwaived, leaving CIT(A) appeal issue open. Section 264(4) creates a statutory bar on revisional jurisdiction where an appeal before the CIT(A) is still available and the assessee has not waived that remedy. A revision petition filed during the appeal period without express waiver is treated as vulnerable for want of jurisdiction. The maintainability of a subsequent appeal before the CIT(A) depends on whether there was an express or implied waiver and whether the revision has attained finality; the erroneous allowance of revision does not automatically extinguish the appellate remedy.