Date Of Decision: 13[Th]November, 2017Paradigm Geophysical Pty. Ltd v. Commissionerofincometax(Internationaltaxation)-3, New Delhi

$~14 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 6052/2017 Date of decision: 13[th]November, 2017PARADIGM GEOPHYSICAL PTY. LTD...... PetitionerThroughMr. Piyush Kaushik, Advocate versus COMMISSIONEROFINCOMETAX(INTERNATIONALTAXATION)-3, NEW DELHI..... RespondentThroughMr. Sanjay Kumar, Standing Counsel CORAM: HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MS. JUSTICE PRATHIBA M. SINGH SANJIV KHANNA, J.(ORAL) Counter affidavit has not been filed despite two opportunities grantedon 19[th]July, 2017 and 12[th]September, 2017.We were inclined to grantfurther opportunity to file counter affidavit subject to imposition of costs,but learned counsel for respondents had stated that the writ petition raiseslegal issues and he is ready and would address the argument. 2.Accordingly, with the consent of the counsel, we have taken up thewrit petition for final hearing and disposal. 3.The Petitioner is a non-resident company and a tax resident ofAustralia. 4.The petitioner in India is engaged in the business of providing anddeveloping software enabled solutions to the oil and gas industry and annual W.P.(C) 6052/2017Page 1 of 9 maintenance services in relation to the solutions supplied by it. 5.For the Assessment Year 2012-13, the petitioner had filed returndeclaring total income of 1,97,16,140/-, inter alia, applying provisions of44BB of Income Tax Act, 1961 (`the Act'). 6.Assessing Officer (AO for short) issued notice for scrutiny assessmentand thereafter issued draft assessment order dated 5[th]March, 2015,proposing to tax the receipts as Royalty/ Fee from Technical Services. Noobjections were filed and consequently the final assessment order dated 11[th]May, 2015 was passed by the AO u/s 144C(3)(b)/143(3) confirming theaddition/ adjustment proposed in the draft Assessment Order. Total Incomeof petitioner for the Assessment Years was computed by applying Section44DA of the Act at Rs. 4,92,90,360/- as against Rs.1,97,16,140/- offered totax by the petitioner by applying provisions of 44BB of the Act. 7.As the petitioner had not filed any objections under Section 144C(2),recourse to sub section 4 of Section 144C was not required. In other words,no directions were passed by the Dispute Resolution Panel (`DRP') inrespect of the draft Assessment Order. 8.The petitioner did not file any appeal against the final assessmentorder dated 11[th]May, 2015 passed by the AO, making the aforestatedaddition. 9.On 1[st]February, 2016, the petitioner filed a Revision Petition underSection 264 of the Act before the Jurisdictional Commissioner of IncomeTax (International Taxation)-3, New Delhi (‘Commissioner’ for short). Theground raised was that the AO had wrongly denied and not applied Section44BB and had incorrectly invoked and applied Section 44DA of the Act. W.P.(C) 6052/2017Page 2 of 9 The petitioner placed reliance on ONGC vs. CIT (2015) 376 ITR 306 (SC)and CBDT Circular no. 1862 on the applicability of section 44BB of theAct. 10.The Commissioner raised certain queries on 20[th]January, 2017. Inresponse, the petitioner clarified that for the Assessment Year 2012-13 theyhad not availed of remedy by way of appeal against the assessment orderand had invoked alternate statutory remedy by way of Revision underSection 264 of the Act. Copy of the additional submissions filed bypetitioner on 20[th]January, 2017 before the Commissioner, has been enclosedas Annexure P4. W.P.(C) 6052/2017Page 2 of 9 The petitioner placed reliance on ONGC vs. CIT (2015) 376 ITR 306 (SC)and CBDT Circular no. 1862 on the applicability of section 44BB of theAct. 10.The Commissioner raised certain queries on 20[th]January, 2017. Inresponse, the petitioner clarified that for the Assessment Year 2012-13 theyhad not availed of remedy by way of appeal against the assessment orderand had invoked alternate statutory remedy by way of Revision underSection 264 of the Act. Copy of the additional submissions filed bypetitioner on 20[th]January, 2017 before the Commissioner, has been enclosedas Annexure P4. 11.The Commissioner, vide the impugned order dated 6[th]March, 2017has declined to interference with the final assessment order primarily on theground that a similar issue had arisen for consideration in other AssessmentYears in which the alternate remedy of appeal was availed by the petitioner.For the Assessment Years 2011-12 and 2013-14, the petitioner had filedappeals before the appellate authority but no appeal was preferred for theAssessment Year 2012-13, the year in question. Hence the Revision Petitionunder section 264 of the Act for the Assessment Year 2012 – 13 was notmaintainable. Paragraphs 6 to 8 of the impugned order are reproducedhereunder:- “6. The application of the assessee, the related contracts andall other material facts provided by the applicant have beencarefully examined and considered w.r.t. the relevant assessmentrecords. It is noted· that the assessments in the case of the assesseefor the A.Ys. 2011-12, 2012-13, 2013-14 and 2014-15 were framedu/s. 143(3) of the Act. In all the given assessments, the income ofthe assessee 'was taxed as Royalty and FTS. The income was brought to tax u/s. 44DA of the Act and not u/s. 44BB. The assesseefiled appeals· against the assessment orders for the A. Y. 2011-12,2013-14 and 2014-15 but did not file any appeal for theassessment year 2012-13, for which the present application u/s. 264has been filed instead. 7. It is further noted that the assessee's appeal for theassessment year 2011-12 has already been disposed of by theCIT(A)-2, Noida vide order dated 03.03.2016. While disposing ofthe assessee's appeal, the CIT(A) has upheld the action of the AO intreating the income earned by the assessee as income from Royaltyand FTS, under the provisions of the Income Tax Act as well underthe relevant DTAA. All the arguments advanced by' the assessee inthe present application u/s 264, were also raised before the CIT(A),which have been duly considered and commented upon by theCIT(A) in his order supra. The assessee's appeals for theassessment years 2013- 14 and 2014-15 are still pending with theCIT(A). 8. A perusal of the relevant assessment records reveals thatthe assessment in the year under consideration has been framed bythe AO in accordance with the relevant · provisions of law. There isnot found to be any wrong application of legal provisions, orviolation of procedure in the assessment proceedings and the finalassessment order that could cause prejudice to the assessee. Theassessee has chosen not to file an appeal against the given·assessment order before the CIT(A) for the reasons best known toit, even when the issues involved in the assessment are absolutelyidentical to those involved in the immediately preceding year aswell as in the immediately succeeding assessment years for whichthe assessee is in appeal The assessee seems to have taken recourseto the provisions of section 264 of the Act as an alternative to thelegal remedy available to the assessee through normal appellatechannel. There is thus a clear attempt on the part of the assessee touse section 264 as a back-door entry to file its appeal on the givenissues.” (emphasis supplied) (emphasis supplied) The Commissioner's reasoning and observation was that the petitioner, forsome unexplained reasons, deliberately did not file an appeal against theassessment order for Assessment Year 2012-13, though it had filed appealsfor other years. He held that this was an attempt to invoke Section 264 of theAct as a backdoor entry to file an appeal. Hence, the Revision petitionshould be dismissed. 12.Having heard the counsels for the petitioner and respondents, we findthat the impugned reasoning cannot be sustained for it is contrary to thelegislative mandate of Section 264 of the Act and the revisionary powerconferred on the Commissioner. Section 264 of the Act empowers thejurisdictional Commissioner to revise any order (other than an order towhich Section 263 applies) passed by an authority subordinate to him, on hisown motion or on an application by the Assessee for revision. TheCommissioner is empowered to call for the record of any proceeding underthe Act in which such an order has been passed and may make such inquiryor cause such inquiry to be made and pass such order thereon, not being anorder prejudicial to the Assessee and subject to the provisions of this Act, ashe thinks fit. Statutory power has been conferred on the Commissioner toexamine and correct any order passed by a subordinate authority. 13.There are restrictions and constraints on exercise of power underSection 264 vide sub-Section 4, which is reproduced below:- (1) to (3) xxx (4) The Commissioner shall not revise any order under thissection in the following cases— (a) where an appeal against the order lies to the DeputyCommissioner (Appeals) or to the Commissioner (Appeals) orto the Appellate Tribunal but has not been made and the timewithin which such appeal may be made has not expired, or, inthe case of an appeal to the Commissioner (Appeals) or] to theAppellate Tribunal, the assessee has not waived his right ofappeal; or (b) where the order is pending on an appeal before the DeputyCommissioner (Appeals); or (c) where the order has been made the subject of an appeal tothe Commissioner (Appeals) or to the Appellate Tribunal.” In terms of Sub-section 4 to Section 264, jurisdiction to revise anorder cannot be exercised under clauses (b) and (c) when the order ispending in an appeal before the Deputy Commissioner (Appeals), or whenthe order has been made the subject of an appeal to the Commissioner(Appeals) or to the Tribunal. Revision is also not maintainable under clause(a) to sub-section 4, when an appeal against the order lies to the DeputyCommissioner (Appeals) or Commissioner (Appeals) or to the Income TaxAppellate Tribunal ("Tribunal") but such appeal has not been filed and thetime within which such appeal may be filed has also not expired. Further,for clause (a) the assessee should not have waived his right to appeal. Threeconditions; non-filing of appeal, time to file appeal had not expired and nonwaiver of right to appeal are cumulative. 14.Thus, a Revision Petition u/s 264 of the Act can be filed against anyorder (including an assessment order) passed by a subordinate officer, whichis otherwise appealable before Commissioner (Appeals) under section 246Aof the Act or under section 253 of the Act before the Tribunal, where suchappeal has not been filed and limitation period for invoking remedy has W.P.(C) 6052/2017 14.Thus, a Revision Petition u/s 264 of the Act can be filed against anyorder (including an assessment order) passed by a subordinate officer, whichis otherwise appealable before Commissioner (Appeals) under section 246Aof the Act or under section 253 of the Act before the Tribunal, where suchappeal has not been filed and limitation period for invoking remedy has W.P.(C) 6052/2017 expired and the assessee has waived his right to appeal. The statutory bar isthat Revision Petition cannot be entertained when an appeal has been filedbefore Commissioner (Appeals) or before the Tribunal in respect of suchorder or if no such appeal has been filed, the time limit for filing such appealhas not expired. Right to file an appeal should be waived for a revisionpetition to be maintainable. The objective and purpose is to ensure that theAssessee does not assail the same order before two forums and that it canelect between either filing an appeal or a revision. The Assessee cannot availof both remedies against the same order for the same Assessment Year. Ifthe time period for filing the appeal has not expired, the revision cannot beentertained – only to ensure that after filing of Revision, the assessee doesnot thereafter file an appeal.Even thereafter, the requirement is that theassessee should have waived his right to appeal. 15.It is not the case of the respondents or the reason given by theCommissioner that time for preferring appeal had not expired. It is theadmitted case that time for filing appeal against the assessment order for AY2012-13 had expired. The assessee had waived his right to file appeal.Clause (a) is therefore not attracted. Clause (b) to Section 264(4) of the Actis also not attracted in the present case and it is not the case of the Revenuethat the petitioner has filed an appeal for 2012-13 before Dy. Commissioner(Appeals). The petitioner has also not filed any appeal against the said orderbefore the Commissioner (Appeals) or the Tribunal to attract the negativestipulation in clause (c) to Section 264 (4) of the Act. The present casetherefore, does not fall under clauses (a) to (c) of Section 264 (4) of the Act. 16.Under the Act, i.e., Income Tax Act, each Assessment Year is W.P.(C) 6052/2017 separate and the assessee files the return for each year and assessment orderis passed. Strict principles of res judicata do not apply, though principle ofconsistency is applied. Commissioner cannot refuse to entertain a revisionpetition filed by the assessee under Section 264 of the Act if it ismaintainable on the ground that a similar issue has arisen for considerationin another year and is pending adjudication in appeal or another forum.Negative stipulations are clearly not attracted.When a statutory right isconferred on an assessee, the same imposes an obligation on the authority.New and extraneous conditions, not mandated and stipulated, expressly orby implication, cannot be imposed to deny recourse to a remedy and right ofthe assessee to have his claim examined on merits. 17.The Jurisdictional Commissioner no doubt is an administrativeauthority to the subordinate officers including assessing officer, neverthelessthe Act has conferred revisionary power on the said Commissioner.Hecannot refuse to exercise the said power because the assessing officer washis subordinate and under his administrative control.The Commissionerwhile exercising power under Section 264 of the Act exercises quasi judicialpowers and he must pass a speaking and a reasoned order.He cannotabdicate his authority on the ground that a similar issue has arisen and issubject matter of appellate proceedings in other years. This would be clearlycontrary to the provisions of Section 264 of the Act. 18.The impugned order no doubt reflects and states that the contention ofthe petitioner was incorrect and merits rejection but it does not assign and giveany reason for the said conclusion. The impugned order cannot be sustained asit does not examine the contention on merits while recording the decision. The W.P.(C) 6052/2017 18.The impugned order no doubt reflects and states that the contention ofthe petitioner was incorrect and merits rejection but it does not assign and giveany reason for the said conclusion. The impugned order cannot be sustained asit does not examine the contention on merits while recording the decision. The W.P.(C) 6052/2017 Commissioner must give and assign reasons for taking a particular view, evenif he accepts the findings and reasons recorded by the assessing officer anddoes not agree with the contention raised by the assessee. This court is,therefore, deprived and is unable to fathom the reasons and ground which werein the mind of the Commissioner. The order of the Commissioner should havecontained reasons for the conclusions arrived at and ought to have dealt withthe issue on merits as required under Section 264 of the Act. 19.Learned counsel for the petitioner has submitted that the petitionerhad filed an appeal for AY 2011-12 on this issue and vide order dated 28[th]April, 2017, the Tribunal has ruled in favour of the Assessee. In thesucceeding AY 2013-14, Commissioner (Appeals) has ruled in its favour. 20.In view of the above, the writ petition is allowed and the impugnedorder dated 6[th]March, 2017 is set aside and quashed.The matter isremanded to the Commissioner to decide the Revision Petition afresh and inaccordance with law. 21.We clarify that we have not expressed any view on merits. In case,the Revision Petition is dismissed, it will be open for the petitioner tochallenge the same in accordance with law. No costs. SANJIV KHANNA, J PRATHIBA M. SINGH, J NOVEMBER 13, 2017 sm/ssn W.P.(C) 6052/2017