YOUNG MEN CHRISTIAN ASSOCIATION vs. CENTRALIZED PROCESSING CENTRE

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WP(C)/14021/2019HC KeralaKLHC01034851201912 June 2019Bench: HONOURABLE MR.JUSTICE S.V.BHATTI6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala held that the view taken by the first respondent (CPC) in Exhibit P8, stating that it lacked jurisdiction to entertain the revision petition under Section 264 of the Income Tax Act, 1961, was unsustainable. The learned Standing Counsel for the Income Tax Department conceded this point. Consequently, the High Court set aside the order in Exhibit P8. The matter was remitted back to the first respondent (CPC) for consideration and disposal of the petitioner's request under Section 264 within eight weeks from the date of receipt of a copy of the judgment. The writ petition was disposed of accordingly.

What were the facts?

The petitioner, Young Men Christian Association (YMCA), filed an income tax return for assessment year 2014-15, which was admitted to be defective. While rectifying the defects, the petitioner omitted to mention the aggregate income in the revised return. Consequently, the Assessing Officer raised a demand based on the incomplete return. The petitioner then filed a request for rectification under Section 264 of the Income Tax Act before the Centralized Processing Centre (CPC), which was rejected by the CPC via Exhibit P8. The CPC's reasoning was that it could not revise an order passed by itself, and Section 264 only allows revision of orders passed by subordinate authorities. The petitioner then filed a writ petition before the High Court of Kerala challenging Exhibit P8.

What were the issues?

1. Whether the Centralized Processing Centre (CPC) has the jurisdiction to entertain a revision petition under Section 264 of the Income Tax Act, 1961, when the original order being challenged was processed by the CPC itself? Assessee's Contention: The petitioner implicitly argues that the CPC's rejection of their Section 264 application was incorrect and that their request for rectification should have been considered. They sought to quash the order of rejection (Exhibit P8). Revenue's Contention: The learned Standing Counsel for the Income Tax Department fairly conceded that the observation in Exhibit P8, holding that the CPC lacks jurisdiction to entertain the revision under Section 264, is unsustainable. He stated that the CPC has the authority to act on the petitioner's request in accordance with the law.

Which sections of the Income-tax Act were involved?

Section 264,Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI WEDNESDAY, THE 12TH DAY OF JUNE 2019 / 22ND JYAISHTA, 1941 WP(C).No. 14021 of 2019 PETITIONER/S: YOUNG MEN CHRISTIAN ASSOCIATION YMCA BUILDINGS, GPO, NEAR SECRETARIAT, TRIVANDRUM- 695001, REPRESENTED BY ITS GENERAL SECRETARY MR. SHAJI JAMES. BY ADVS. SRI.ANIL D. NAIR SHRI.GOKULRAJ L. SMT. ARYA ANIL SRI.R.SREEJITH RESPONDENT/S: 1 CENTRALIZED PROCESSING CENTRE INCOME TAX DEPARTMENT, POST BAG NO.2, ELECTRONIC CITY POST OFFICE, BANGALORE-560100. 2 COMMISSIONER OF INCOME TAX (EXEMPTION), 2ND FLOOR, SAN JUAN TOWERS, OLD RAILWAY STATION ROAD, COCHIN-682018. 3 THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION) TRIVANDRUM-695003. OTHER PRESENT: SC SRI. CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.06.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No. 14021/2019 -2- J U D G M E N T Heard Sri Anil D Nair, the petitioner's Counsel and Sri Christopher Abraham, the learned Standing Counsel for the Income Tax Department. 2. The petitioner prays for the following reliefs: “(a) Call for the records leading to issuance of Exhibit P8 and quash the same by issuing a writ of certiorari; (b) Pending hearing and final disposal of this Writ Petition, this Hon'ble Court be pleased to grant stay of recovery of tax due under Exhibit P4. (c) Issue such other and further reliefs as this Hon'ble Court may deem fit and proper in the interest of justice.” 3. Briefly stated, the case of the petitioner is that the petitioner filed income tax return for the assessment year 2014- 15 and it is admitted that the return filed is defective. The petitioner attended to the defects in the return and in the process of correcting the defects in the return, aggregation of

W.P.(C) No. 14021/2019 -3- income was omitted from mentioning in the revised return. The petitioner since has not disclosed the aggregate income, the Assessing Officer raised a demand by referring to the incomplete return. The petitioner therefore was advised to file a request for rectification of the return before the first respondent. The request is made under Section 264 of the Income Tax Act and request resulted in Ext.P8. The operative portion of Ext.P8 order reads thus: “5. I have carefully examined the submission of the assessee. I have also gone through the report of the assessing officer. On verification of the facts and circumstances of the case, it is seen that in this case the return of income e-filed by the assessee was processed u/s.143(1) by the CPC and assessee's application for rectification u/s.154 was also rejected by CPC. The assessee has filed its petition u/s.264 since the date of filing appeal was over. As per Section 264 the Principal Commissioner or the Commissioner can only revise any order passed by an authority subordinate to him. However, in this case the order u/s 154 was passed by the CPC and therefore it cannot

W.P.(C) No. 14021/2019 -4- be interfered with. Therefore, the application for revision u/s 264 cannot be admitted.” (emphasis added) Hence the writ petition. 4. The first respondent in effect is of the view that the assessment orders since were passed by the Centralized Processing Centre the application now made by the petitioner/ assessee for revision under Section 264 cannot be maintained in law. 5. Sri. Christopher Abraham, the learned Standing Counsel, having regard to the scheme under Sections 143(1), 154 and 264 of the Income Tax Act fairly states that the observation or the view as held in Ext.P8 is unsustainable and the first respondent has jurisdiction and authority to do the needful on the request of petitioner in accordance with law. The respondents have received notices and have not filed counter affidavit. The statement of Sri Christopher Abraham is placed on record and

W.P.(C) No. 14021/2019 -5- accepted. 6. The order in Ext.P8 is accordingly set aside and matter remitted to first respondent for consideration and disposal under Section 264 within eight weeks from the date of receipt of a copy of this judgment. The writ petition disposed of accordingly. Sd/- S.V.BHATTI JUDGE jjj

W.P.(C) No. 14021/2019 -6- APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE INCOME TAX RETURN DATED 29.09.2014. EXHIBIT P2 TRUE COPY OF THE DEFECT NOTICE DATED 19.08.2015. EXHIBIT P3 TRUE COPY OF THE RETURN CURING THE DEFECTS. EXHIBIT P4 TRUE COPY OF THE ORDER DATED 14.03.2016. EXHIBIT P5 TRUE COPY OF THE RECTIFICATION RECEIPT DATED 28.04.2016. EXHIBIT P6 TRUE COPY OF THE ORDER DATED 02.06.2016. EXHIBIT P7 TRUE COPY OF THE REVISION PETITION FILED BEFORE THE 2ND RESPONDENT. EXHIBIT P8 TRUE COPY OF THE ORDER DATED 29.03.2019.

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