Delhi High Court Excludes Time Spent Prosecuting Tax Appeal Before An Authority Without Jurisdiction, Rules Revision Petition Not Time Barred

A Bench of Delhi High Court, consisting of Justices Manmohan and Navin Chawla, excluded the time spent in prosecuting a tax appeal before an authority devoid of jurisdiction in computing the limitation period for filing a revision petition under the Income Tax Act, 1961. The Assessee filed a writ petition before the Delhi High Court challenging the order passed by the Commissioner of Income Tax (International Taxation) (CIT (IT)) dismissing Assessee's Revision Petition under Section 264 of the Income Tax Act, 1961 on the ground of limitation. The Assessee also sought a direction from the court to the CIT (IT) to consider Assessee's Revision Petition on merits after condoning the delay in filing the petition. The counsel for the Assessee submitted that the Assessee's Revision Petition under Section 264 of the Act was arbitrarily dismissed by the CIT (IT) on the ground of limitation. He states that the Assessee filed an appeal under Section 248 of the Act against a March 2018 order passed under Section 195 (2) of the Act, under a bona fide mistake of law that the said order is appealable. The Assessee pursued the appeal until June, 2019 when he came to know that the said appeal is not maintainable as the Assessee had not paid the tax determined in the order. The counsel for the Assessee submitted that, immediately thereafter, the Assessee withdrew the appeal and filed a Revision Petition under Section 264 of the Act in June, 2019. The Assessee states that the impugned order dismissing the Revision Petition of Assessee as time-barred is erroneous since there was sufficient cause for the delay. The counsel for the revenue authorities submits that the reasoning given by the Assessee for seeking condonation of delay in filling the Revision Petition is untenable in law. Section 195 (2) of the Act provides than where a person responsible for paying any sum chargeable under the Act, other than salary, to a non-resident considers that the whole of such sum would not be chargeable to Income, he may make an application to the Assessing Officer to determine the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted only on that proportion of the sum which is so chargeable. Section 248 of the Act provides that where under an agreement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person paying the income, and such person claims that no tax was required to be deducted on such income, he may appeal to the Commissioner of Income Tax (Appeals) for a declaration that no tax was deductible on such income, provided he had already paid such tax to the credit of the Central Government. Also, Section 264 (3) provides that an application for revision filed by the assessee against the specified order passed under the Act must be made within one year from the date on which the order was communicated to the assessee or the date on which he otherwise came to know of it, whichever is earlier. The court held that given the facts of the present case, the Assessee was entitled to exclusion of time spent in bona fide prosecution before a court without jurisdiction, in view of Section 14 of the Limitation Act, 1963. "In the opinion of this Court, Section 14 of the Limitation Act, 1963 is attracted to the facts of the present case and the Petitioner is entitled to exclusion of time spent in prosecuting the proceeding bona fide in a court without jurisdiction". The court observed that if the time spent by the Assessee in prosecuting the appeal under Section 248 of the Act is excluded, then the Revision Petition filed under Section 264 would be within the limitation period. The court, allowing the writ petition, remanded the matter to the CIT (IT) to decide the Assessee's Revision Petition on merits in accordance with the law. Case Title: KLJ Organic Ltd. Versus Commissioner Of Income Tax (International Taxation)-2Citation: 2022 LiveLaw (Del) 150 Click Here To Read/Download Order

Delhi High Court Excludes Time Spent Prosecuting Tax Appeal Before An Authority Without Jurisdiction, Rules Revision Petition Not Time Barred

Parina Katyal

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