INCOME TAX

INSTRUCTION NO. 1794/1998

 Dated: August 17, 1998

Sub:- Scope of Clause (c) of Sub-Section 264of the Income-Tax Act, 1961.

Attention is invited to Board's Instruction No. 195 dated 30.7.1970 on the above subject in which it was explained that the scope of section 264 should be construed so as to mean that the jurisdiction of the commissioner to entertain a revision petition from an assessee against an order could be barred only if an appeal against that order has been preferred by the assessee before the Tribunal and not where such an appeal has been preferred by the Deptt.

The issue has been referred to Ministry of Law again for reconsideration of their earlier opinion in the light of the Karnataka High Court judgment in the case of CIT vs. Hindustan Aeronautics Ltd. (157 ITR 315). The Ministry of Law have now advised that the provisions of clause (c) of sub-section (4) of Section 264 mean that the jurisdiction of CIT u/s 264 in respect of an order would be barred whether an appeal against that order has been preferred before the Tribunal by the assessee or by the Department. The Board's Instruction No. 195 dated 30.7.1970 stands superseded. This legal position may be brought to the notice of all in your charge.

EXTRACT OF OPINION OF MINISTRY OF LAW.

On a careful analysis of section 264(4)(c) and the judgments announced by Calcutta and Karnataka High Courts, we feel that the earlier opinion given by us should be revised and the circular should may accordingly be amended. The jurisdiction of the Commissioner revision is an extra remedy alternatively available to an assessee in case he has not been able to point out at the time of Assessment or the mistakes he has committed at time of original assessment. This remedy is available also for orders which are not appealable. This remedy can be availed of only alternatively when he did not file if an appeal or the order has not been appealed. It makes no difference if an appeal is filed either by the Dept. or by the assessee concerned. The jurisdiction of the Commissioner shall be barred if an appeal is filed even by the Department. The logic which may be given for this is that the assessee should have an opportunity of adjudication on the points he was not able at the time of the order made by the ITO or Assistant Appellate Commissioner. If those orders are made the subject of appeal, the department then also has an opportunity to put forward his grievance before the appellate court and may seek relief. The intention of the legislature seems to have been compiled with and there seems to be no taking away of the right of revision in that case. The judgments in the aforesaid cases seems to be proper on the basis of the doctrine of merger. The Hon'ble High Court has rightly said that if an order of lower authority has been appealed, the judgment of the appellate authority shall merge with the orders earlier given. Now, there remains nothing for which the revision filed before the Commissioner.

In view of the aforesaid, we agree with the ruling given by the Hon'ble Karnataka High Court and the views expressed by Deptt. They may accordingly amend the circular earlier issued.

F.No. 273/5/86-IT(J)