Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Appeals & Revisions under Income Tax Act.

Appeals & Revisions under Income Tax Act.
Appeals & Revisions under Income Tax Act.

Table of Contents

1.   First Appeal Filed by the Assessee

The first appeal against the order of Assessing Officer shall lie to the Commissioner (Appeals) and it can be filed by the assessee only.

(A)   [Section 246A]- Appealable Orders before Commissioner (Appeals):

Any assessee or any deductor or any collector aggrieved by any of the following orders, may appeal to the Commissioner (Appeals) against—

(a)     an order passed by the Joint Commissioner under section 115VP(3)(ii) refusing to approve the option of tonnage scheme in case of a company operating ships; or

(b)     an order of assessment under section 115WE(3) or section 115WF, where the assessee. being an employer objects to the value of fringe benefits assessed;

(c)      an order against the assessee, where the assessee denies his liability to be assessed under this Act; or

(d)     an intimation under section 143(1) or (1B) or section 200A(1) or section 206CB(1) where the assessee or the deductor or the collector objects to the making of adjustments in return of income or statement of TDS or TCS. as the case may be.

(e)     any order of assessment under section 143(3) (except an order passed in pursuance of
directions of the Dispute Resolution Panel) or 144, where the assessee objects:

(i)           to the income assessed, or

(ii)          to the amount of tax determined, or

(iii)         to the amount of loss computed, or

(iv)          to the status under which he is assessed;

(f)      an order of assessment, reassessment or re-computation under section 147 (except an order passed in pursuance of directions of the Dispute Resolution Panel) or section 150;

(g)     an order of assessment or reassessment under section l53A (except an order passed in pursuance of directions of the Dispute Resolution Panel) consequent upon any search conducted or books of account requisitioned;

(h)     any order of assessment or reassessment under section 92CD( 3) relating to an order passed by the Assessing Officer on modified return filed in accordance with and limited to the advance pricing agreement;

(i)      an order of rectification made under section 154 or order under section 155 having the effect of:

(i)           enhancing the assessment, or

(ii)          reducing a refund, or

(iii)    order refusing to allow the claim made by the assessee under either of these sections;

(j)                     an order under section 163 treating the assessee as the agent of a non-resident;

(k)     an order under section 170(2) or (3) relating to assessment on successor when the predecessor cannot be found or recovery of tax of the predecessor from the successor in case of succession to business otherwise than on death;

(l)         an order under section 171 refusing to recognize partition of a IIUF;

(m)    an order under section 201 treating the assessee deemed to be assessee in default for failure to deduct the whole or any part of the tax or pay tax after deduction;

(n)     an order made under section 206C(6A) treating the assessee deemed to be assessee in default for failure to collect the whole or any part of the tax or after collecting, fails to pay the tax as required by or under this Act;

(o)        an order under section 237 relating to refunds;

(p)     an order imposing penalty under sections 221, 271, 271A, 271AAA, 271AAB, 271B, 271GA, 271F, 271FB, 272AA, 272BB or an order imposing or enhancing penalty under section 275(1A);

(q)     an order made by Joint Commissioner imposing a penalty under sections 271C, 271CA, 271D. 271E and 272AA;

(r)      an order of Joint Commissioner / Joint Director imposing a penalty under section 272A;

(s)        an order imposing a penalty under Chapter XXI i.e. under sections 270 to 275;

(t)      an order of assessment made by an Assessing Officer under clause (c) of section 1 58BC Le. Block Assessment, in respect of search initiated under section 132 or books of account, other documents or any asset requisitioned under section 132A, on or after 1.1.1997;

(u)     an order imposing a penalty under section 158BFA(2) for concealment of income in case of Block Assessment;

(v)      an order made by an Assessing Officer other than a Joint Commissioner under the provisions of this Act in the case of such person or class of persons, as the Board may, having regard to the nature of the cases, the complexities involved and other relevant considerations direct.

(B)   [Section 248]- Appeal by person denying liability to deduct tax   :

Where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central Government, claims that no tax was required to be deducted on such income, he may appeal to the Commissioner (Appeals) for a declaration that no tax was deductible on such income.

(C)   Form of appeal and limitation [Section 249 and Rules 45 and 46]

As per section 249(1), an appeal to the Commissioner (Appeal) shall be in the prescribed form and shall be verified the prescribed manner.

(1) Form of appeal to Commissioner (Appeal) (Rule 45]:

1.  Form [Rule 45(1)]:

An appeal to the Commissioner (Appeals) shall be made in Form No. 35.

2.  Manner of Furnishing the Appeal [Rule 45(2)]:

Form No. 35 shall be furnished in the following manner, namely:

(a)     in the case of a person who is required to furnish return of income electronically under rule 12(3).—

(i)      by furnishing the form electronically under digital signature, if the return of income is furnished under digital signature;

(ii)     by furnishing the form electronically through electronic verification code in a case not covered under sub-clause (i);

(b)     in a case where the assessee has the option to furnish the return of income in paper form, by furnishing the form electronically in accordance with clause (a) of rule 45(2) or in paper form.

3.  Verification of Appeal [Rule 45(3)]:

The form of appeal referred to in rule 45(l), shall be verified by the person who is authorised to verify the return of income under section 140 of the Act, as applicable to the assessee.

4.  Manner of furnishing the accompanying document [Rule 45(4)]:

Any document accompanying Form No. 35 shall be furnished in the manner in which the said form is furnished.

5.  Procedure for Filing Appeal to be Specified [Rule 45(5)]:

The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall—

(i)         specify the procedure for electronic filing of Form No. 35 and documents;

(ii)     specify the data structure, standards and manner of generation of electronic verification code, referred to in rule 45(2), for the purpose of verification of the person furnishing the said form; and

(iii)    be responsible for formulating and implementing appropriate security, archival and retrieval of policies in relation to the said form so furnished.

6.  [Section 249(1)]- Fee for Filing Appeal:

Form 35 shall be accompanied by a fee as under:

(a) Where the total income / loss of the assessee as computed by the A.O. in the case to which appeal relates is Rs. 1,00,000 or less Rs. 250
(b) Where the total income / loss of the assessee, computed as aforesaid in the case to which appeal relates exceeds Rs. 1,00,000 but does not exceed Rs. 2,00,000 Rs. 500
(c) Where total income / loss of the assessee, computed as aforesaid in the case to which appeal relates exceeds Rs. 2,00,000 Rs. 1,000
(d) Where the subject matter of appeal relates to any matter other than specified in clauses (a), (b) and (c) above Rs. 250
See also  Appeals to Appellate Tribunal [Section 253(1) and (2)]

The fee should be credited in a branch of the authorised bank or a branch of the State Bank of India or a branch of the Reserve Bank of India after obtaining a challan from the Assessing Officer and a copy of challan sent to the Commissioner of Income-tax (Appeals).

(2) [Section 249(2)]- Time Limit for Filing Appeal:

The appeal should be presented within a period of 30 days of—

(a)        the date of payment of tar, where appeal is under section 248; or

(b)     the date of service of notice of demand relating to assessment or penalty if the appeal relates to assessment or penalty; or

However, where an application has been made under section 270AA (1), the period beginning from the date on which the application is made, to the date on which the order rejecting the application is served on the assessee, shall be excluded. [Proviso inserted by the Finance Act, 20 16, w.e.f. 1.4.2017]

(c)      the date on which intimation or the order sought to be appealed against is served if it relates to any other cases.

Exclusion of lime for calculating lime limit for filing appeal [Section 268]:

For this purpose, the date on which the order complained of is served is to be excluded. Further, if the assessee was not furnished with a copy of the order when the notice of the order (say notice of demand) was served upon him then the time required for obtaining a copy of the order should be excluded, i.e. period taken for obtaining the order shall be added to the time limit of 30 days.

(3) [Section 249(3)]- Condonation of Delay in Filing Appeal:

The Commissioner (Appeals) may admit an appeal after the expiration of the prescribed period, if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

(4) [Section 249(4)]- Amount of Tax Payable before Filing Appeal:

No appeal shall be admitted unless at the time of filing of the appeal:

(a)     where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him: or

(b)     where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him. i.e. tax which is payable on income assessed under section 144 or 147.

However, where no return has been filed by the assessee, the Commissioner (Appeals) on an application made by the assessee, may, for any good and sufficient reason to be recorded in writing, exempt him from the payment of such tax.

(D)   [Section 250]- Procedure in Hearing Appeal:

(i)      The Commissioner (Appeals) shall fix a day and place for the hearing of the appeal and shall give notice of the same to the appellant and to the Assessing Officer against whose order the appeal is preferred.

(ii)        The following persons shall have a right of being heard at the hearing of the appeal:—

(a)          the appellant, either in person or through authorised representative

(b)          the Assessing Officer, either in person or through a representative.

(iii)    The appellate authority shall have the power to adjourn the hearing of the appeal from time to

(iv)     The appellate authority may, before disposing off any appeal, make such further inquiry as he thinks fit and may direct the Assessing Officer to do so and report the same.

(v)      The appellate authority may, at the hearing of the appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if he is satisfied that omission of such ground of appeal was not willful or unreasonable.

(vi)    The order of the appellate authority disposing off the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.

(vii)    The order passed by the Commissioner (Appeals) shall be communicated to the assessee and to the Commissioner of Income Tax.

(E)   [Section 251]- Powers of the Commissioner (Appeals):

In disposing off an appeal, the Commissioner (Appeals), shall have the following powers:

(i)      in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; or

(ii)     in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; or

(iii)    in an appeal against an order imposing a penalty — he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;

(iv)       in any other case — he may pass such orders in the appeal as he thinks fit.

The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.

(F)   [Section 220(6)]- Stay of disputed demand:

Although an appeal can be filed by the assessee after depositing the tax due on the returned income, but the Assessing Officer normally continue with the recovery proceedings of the tax, demanded as per notice of demand. In such cases the assessee who has presented an appeal against such order can apply to the Assessing Officer for stay of the disputed demand. Where an assessee has presented an appeal under section 246A, the Assessing Officer may, in his discretion, and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of.

2.   Appeals to Appellate Tribunal [Section 253(1) and (2)]

(A) [Section 253(1)]- Orders against which Appeal may be filed by the assessee:

As per section 253(1), any assessee may file an appeal before the Appellate Tribunal against the following orders:

(a)        an order passed by Commissioner (Appeals):

(i)           under section 250 i.e. order passed on the appeal filed before him.

(ii)          order under section 270A.

(iii)         imposing penalty under sections 271, 271A, 271AA, 271G. 271J and 272A.

(iv)     under section 154 regarding rectification of mistakes in an order passed under section 250 or in an order imposing penalty under the above sections, if the rectification has not been done/satisfactorily done by him.

(b)        an order passed by a Principal Commissioner or Commissioner:

(i)      under section 12AA (or 12AB inserted by the Finance Act, 2020, w.e.f. 1.6.2020) refusing to grant registration to a trust or institution;

(ii)          under section 80G(5)(vi) refusing to grant approval to the institution or fund;

(iii)    under section 263 relating to revision of erroneous order passed by Assessing Officer;

(iv)          under section 270A

(v)           Imposing penalty under section 271 or section 272A; or

(vi)          under section 154 amending his order under section 263 or order of penalty.

(c)      order imposing penalty passed by a Principal Chief Commissioner or Chief Commissioner, Principal Director General or Director General or Principal Director or Director under section 272A.

(d)        an order passed by Assessing Officer

(i)      under section 115VZC(1) with the previous approval of Chief Commissioner excluding the shipping company from Tonnage Tax Scheme due to any transaction or arrangement referred to in section 115VZB(1) which amounts to an abuse of the Tonnage Tax Scheme.

(ii)     under section 143(3) or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order.

(iii)    under section 143(3) or section 147 or section 153A or section 153C with the approval of the Principal Commissioner or Commissioner as referred to in section 144BA(l2) or an order passed under section 154 or section 155 in respect of such order.

(e)     an order passed by the prescribed authority under section 10(23C)(iv), (v), (vi) and (via). In other words, fund or institution established by charitable purposes having regard to its importance throughout India or any State, trust wholly for public religious purposes and wholly public religious and charitable purposes, or universities and other educational institutions or hospital and medical institutions can now file an appeal to the Tribunal against the order of rejection of the application made for approval of the said institution.

(B) [Section 253(2)]- Principal Commissioner or Commissioner may also direct the A.O. to file an appeal:

The Principal Commissioner or Commissioner may also, if he objects to any order passed by the Commissioner (Appeals) under section 154/250, direct the Assessing Officer to appeal to the Appellate Tribunal against the order.

3.   Procedure for filing appeal to Appellate Tribunal [Section 253(3), (3A) (4), (5) and (6)]

(1) [Section 253(3)]- Time limit for Filing Appeal:

The appeal to the Appellate Tribunal shall be filed within 60 days of the date on which the order sought to be appealed against, is communicated to the assessee or to the CIT. as the case may be.

See also  [Sections 115R to 115T]- Special Provisions relating to Tax on Distributed Income to Unit Holders

(2) [Section 253(4)]- Filing of Cross Objections and Time Limit:

The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Commissioner (Appeals), has been preferred under section 253(1) or section 253(2) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within 30 days of the receipt of the notice, file a memorandum of cross- objections, verified in the prescribed manner, against any part of the order of the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in section 253(3).

(3) [Section 253(5)]- Condonation of delay of time limit:

 The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross objections after the expiry of 60/30 days, if it is satisfied that there was sufficient cause for not presenting it within the specified period.

(4) Prescribed forms and documents to accompany [Section 253(6) and Rule 47J:

The appeal to the Appellate Tribunal shall be in Form No. 36 and memorandum of cross objections in Form No. 36A. The appeal and memorandum etc. are to be filed in triplicate and shall be accompanied by two copies (at least one of which should be a certified copy) of the order appealed against and two copies of the order of the Assessing Officer. Two copies of the grounds of appeal and statement of facts before the first appellate authority are also to be filed. In case the appeal is against an order levying penalty, two copies of the relevant assessment order should also be filed

The appeal against the assessment order passed in pursuance of the directions of the Panel (Dispute Resolution Panel) shall be filed before the Appellate Tribunal in Form No. 36B. (Omitted w.e.f. 1.6.2016)

Signing of appeal [Rule 47]:

Form No. 36, grounds of appeal at the verification should be signed by the person authorized to sign the return of income under section 140.

Fee for filing appeal [Section 253(6)]:

An appeal to the Appellate Tribunal shall be accompanied by a fee of—

(a) Where the total income/loss of the assessee as computed by the Assessing Officer in the case to which the appeal relates is Rs. 1,00,000 or less Rs. 500
(b) Where the total income/loss of the assessee as computed aforesaid is more than Rs. 1,00,000 but does not exceed Rs. 2,00,000 Rs. 1,500
(c) Where it exceeds Rs. 2,00,000 (subject to a maximum of rs. 10,000) 1% of the assessed income
(d) Where the subject matter of the appeal relates to any matter other than specified in clauses (a), (b) and (c) above Rs. 500

However, no such fee shall be payable in case—

(i)         the appeal is filed by the Principal Commissioner or Commissioner, or

(ii)     where the memorandum of cross objections is filed either by the assessee or the department.

4.   Procedure for Filing and Disposal of Stay-Petition

(1) Application for Stay of Demand [Rule 35A(1) of Income Tax Appellate Tribunal Rules, 1963]:

Every application for stay of recovery of demand of tax, interest, penalty, fine, or any other sum shall be presented in triplicate by the applicant in person, or by his duly authorised agent, or sent by registered post to the Registrar or the Assistant Registrar, as the case may be, in respect of which the stay application arises.

Separate applications shall be filed for stay of recovery of demand under different enactments.

(2) Particulars to he mentioned in the application of stay of demand [Rule 35A(2) of Income Tax Appellate Tribunal Rules. 1963]:

Every application shall be neatly typed on one side of the paper and shall be in English and shall set forth concisely the following:—

(i)      short facts regarding the demand of the tax, interest, penalty, fine, or any other sum, recovery of which is sought to be stayed;

(ii)        the result of the appeal filed before the Commissioner (Appeals), if any;

(iii)    the exact amount of tax, interest, penalty, fine, or any other sum demanded, as the case may be, and the amount undisputed therefrom and the amount outstanding.

(iv)       the date of filing the appeal before the Tribunal and its number, if known;

(v)     whether any application for stay was made to the revenue authorities concerned, and if so, the result thereof (copies of correspondence, if any, with the revenue authorities to be attached);

(vi) reasons in brief for seeking stay;

(vii) whether the applicant is prepared to offer security, and if so. in what form;

(viii) prayers to be mentioned clearly and concisely (stating exact amount sought to be stayed);

(ix) the contents of the application shall be supported by an affidavit sworn by the applicant or his duly authorised agent;

(3) [Section 254(7)]- Fee for Filing Application of Stay:

Every application for stay of demand should be accompanied by a fee of 5OO.
An application which does not conform with the above requirements is liable to be summarily rejected.

(4) Order of Stay [First proviso to section 254(2A)]:

 The Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under section 253(1), for a period not exceeding 180 days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order:

However, as per second proviso to section 254(2A). where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed 365 days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed:

Further, as per third proviso to section 254(2A), if such appeal is not so disposed of within the period of 180 days or maximum period of 365 days, as the case may be, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.

5.   [Section 254]- Orders of Appellate Tribunal

(1) [Section 254(1)]- The Appellate Tribunal mar pass such orders thereon as it thinks fit:

The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.

(2) [Section 254(2A)]- Order to be passed within 4 years if possible:

In an appeal filed by the assessee or Assessing Officer, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of 4 years from the end of the financial year in which such appeal is filed under sections 253(1) or (2).

(3) [Section 254(2B)]- Cost of any Appeal:

The cost of any appeal to the Appellate Tribunal shall be at the discretion of that Tribunal.

(4) [Section 254(3)]- Tribunal to send the copy of the order:

The Appellate Tribunal shall send a copy of any orders passed by it to the assessee and to the Principal Commissioner or Commissioner.

(5 [Section 254(4)]-Order passed by Appellate Tribunal shall be final:

The order passed by Appellate Tribunal shall be final unless appeal is made under section 260A.

6.   [Section 254(2)]- Rectification of Mistake by the Tribunal:

The Appellate Tribunal may, at any time within 6 months from the end of the month in which the order was passed, with a view to rectify any mistake apparent from record, amend any order passed by it under section 254(1), and shall make such amendment if the mistake is brought to its notice by the assessee or Assessing Officer.

If the application for rectification is filed by the assessee. it shall be accompanied by a fee of Rs. 50.

An amendment, which has the effect of increasing the tax liability of the assessee. shall be made only after the assessee has been given a reasonable opportunity of being heard.

7.   Revision by the Principal Commissioner or Commissioner under Income Tax Act.

(1). [Section 263]- Revision of orders prejudicial to Revenue:

The Principal Commissioner or Commissioner may call for and examine the record of am proceedings under the Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue. He may pass such orders thereon as the circumstances of the case justify including an order enhancing or modifying the assessment or canceling the assessment and directing a fresh assessment. However, he has to pass an order only after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary.

However, the Principal Commissioner or Commissioner can revise the order passed by the Assessing Officer only if he considers that the order passed is prejudicial to the interests of the revenue.

See also  Value of Taxable Supply of Goods or Services under Chapter IV of CGST Rules (Rules 27 to 35)

For removal of doubts, it is provided that the Principal Commissioner or Commissioner can revise the following orders also:

(a)     an order of assessment made by the Assistant Commissioner/Deputy Commissioner or the Income-tax Officer on the basis of directions issued by Joint Commissioner under section 144A.

(b)     an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of Assessing Officer conferred on him under the orders or directions issued by CBDT or Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by CBDT under section 120.

When will the order of the Assessing Officer be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue?

Since the interpretation of expression “erroneous in so far as it is prejudicial to the interests of the revenue” has been a contentious one, the Finance Act, 2015 has inserted the following Explanation 2 to section 263(1) w.e.f. 1.6.2015 in order to provide clarity on the issue.

Explanation 2.—         For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,—

(a)     the order is passed without making inquiries or verification which should have been made:

(b)        the order is passed allowing any relief without inquiring into the claim;

(c)      the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119: or

(d)     the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.

Time limit for passing the revision order under section 263:

The Commissioner cannot revise the order of the Assessing Officer after the expiiy of 2 years from the end of the financial year in which the order sought to be revised was passed. In computing the period of limitation of 2 years, the following period shall be excluded:

(1)     the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129, and

(2)     any period during which any proceeding under this section is stayed by an order or injunction of any court.

No time limit in the following cases:

An order of revision may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal. National Tax Tribunal, the High Court or the Supreme Court under the Income-tax Act or order of Court under any other law.

Commissioner’s power of revision extends to matters not covered in appeal [Clause (c) of Explanation to section 263]:

Where an order passed by the Assessing Officer has been subject matter of any appeal, it cannot be revised by the Commissioner. However, in respect of such matters which have not been considered and decided in appeal, the Commissioner has powers under section 263 for revision.

(2).  Power of revision involves 4 steps to be taken U/s 263

Step 1:

The Principal Commissioner or Commissioner can call for and examine the records of any proceeding under the Act. For this purpose he does not need to show any reason.

Step 2:

He would see whether the order passed under the Act by the Assessing Officer is erroneous in as much as it is prejudicial to the interest of the revenue. Up to this time, there is no question of the assessee appealing or making any submission.

Step 3:

If after calling for and examining the records, the Principal Commissioner or Commissioner considers that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, then he has to give the assessee an opportunity of being heard. The Principal Commissioner or Commissioner must disclose in his notice to the assessee the grounds on which he desires to revise the order of the Assessing Officer. Further notice to show cause must be served upon the assessee reasonably ahead of the date fixed for hearing.

Step 4:

The Principal Commissioner or Commissioner may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. lie can enhance or modify the assessment. He has also power to cancel the assessment and direct fresh assessment.

(3).  [Section 264]- Revision of orders in favor of Assessee:

Revision of orders not covered by section 263, can be made by the Principal Commissioner or Commissioner either on his own motion or on an application made by the assessee, provided orders have been passed by an authority subordinate to him. The application made by the assessee shall be accompanied by a fee of Rs. 500. The Principal Commissioner or Commissioner may call for the record of any proceeding under this Act on the basis of which such order has been passed and may make such inquiry or cause such inquiry to be made. He may pass such orders thereon as he thinks fit as are not prejudicial to the assessee. The Principal Commissioner or Commissioner, under this section can cancel the assessment and direct the Assessing Officer to make a fresh assessment but such direction shall not be prejudicial to the assessee.

The Principal Commissioner or Commissioner shall not revise any order under this section in the following cases:

(a)     where the order has been made more than one year previously, the Principal Commissioner or Commissioner shall not, on his own motion, revise such an order; or

(b)     where the application for revision by the assessee has been made after one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier.

However if the Principal Commissioner or Commissioner is satisfied that the assessee was prevented by sufficient cause from making the application within the prescribed period he may admit an application made after the expiry of that period.

Example: Assessing Officer has passed an order on 15.11.2018 which was received by the assessee on 19.11.2018. In this case CIT can make a revision order suo moto up to 15.11 .2019 whereas the assessee can file application under section 264 up to 19.11.2019.

(c)      where an appeal against the order lies to the Commissioner (Appeals) but it has not been made and the time within which such appeal may be made has not expired; and the assessee has not waived his right of appeal; or

(d)     where the order has been made the subject of an appeal to the Commissioner (Appeals) i.e. where an appeal has been filed to CIT (Appeal) on any issue relating to such order.

Time limit for passing the revision order under section 264:

On application made by the assessee under this section, the Principal Commissioner or Commissioner shall pass an order within one year from the end of the financial year in which the application is made by the assessee. In computing the period of limitation of one year, the following period shall be excluded:

(1)     the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129, and

(2)     any period during which any proceeding under this section is stayed by an order or injunction of any court.

No time limit in the following case:

However, an order of revision may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, high Court or the Supreme Court.

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