Facts of the Case

M/s Cincom Systems India Pvt. Ltd. was aggrieved by an order passed by the Additional Commissioner of Income Tax and filed a revision petition before the Commissioner of Income Tax under Section 264 of the Income-tax Act, 1961.

The petitioner contended that the revision petition was heard summarily by the Commissioner on 14 December 2005. However, it was merely informed that no stay of recovery would be granted, and no reasons for such refusal were communicated or recorded.

The petitioner apprehended that while the revision petition was still pending before the Commissioner, the tax demand raised against it might be enforced, rendering the revision proceedings ineffective and infructuous. Consequently, the petitioner approached the Delhi High Court seeking appropriate protection against recovery proceedings pending disposal of the revision petition.

 

Issues Involved

  1. Whether the High Court should intervene when a revision petition under Section 264 is pending before the Commissioner of Income Tax.
  2. Whether coercive recovery of tax demand should be stayed during the pendency of the revision proceedings.
  3. Whether the Commissioner should be directed to pass a reasoned and speaking order within a specified time frame.

 

Petitioner’s Arguments

  • The petitioner argued that the revision petition under Section 264 was pending consideration before the Commissioner.
  • It was submitted that the Commissioner had declined to grant stay of recovery without recording or communicating any reasons.
  • The petitioner expressed apprehension that recovery proceedings could be initiated before the revision petition was decided.
  • Such recovery would defeat the purpose of the revision proceedings and render them ineffective.
  • Therefore, protection against coercive recovery and an expeditious decision on the revision petition were sought.

 

Respondent’s Arguments

  • The Revenue submitted that there was no justification for invoking the writ jurisdiction of the High Court while the revision petition was still pending before the Commissioner.
  • It was contended that without examining the merits of the petitioner’s allegations, the Commissioner could be directed to hear and dispose of the revision petition within a fixed period.
  • The respondent suggested that an appropriate speaking order could be passed after granting a hearing to the petitioner.

 

Court Order / Findings

The Delhi High Court disposed of the writ petition with the following directions:

  1. The Commissioner of Income Tax was directed to hear the petitioner in support of the revision petition on 26 December 2005 at 11:00 A.M.
  2. The Commissioner was directed to pass an appropriate speaking order on the revision petition within three weeks from the date of hearing.
  3. The petitioner was directed to appear through its authorized representative on the scheduled date and time.
  4. In case of failure to appear, the Commissioner would be at liberty to pass an appropriate order without granting any further opportunity.
  5. The Court further directed that until the Commissioner passed a final order on the revision petition, no coercive steps for recovery of the disputed amount should be initiated against the petitioner.
  6. The writ petition was accordingly disposed of.

 

Important Clarification

  • Pendency of a revision petition under Section 264 does not automatically result in stay of recovery proceedings.
  • However, where recovery during pendency of the revision may render the proceedings ineffective, the High Court can exercise its writ jurisdiction to protect the assessee.
  • The Court emphasized the importance of a reasoned and speaking order by the Commissioner while deciding revision petitions.
  • Interim protection may be granted by the Court until the competent authority finally adjudicates the revision petition.
  1. Mahindra & Mahindra Ltd. v. Union of India – Exercise of writ jurisdiction where alternative statutory remedies become ineffective.
  2. CIT v. Chhabil Dass Agarwal – Principles governing interference under Article 226 despite availability of alternate remedies.

Sections Involved

  • Section 264, Income-tax Act, 1961 – Revision of orders by Commissioner of Income Tax.
  • Article 226, Constitution of India – Writ jurisdiction of High Courts.
  • Provisions relating to recovery of tax demand during pendency of revision proceedings.


Link to Download the Order

https://delhihighcourt.nic.in/app/case_number_pdf/2005:DHC:14797-DB/61319122005CW238262005_115230.pdf

 

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