An assessee aggrieved by an order passed by the Assessing Officer may file an appeal against the same to the CIT(A). As an alternative remedy the assessee may prefer an application to the Principal Commissioner or Commissioner for revising the orders passed by the Assessing Officer. A remedy under section 264 is contemplated by the Legislature only to meet a situation faced by an aggrieved assessee who is unable to approach the appellate authorities for relief and has no other alternative remedy under the Act. Even those orders which are not appealable before the CIT(A), may be referred by the assessee to the Principal Commissioner or Commissioner for seeking revision or modification.
Pre conditions for revision of other orders
This is
alternate remedy available with the Assessee, however various conditions are
required to be fulfilled before making an application to the Principal
Commissioner or Commissioner for revision of the order. The
conditions are-
(i)
Applicable
to any order other than an order to which section 263 applies
• Applies to any order :
(a) other than an order to which section 263 applies
(b) Passed by an authority subordinate to the Principal Commissioner or
Commissioner
(ii)
Principal Commissioner or Commissioner may act suo moto or on
application made by the assessee.
Principal Commissioner or Commissioner can on his own motion revise any order and such revision can be done within one year from the date of order. Hence, similar to the provisions of section 263, which favors revenue, provisions of section 264 is incorporated to favor assessee.
(iii)
Principal Commissioner or Commissioner may call for the record of any
proceedings under the Act in which such order has been passed.
(iv)
Order
may be passed not being prejudicial to the assessee. However an order declining
to interfere is not an order prejudicial to the assessee.
(v) In
case any order pass by any authority subordinate to assessing officer (other
than order passed under section 263), any authority subordinate to assessing
officer, may on himself or on application filed by assessee, call for any
information & pass revision order, after relevant inquiry & collecting
information.
(vi) After revision under section 263, revision
under section 264 is not possible. However, after revision under section 264,
revision under section 263 is possible.
(vii) Revision under section 264 is not possible on any
issue, if an appeal has been filed to CIT(Appeals).
(viii) Application is made within one year from the
date of service of order to be revised or from the date on which the assessee
came to know of the order, whichever is earlier – (discretion is given to
condone the delay in filing the application if assessee prevented by sufficient
cause)
(ix) The order under this section shall be
passed within 1 year from end of financial year, in which application under
section 264 is filed by assessee.
(x) Fees
of Rs. 500/- to be paid alongwith filing the application.
Assessee seeking CIT blessing under
section 264 can not be surprised with revisionary order under section 263
Section 264 debars Commissioner
from passing any order which is prejudicial to assessee and, therefore, once
assessee approaches Commissioner for getting relief under section 264,
Commissioner can not pass an order by invoking provisions of section 263.
Intimation under Section 143(1) is regarded as an order for
the purpose of Section 264 and therefore an application under Section 264 is
maintainable against such an intimation
The Delhi High Court in the case
of Vijay Gupta had held that an intimation under Section 143(1) of the Act is
regarded as an ‘order’ for the purpose of Section 264 of the Act. However, the
Assessing Officer relying on the Supreme Court decision in the case of Rajesh
Jhaveri Stock Brokers (P) Ltd. has been contending that an intimation under
Section 143(1) of the Act could not be treated as an ‘order’. Therefore, no
petition under Section 264 of the Act could be maintained against such
‘intimation’. The Delhi High Court permitted the taxpayer to rectify its tax
return by virtue of revision powers under Section 264 of the Act against an
intimation under Section 143(1) to claim benefit of lower tax rate on FTS by
applying Most Favored Nation (MFN) clause under the tax treaty. - [Vijay Gupta v. CIT (2016) 386 ITR 643 : 238 Taxman 505 : 68 taxmann.com 131 (Del)]
Whether section 264
debars Commissioner from passing any order which is prejudicial to assessee
and, therefore, once assessee approaches Commissioner for getting relief under
section 264, Commissioner can not pass an order by invoking provisions of
section 263 - Held, yes [Para 11] [In favour of assessee]
11. From the
above, it is evident that under Section 264, the CIT can revise any order
passed by any authority subordinate to him on his own motion or on the
application made by the assessee. He can pass the order as he thinks fit not
being an order prejudicial to the assessee. Thus, it is very clear that under
Section 264, the CIT cannot pass any order which is prejudicial to the
assessee. Now, in the case under appeal before us, it is evident that the
assessee moved revision petition under Section 264 before the CIT, Central-II
for quashing the penalty order. On the other hand, the CIT, Central-II
initiated proceedings under Section 263 of the Income-tax Act and passed order
thereon which was prejudicial to the interests of the assessee. That Section
264 of the Income-tax Act debars the CIT from passing any order which is
prejudicial to the assessee. Therefore, in our opinion, when the CIT cannot
pass the order prejudicial to the assessee under Section 264, once the assessee
approached him for getting relief under Section 264, if he is allowed to pass
order under Section 263 prejudicial to the assessee, it would make prohibition
under Section 264 that the CIT cannot pass the order prejudicial to the
assessee as nullity. Therefore, in our opinion, on the facts of the assessee's
case, the order under Section 263 cannot be sustained. (Related Assessment
years : 2005-06 & 2006-07) – [Vineet Sharma v. CIT (2014) 148 ITD 619 : 41 taxmann.com 141 (ITAT
Delhi)]
Commissioner – Revision of other
order – Set aside assessment – Power of Assessing Officer
Where
the Commissioner exercising its revisional authority under section 264 of the
Act, directed the Assessing Officer to adjudicate and examine a specific
issues. However, the assessment was framed by the Assessing Officer on a higher
income by assuming more powers than that of revisional authority. The action of
the Assessing Officer was held patently illegal and without jurisdiction.
(Related Assessment years : 1989-90 to 1999-2000) – [N. Seetharaman v. CIT (2008) 298 ITR 210 : 216 CTR 238 : 6 DTR 238
(Mad.)]
Order
under section 264 cannot be prejudicial to the assessee
As per the provisions of Section
264(1), the order passed by the CIT under section 264, cannot be prejudicial to
the assessee. An order by the CIT declining to interfere shall not be deemed to
be an order prejudicial to the assessee, according to Explanation - 1 to
Section 264.
Order
passed by the CIT under section 264 should not be prejudicial to the assessee even
indirectly
In this case, on a petition under
section 264 by the assessee the CIT set aside the assessment, with a direction
to make a fresh assessment. The Assessing Officer completed the fresh
assessment without any change in total income and tax originally assessed. The
Assessing Officer also initiated penalty proceedings under section 271(1)(c),
though no such penalty proceedings were initiated in the original order of the
Assessing Officer. The Tribunal held that order under section 264 of the CIT,
had indirectly resulted in the levy of penalty under section 271(1)(c) and as
such was prejudicial to the interest of the assessee. The cancellation of order
under section 271(1)(c) was accordingly held to be justified. – [ACIT v.
M.V. Kenlucky (1997) 60 ITD 492 (ITAT Pune)]
Even
an order passed in violation of principles of natural justice can be corrected
under section 264
Even an order wherein the principles of natural
justice have been ignored, can be corrected in exercise of revisional powers
under section 264. (Related Assessment year : 1964-65) - [Mohammadi Begum v. CIT (1986)
158 ITR 622 (AP)]
CIT has the power under section 264
to issue directions to Assessing Officer
Section 264 is not a provision of
law dealing with the question of imposition of liability on the assessee. It is
only a part of machinery section. It cannot be construed in a narrow manner.
The CIT has the power under section 264, to issue directions to the Assessing
Officer. (Related Assessment year :
1964-65) – [Mohammadi
Begum v. CIT (1986) 158 ITR 622 (AP)]
New
ground can be entertained by the CIT
The revisional powers conferred
by Section 264 on the CIT are very wide. It is open to the CIT to entertain
even a new ground, not urged before the lower authorities, while exercising revisional
powers. – [C. Parikh & Co v. CIT
(1982) 138 ITR 689 (All)]
A new claim for deduction made by
the assessee in revision petition is to be examined on merits. (Related Assessment year : 1975-76) – [Rashtriya Vikas Ltd. v. CIT 99 CTR 68(All)]
Assessee
can file a revision petition against an addition erroneously accepted by him
The CIT cannot reject a petition for revision on the
ground that the assessee itself had returned income which it claims in the
revision petition as not its income. In such a situation the CIT is bound to
apply his mind to the question whether the assessee is liable to be taxed in
respect of that income. — [Pt. Sheonath
Prasad Sharma v. CIT (1967) 66 ITR 647 (All)]
Even those orders which are not
appealable before the Dy CIT(A) or CIT(A), may be referred by the assessee to
the CIT for seeking revision or modification. – [Dwarka Nath v. ITO (1965) 57 ITR 349(SC)]
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