26 May 2020


High Court of Delhi

Rites Limited v. Commissioner of Income Tax, Delhi-V



Direct Taxation

Commissioner is empowered to entertain even a new ground not urged before lower authorities while exercising revisional powers

Petitioner, Rites Limited, has filed present petition challenging order passed by Respondent. By order dated 10th December 2010, CIT(A) dismissed appeal filed by Petitioner holding that claim could not be allowed by way of rectification in a proceeding under Section 154 of Act. CIT(A) referred to decision of Supreme Court in Goetze India Limited v. Commissioner of Income Tax and held that, a claim not made in original return could not be made subsequently during assessment proceedings by way of letter. Further, by impugned order dated 24th March 2014, CIT(A) rejected application filed by Petitioner under Section 264 of Act, holding that, Petitioner had not claimed deduction in respect of provision for wage arrears by revising return for AY 1998-1999. Therefore, issue did not emanate from assessment order.

Regarding preliminary objection on maintainability of present petition under Article 226 of Constitution, when remedy of challenging decision of AO by way of an appeal has been exhausted, Court is of view that, Petitioner went before CIT with a petition under Section 264 of Act only pursuant to leave granted by this Court in its order dated 4th September 2012. It is not, therefore, open to Revenue to raise a preliminary objection as to maintainability.

Impugned order of CIT appears to have ignored history of litigation leading to filing of revision petition. Petitioner has already exhausted remedies that were available to it. In light of order of this Court disposing of Petitioner's appeal in first round, the CIT ought to have considered claim of the Petitioner on merits. Petitioner's revision petition under Section 264 of Act ought not to have been dismissed on a mere technicality.

In C. Parikh & Co. v. CIT, Gujarat High Court observed that, there is nothing in Section 264 which places any restriction on Commissioner's revisional power to give relief to the Assessee in a case where Assessee detracts mistakes on account of which he was over-assessed after assessment was completed. It is open to Commissioner to entertain even a new ground not urged before the lower authorities while exercising revisional powers. In Sneh Lata Jain v. CIT, it was observed that, in its revisionary jurisdiction, CIT has power to call for record of any proceedings under this Act and is also entitled to make any enquiry himself or cause any inquiry to be made and to pass such order as he thinks fit.

In present case, therefore, mere fact Petitioner did not make any claim in original return and also in its revised return before passing of assessment order by AO would not stand in way of CIT exercising revisionary jurisdiction to grant relief. Supreme Court in its decision in Goetze India Limited v. Commissioner of Income Tax held that, while AO could not permit a claim to be made after filing of return without Assessee revising it prior to assessment order, it did not impinge on scope of revisionary jurisdiction of CIT.

In CIT v. Mithlesh Impex, it was clarified that, decision of Supreme Court in Goetze India Limited is confined to powers of AO. However, "when it comes to power of Appellate Commissioner or Tribunal, Courts have recognized their jurisdiction to entertain a new ground or a legal contention."

Consequently, Court is satisfied that in present case, CIT erred in rejecting revision application of Petitioner on ground of maintainability. CIT ought to have entertained revision petition on merits. Court directs that, revision application filed before CIT should be treated as having been allowed on merits. Consequently, while setting aside impugned order of CIT dated 24th March 2014, Court allows revision petition filed by Petitioner before CIT and directs AO now to give effect to this order by computing the tax liability of Petitioner for the AY 1998-1999 after allowing claim for provision made for wages arrears as per 5th Pay Commission which became effective on 1st January 1996.


Goetze India Limited v. Commissioner of Income Tax MANU/SC/8814/2006
: (2006) 284 ITR 323, CIT v. Mithlesh Impex, C. Parikh & Co. v. CIT, Sneh Lata Jain v. CIT

Tags : Application Maintainability New ground

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