22 Revision : S. 197 and S. 264 of Income-tax Act, 1961 : An
order rejecting application u/s.197 for lower rate for deduction of tax is an
order which can be revised u/s.264.
[Larsen & Toubro Ltd. & Anr. (Bom.), W.P.(L) No. 694
of 2010, dated 28-4-2010]
On 29-10-2009, the petitioner had made an application to the
Assessing Officer u/s.197 of the Income-tax Act, 1961 for issuing a certificate
authorising MMRDA to deduct tax at source at a lower rate of 0.11% from the
payments made by it to the petitioner under a contract. The application was
rejected by the Assessing Officer. The petitioner therefore preferred a revision
petition u/s.264 to the Commissioner. The Commissioner rejected the application
inter alia on the ground that when the Assessing Officer rejects an
application u/s.197, he does not pass an ‘order’ as envisaged in S. 264 and
consequently, a revision u/s.264 is not maintainable.
The Bombay High Court allowed the writ petition filed by the
petitioner challenging the order of the Commissioner and held as under :
“(i) The Commissioner is manifestly in error when he holds
that the rejection of an application u/s.197 by the Assessing Officer does not
result in an order and that the revisional power which is vested in the
Commissioner u/s.264 would not be attracted.
(ii) The Assessing Officer when he rejects an application
is bound to furnish reasons which would demonstrate an application of mind by
him to the circumstances which are mandated both by the statute and by the
Rules to be taken into consideration. Hence, it would be impossible to accept
the view that the rejection of an application u/s.197 does not result in an
order.
(iii) The expression ‘order’ for the purposes of S. 264 has
a wide connotation. The Parliament has used the expression ‘any order’. Hence,
any order passed by an authority subordinate to the Commissioner, other than
an order to which S. 263 applies, is subject to the revisional jurisdiction
u/s.264. A determination of an application u/s.197 requires an order to be
passed by the Assessing Officer after application of mind to the circumstances
which are germane u/s.197 and the rules framed U/ss.2A.
(iv) The Commissioner was, therefore, manifestly in error
when he held that there was no order which would be subject to his revisional
jurisdiction u/s.264.”
Reported :
23 Assessment : Validity : Block period 1-4-1990 to
20-8-2000 : Copies of seized material not provided to assessee, nor assessee
given opportunity to cross-examine person whose statement AO relied upon : Fatal
to proceedings : Addition cannot be sustained.
[CIT v. Ashwani Gupta, 322 ITR 396 (Del.)]
In an appeal against the block assessment order the
Commissioner (Appeals) found that the Assessing Officer had passed the
assessment order in violation of the principles of natural justice inasmuch as
he had neither provided copies of the seized material to the assessee, nor had
he allowed the assessee to cross-examine the person on the basis of whose
statement the addition was made. He therefore held that the entire addition made
by the Assessing Officer was invalid and accordingly deleted the addition. The
Tribunal confirmed the order of the Commissioner (Appeals).
On appeal by the Revenue, the Delhi High Court upheld the
decision of the Tribunal and held as under :
“(i) The Revenue had accepted the findings of the Tribunal
on facts as also the position that there had been a violation of the
principles of natural justice. However, its plea was that the violation of the
principles of natural justice was not fatal so as to jeopardise the entire
proceedings.
(ii) The Tribunal correctly held that once there was a
violation of the principles of natural justice inasmuch as seized material was
not provided to an assessee, nor was cross-examination of the person on whose
statement the Assessing Officer relied upon, granted, such deficiencies would
amount to a denial of opportunity and, consequently, would be fatal to the
proceedings.
(iii) No substantial question of law arose.”
