Rayala Corporation Pvt. Ltd. vs The Commissioner of Income Tax

D. Murugesan, J.—The appellant-M/s Rayala Corporation Private Limited is engaged in the business of manufacture and sale of typewriters

and manufacture and supply of defence equipments/components to various defence establishments in the country. In respect of levy of interest u/s

216 of the Income Tax Act and for waiver for the assessment years 1978-79 and 1980-81, the matter landed before the Settlement

Commissioner who, by order dated 30.12.92, remitted the matter to the assessing authority, and the assessments were completed on 6.12.93 and

21.2.94 respectively.

In terms of Sub-section (3) of Section 264 of the Income Tax Act, the assessee is entitled to prefer a revision within a period of one year from

the date of the assessment order. However, without availing the remedy of filing revision petition, the appellant-assessee approached this Court by

filing W.P. Nos. 21111 to 21113 of 1994. By order dated 22.12.2000, this Court, while dismissing W.P. No. 21111 of 1994 as infructuous,

disposed the remaining two writ petitions with the following directions:

However, the petitioner is given liberty to approach the Commissioner of Income Tax for waiver of interest u/s 264 of the Act. The petitioner is

also permitted to prefer revision petition within a period of one month from this date. I am of the view that since the writ petition was entertained by

this Court and the matter has been pending from the date of filing of the writ petition, the Commissioner of Income Tax is directed to take the

revision petition that may be filed u/s 264 of the Act by the petitioner, if the application is filed within one month from the date without raising any

objection as to limitation and the Commissioner is directed to consider the said petition on merits and in the light of my judgment of even date

rendered in W.P. No. 21120 of 1994. The writ petition is accordingly disposed of.

By the said order, the appellant-assessee ought to have preferred the revision petitions within a period of one month from 22.12.2000 i.e., on or

before 21.1.2001. However, the revision petitions were filed only on 7.5.2001 and the same were dismissed by the revisional authority on

21.3.2003 on the ground that they were filed beyond a period of one month as prescribed by this Court. The said orders were questioned by the

appellant-assessee in W.P. Nos. 12408 and 12409 of 2003, which were dismissed by a common order dated 18.9.2003. Hence the present

appeals are filed by the appellant-assessee.

We have heard Mr. V.Ramachandran, learned senior counsel for the appellant and Mr. Arun Kurian Joseph, learned junior standing counsel for

the Income Tax Department.

In terms of Sub-section (3) of Section 264 of the Income Tax Act, as against the order of the assessing authority, a revision is maintainable and

could be filed within a period of one year from the date of the order. A proviso has been added to the said section, wherein a power has been

conferred on the Commissioner to admit an application made after the expiry of the said period, if he is satisfied that the assessee was prevented

by sufficient cause for making the application within that period. Hence it is not as if the revision filed beyond a period of one year would be

automatically rejected and even a revision filed beyond that period could be entertained for good and sufficient reasons. This Court, while

permitting the appellant-assessee to file the revision petitions taking into note of the said proviso, directed the appellant-assessee to prefer the

revision petitions within a period of one month from the said date and also made it clear that the revisional authority should consider the revision

petitions on merit in the event they are filed within the said period without raising any objection as to the limitation. Only in view of the period

prescribed by this Court, the revisional authority, though had power to entertain the revision petitions even beyond a period of one year for good

and sufficient reasons, had rejected the revision petitions solely on the ground that they were not filed as directed by this Court within the

prescribed period.

This takes us to the only question as to whether the appellant-assessee is justified in not preferring the revision petitions as directed by this Court

within a period of one month. Immediately after the revision petitions were filed on 7.5.2001, a doubt was entertained as to whether the revision

petitions could be entertained for consideration on merit, as they were filed beyond a period of one month as directed by this Court. In fact, in the

revision petitions as to the earliest opportunity available to the appellant-assessee, it is stated as follows in paragraph-2:

The final portion of the above order was pronounced in the open court on 22.12.2000 and on the very same date our Counsel, M/s George

Cheriyan and B Ravi Raja have applied for the order copy. We understand from our Counsel that the said application has been lost by the Court

Registry and our Counsel have to reapply for the same. The re-application was made by our Counsel on 27.02.2001 and the order was made

available and delivered to our Counsel on 16.04.2001. We were informed by our Counsel that only the final portion of the order was pronounced

in the Open Court and not the entire text. Hence, our Counsel is not aware of the fact that the Assessee/Petitioner has to submit the Petition u/s

264 within the time stipulated therein. This fact we came to know only when the order copy was received i.e., on 16.04.2001.

Even then, as the clarification was required, the appellant-assessee filed two miscellaneous petitions in W.P.M.P. Nos. 15409 and 15410 of 2002

in W.P. Nos. 21112 & 21113 of 1994 before this Court seeking for clarification and direction to the Commissioner of Income Tax to take on file

the revision petitions and to dispose of the same as per the directions of this Court dated 22.12.2000. In support of the said petitions, in

paragraph-6, it is averred as follows:

I submit that however, this Hon''ble Court in its common order dt.22.12.2000 in W.P. Nos. 21111 to 21113 of 1994, has given the liberty to

the Petitioner to file the Petition u/s 264 of the Income Tax Act, 1961 for the Asst.Years 1978-79 and 80-81 in W.P. Nos. 21112 and 21113

within one month from the date of the order. Further this Hon''ble High Court has directed the Commissioner of Income Tax, to take the revision

petition that may be filed by the Petitioner u/s 264 of the Income Tax Act, 1961 within one month from the date without raising any objection as to

the limitation. Further, this Hon''ble High Court has also directed the Commissioner to consider the petition on merit in the light of the judgment of

this Hon''ble Court dt.22.12.2000 in W.P. No. 21120 of 1994.

In the meantime, as the revision petitions were not entertained, W.P. Nos. 12408 & 12409 of 2003 were filed and in support of the said

petitions, an affidavit of the counsel was also filed and in the said affidavit, it is averred as follows:

I submit that I am one of the counsel of the petitioner in W.P. Nos. 21111 to 21113 of 1994, I am filing this affidavit in support of the writ

petition filed by the petitioner in the above matter.

I state that our court clerk, after verification with the Registry had informed us that a copy application filed for issue of certified copy of the order

dated 22.12.2000 passed by this Hon''ble High Court in W.P. Nos. 21111 to 21113 of 1994 made on the same date of the order was misplaced

and therefore we as the counsel were called upon to make a fresh application. Accordingly a fresh copy application was made on 27.02.2001 in

C.D. No. 3205 of 2001 on 2001 and the same was processed and the order copy made ready on 16.04.2001 and delivered on the same day. I

state that within 30 days of obtaining the order copy of this Hon''ble Court, the petitioner has filed on 07.05.2001 petition u/s 264 of the Income

Tax Act as directed by this Hon''ble Court.

I state that the respondent required a clarification to be obtained from the Hon''ble High Court regarding the prescribed limitation stated in the

order for filing petition u/s 264 of the Income Tax Act. I further state that accordingly W.M.P. Nos. 15409 & 15410 of 2002 in W.P. Nos.

21111 to 21113 of 1994 were filed seeking for clarification from this Hon''ble Court as required by the respondent. In spite of the best efforts by

us and in spite of having the W.M.Ps. numbered seeking clarification of this Hon''ble Court, the matter was not listed as we were informed by the

Registry that the main writ bundle could not be located. In the meantime the respondent has dismissed the petition filed by the petitioner u/s 264 of

the Income Tax Act on account of non-compliance of the Court direction namely ""viz.filing of petition within 30 days from the date of the order"".

I state the delay in filing the petition by the petitioner before the respondent was not due to any willful default of the petitioner but due to

circumstances beyond the control of the petitioner whereby our office was not in a position to make available the order copy to the petitioner

earlier due to the circumstances mentioned hereinabove.

I further submit that I am filing this affidavit in support of the affidavit of the petitioner to enable the petitioner to obtain suitable redress in terms

of the orders passed by this Hon''ble Court dated 22.12.2000.

Keeping the above explanation offered by not only the appellant-assessee, but also the counsel for the appellant-assessee, it has to be now

considered whether the failure on the part of the assessee in not preferring the revision petitions within the period stipulated by this Court is wanton

and only to drag on the proceedings. While considering the issue in question, it must be kept in mind that as against the assessment orders put

against the assessee, the assessee could have filed revision petitions straight-away invoking Sub-section (3) of Section 264 of the Income Tax Act.

But the assessee had chosen a wrong forum by filing writ petitions before this Court, which were ultimately dismissed directing the appellant to file

the revision petitions. As, in the meantime, the period of limitation prescribed under Sub-section (3) of Section 264 was over, this Court taking into

consideration of the fact that the assessee should not be deprived of the right to file the revision petitions, merely because it has chosen a wrong

forum, permitted the assessee to file the revision petitions, of course, prescribing a period of 30 days. From the explanation offered by the counsel

appearing for the appellant through his affidavit, it is seen that the order was passed on the last working day before the Court closed for Christmas

holidays i.e., 22.12.2000 and the Court only pronounced the operative portion of the order, the explanation offered by the counsel that he was not

aware of the period prescribed by the Court could be accepted and we have no reason to discard the same. Further, immediately copy application

was made and since the same was misplaced in the Registry, another copy application was made on 27.2.2001 and thereafter the copy was

obtained on 16.4.2001 and the revision petitions were filed within a period of one month prescribed by the Court. There is no delay on the part of

the appellant-assessee in preferring the revision petitions within a period of 30 days from the date when the copy was obtained. Of course, the

learned Counsel who represented the appellant should have intimated the orders of this Court to prefer the revision petitions at least when he came

to know that the application was misplaced in the Registry and another application was filed and, in the meantime, his failure to ascertain the actual

order passed by this Court. Nevertheless, the question is whether a litigant should be prejudiced due to the fault of the advocate. In our opinion,

when the fault of the advocate is justified by giving sufficient reasons by way of filing an affidavit, the Court should normally entertain and accept

such explanation and pass orders. Yet another aspect which weigh our mind as to the bona fide of the appellant/assessee is that the assessee has

approached this Court by filing two miscellaneous petitions for clarifying the order on 13.3.2002 and those miscellaneous petitions have not so far

been disposed of and are kept pending. In the meantime, the revisional authority has passed the orders declining to entertain the revision petitions

on the ground that they were filed beyond the period prescribed by this Court. Had the said miscellaneous petitions been disposed of as rejected,

the consideration would be entirely different. However, so long as those petitions are not rejected and are kept pending, merely because those

petitions are pending, the revisional authority ought not to have rejected the revision petitions on the ground that the period prescribed by this

Court for filing the revision petitions was over. As already referred to, in terms of the proviso to Section 264(3), it is not as if there is a total bar for

the revisional authority to reject any application which is filed beyond a period of one year. On good and sufficient reasons, even the revisional

authority could extend the time and the further period is also not restricted. After all, the right of a party to get a disposal on merits before the

revisional authority has been defeated only on the sole ground that the revision petitions were not filed by the appellant-assessee as directed by this

Court within a period of one month. When this Court has fixed a period of one month, it would have certainly considered extension by a further

period of one month if the miscellaneous petitions in W.P.M.P. Nos. 15409 and 15410 of 2002 were taken up for hearing and disposed of.

The prime consideration of this Court in matters like this would be in the advancement of justice and the parties should get the disputes

adjudicated on merits and not on the ground of failure to file the revision petitions within a period of one month which was prescribed by this

Court, when this Court would be competent to extend the said period subsequently. Further, we are at a loss to understand the purpose for which

the assessee could drag on the matter, as the assessee would not be gaining anything by dragging the matter, except keeping the entire assessment

proceedings extended without any challenge. In the event the revisional authority is directed to consider the revision petitions on merit, the

respondent-department also would not be prejudiced. On the other hand, if the revision petitions are not restored to file, the assessee would be

seriously prejudiced and the assessment orders which were completed on 6.12.93 and 21.2.94 respectively would become final without there

being any challenge. In order to meet the ends of justice, we accept the explanation offered by the learned Counsel for the appellant-assessee in his

affidavit as to the furnishing of the copy application and the receipt of the copy of the order coupled with the fact that the very same stand was

taken by the appellant-assessee before the revisional authority as well as this Court as to the filing of the clarification petitions.

For the foregoing reasons, without expressing any opinion on the merits of the case, the orders passed by the respondent/revisional authority

dated 21.3.2003 and the orders passed in W.P. Nos. 12408 and 12409 of 2003 are set aside and the revision petitions dated 7.5.2001 are

restored to file. The revisional authority/the Commissioner of Income Tax, Chennai-III is directed to consider the revision petitions on merit and

dispose of the same as expeditiously as possible. It is needless to mention that the revisional authority will act in terms of Section 264(3) to afford

an opportunity to the appellant-assessee and without reference to the limitation as such. The writ appeals are allowed with the aforesaid directions.

Consequently, W.A.M.P. Nos. 6701 & 6702 of 2003 are closed. No costs.