Society under Registration Act, 1860 V. CIT (Exemption), Hyderabad and National Faceless Appeal Centre (NFAC)

WP/24522/2022

AI Insights

The case involves a writ petition filed by a society running an educational institution, challenging the order of the Commissioner of Income Tax (Exemption), Hyderabad, which rejected the petitioner's revision application under Section 264 of the Income Tax Act, 1961. The rejection was based on the grounds that an appeal was already pending before the National Faceless Appeal Centre (NFAC), New Delhi, and thus, the revision application could not be entertained. The petitioner sought to withdraw the pending appeal and have the revision considered on its merits. The court examined the legal provisions under Section 264 of the I.T. Act and upheld the Commissioner's decision, emphasizing that the revision application cannot be entertained while an appeal is pending.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 807894 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 14-09-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Keywords: Appeal Withdrawal; Assessment Year; Educational institution; Income tax exemption; Natural Justice; Revision petition
• Section: 143(3); 143(2); 263; 11; 13; 264

Judgement Text

"THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HON’BLE SRI JUSTICE A.V. RAVINDRA BABU Writ Petition No.24522 of 2022 ORDER:- (per the Hon’ble Sri Justice C. Praveen Kumar) The present writ petition came to be filed, seeking the following reliefs:- “(a) to declare the order of first respondent, CIT (Exemption), Hyderabad dated 30.03.2022 as being unjust, invalid and against the settled principles of law and principles of natural justice, consequently set aside the order of the first respondent, CIT (Exemption), Hyderabad dated 30.03.2022, thereby directing the first respondent to consider the Revision Petition of the petitioner under Section 263 of the Income Tax Act, 1961 on merits, by treating the Appeal filed by the petitioner before the second respondent as withdrawn; and (b) to direct the second respondent to decide the Appeal filed by the petitioner by considering the application for withdrawal of petitioner and to dispose of the appeal expeditiously.” 2. The facts, in issue, are that the petitioner herein is a Society under Registration Act, 1860, established in the year 1975 and running an Educational Institution and since then for the assessment years 2017-18 the petitioner herein filed income tax returns on 28.03.2019 declaring CPK, J & AVRB, J W.P.No.24522 of 2022 2 total income as ‘NIL’, after claiming exemption under Section 11 of the Income Tax Act, 1961 [for short, “I.T. Act”]. However, the case of the petitioner was selected for scrutiny under the Computer Aided Scrutiny Selection [CASS] and a notice was issued under Section 143(2) of the I.T. Act. After following the procedure, the assessment was completed under Section 143(3) of the I.T. Act and an order came to be passed on 31.12.2019 making an addition of Rs.12,30,23,948/- holding that the above mentioned amount diverted by the petitioner to M/s.Sri Viswasanthi Educational Institution, which is in violation of Section 13 of the I.T. Act. An appeal came to be filed on 23.01.2020 against the order dated 31.12.2019, which was transferred to the National Faceless Appeal Centre [NFAC]. (a) While things stood thus, the petitioner made an application under Section 264 of IT Act, for revision of the order, dated 31.12.2019 before the first respondent. At the same time, the petitioner made an application before the second respondent seeking withdrawal of the appeal filed vide letter dated 04.02.2021. It is said that the petitioner herein made number of requests on various CPK, J & AVRB, J W.P.No.24522 of 2022 3 dates seeking permission of withdrawal of the appeal. Without considering the request made, the Commissioner of Income Tax vide Order dated 30.03.2022 rejected the revision filed on the ground that the appeal filed by the assessee against the order of Assessing Officer is pending before the NFAC and that an order cannot be revised pending appeal. At that stage, the present writ petition is filed, seeking the above two reliefs. 3. A counter came to be filed by the respondents disputing the averments made in the affidavit filed, which are not specifically admitted. It is stated in the counter that when the appeal filed by the petitioner, which is pending disposal before the NFAC, New Delhi, the Commissioner of Income Tax has no jurisdiction to consider the petition filed under Section 264 of the I.T. Act. It is said that the remedy available under Section 264 of the I.T. Act is an alternative remedy and not an additional remedy and that the assessee cannot avail both the remedies. It is further contended that when the appeal is filed, and when the same is pending consideration, the assessee as a whole, raised all the objections, which he intends to raise before the Assessing CPK, J & AVRB, J W.P.No.24522 of 2022 4 Authority. It is further stated in the counter that the first respondent is obligated to pass an order on the application filed by the assessee under Section 264 of the I.T. Act within a period of one year from the end of the financial year in which the application is made by the assessee for revision. As the last date for passing of an order under Section 264 of I.T. Act was 31.03.2022, the first respondent passed the order within the stipulated period, rejecting the application. Hence, pleaded that the order impugned in the writ petition warrants no interference. 4. As seen from the averments made in the affidavit filed, challenging the proceedings issued for the assessment year 2017-18, the petitioner preferred an appeal before the second respondent. Pending appeal, an application for revision, intimation under Section 143(3) of the I.T. Act came to be made under Section 264 of the I.T. Act. Since an application under Section 264 of the I.T. Act cannot be entertained pending appeal, an order came to be passed rejecting the request for revision of intimation. CPK, J & AVRB, J W.P.No.24522 of 2022 5 5. In order to appreciate the correctness of the order passed, it would be just and proper to refer to Section 264 (4) of the I.T. Act, which is as under:- “The [Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or] Commissioner shall not revise any order under this section in the following cases:- (a) Where an appeal against the order lies to the [Deputy Commissioner (Appeals) [or to the Commissioner (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or in the case of an appeal [to the Commissioner (Appeals) or] to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) Where the order is pending on an appeal before the [Deputy Commissioner (Appeals)]; or (c) Where the order has been made the subject of an appeal [to the Commissioner (Appeals) or] to the Appellate Tribunal. 6. A perusal of the above would show that the Commissioner cannot revise an order under Section 264(4) of the I.T. Act, where an appeal is filed against an order to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal or where the order is pending on an appeal before the Deputy Commissioner (Appeals) or where the order has been made subject, of an appeal to the Commissioner (Appeals) or to CPK, J & AVRB, J W.P.No.24522 of 2022 6 the Appellate Tribunal. Having regard to the above, the question of Commissioner (Appeals) considering the request of the petitioner would not arise. 7. At this stage, learned counsel for the petitioner would submit that a direction may be given to the first respondent to consider the revision of the petitioner under Section 263 of the I.T. Act on merits, by treating the appeal filed by the petitioner as withdrawn. It is to be noted here that an order under Section 264 of the I.T. Act is required to be passed within a period of one year from the end of Financial Year, in which, the application is made by the petitioner for revision. In the instant case, last date of passing of order was 31.03.2022. That being the position, the question of giving a direction to the Commissioner for passing of an order under Section 264 of the I.T. Act beyond the said period would not arise. Hence, we are of the view that such a request cannot be granted. 8. Further, having regard to the provision of law referred to above, an order cannot be passed by treating something which is not in existence. Hence, the first relief CPK, J & AVRB, J W.P.No.24522 of 2022 7 sought for by the petitioner in the writ petition cannot be granted. 9. The second relief, which is sought for by the petitioner is, a direction to the second respondent to decide the appeal filed by the petitioner by considering the application for withdrawal of petitioner and to dispose of the appeal expeditiously. At first blush, the request made by the petitioner appeared to be quite probable, but a close perusal of the provisions of the Act and the counter filed would show that even if the request of the petitioner for withdrawal of the appeal is accepted, a direction to the Commissioner (Appeals) to pass an order under Section 264 of the I.T. Act cannot be granted for the reasons stated supra. However, the relief sought for by the petitioner for expeditious disposal of the appeal can be considered, and accordingly a direction is given to the appellate authority to disposal of the appeal in accordance with law, as early as possible. 10. In the given set off circumstances, we feel that it would be just and proper for the petitioner to get the Appeal adjudicated on merits before the Appellate CPK, J & AVRB, J W.P.No.24522 of 2022 8 Authority. However, if the petitioner is entitled to get his appeal withdrawn, the Authority may have a relook into the matter and do the needful at the earliest. But, it is made clear that the order of withdrawal of appeal does not give a right to the petitioner to get his matter adjudicated under Section 264 of the I.T. Act. 11. With the above directions, the writ petition is disposed of. There shall be no order as to costs. Miscellaneous petitions pending, if any, shall stand closed. _______________________________ JUSTICE C.PRAVEEN KUMAR _________________________________ JUSTICE A.V. RAVINDRA BABU Date: 14.09.2022 MS CPK, J & AVRB, J W.P.No.24522 of 2022 9 THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HON’BLE SRI JUSTICE A.V. RAVINDRA BABU Writ Petition No.24522 of 2022 (per the Hon’ble Sri Justice C. Praveen Kumar) Date: 14.09.2022 MS "