Gujarat H.C : Whether the impugned order of the respondent No. 1, under s. 264 of the Income-tax Act, 1961 (IT Act), dt. 26th March, 1992, in respect of asst. yr. 1975-76 to 198182 (7 years), whereby, the revision application of the petitioner-assessee came to be rejected on the ground that it was barred by limitation, is legal, valid or justified or not ?

Counsel Appeared

S.N. Soparkar, for the Petitioner : R.P. Bhatt, for the Respondent

JUDGMENT

J.N. BHATT, J. :

The short, but interesting question which has surfaced in this petition under Art. 226 of the Constitution of India is, as to whether the impugned order of the respondent No. 1, under s. 264 of the Income-tax Act, 1961 (IT Act), dt. 26th March, 1992, in respect of asst. yr. 1975-76 to 198182 (7 years), whereby, the revision application of the petitioner-assessee came to be rejected on the ground that it was barred by limitation, is legal, valid or justified or not ?

2. The petitioner-assessee was working as Development Officer for the Life Insurance Corporation of India and was in receipt of incentive bonus, partly, in order to reimburse the expenditure required to be incurred for procuring business. He raised this issue, for the first time, in the asst. yr. 1982-83, contending that since part of the incentive bonus received is required to be spent for procuring business part of incentive bonus should be exempted under the provisions of IT Act. The contention was accepted by the Asstt. CIT, Jamnagar, whereby, he held that the petitioner is entitled to deduction at 40 per cent of the incentive bonus as expenses. The Tribunal, later on, confirmed it. Prompted by this, the petitioner-assessee filed Revision application on 20th Jan., 1984, before the respondent for asst. yrs. 1975-76 to 1981-82, against the orders under s. 143(3) passed by the ITO, claiming the part of the incentive bonus as permissible expenditure. Since there was delay, as the revision was for past 7 years assessment, the assessee inter alia, contended that the order of the first appellate authority for the asst. yr. 1982-83 came to be recorded on 22nd Dec., 1983 and within a period of one month, the revision came to be filed on 20th Jan., 1984, for the entire block of seven years by invoking the aids of the provisions of s. 264 of the IT Act. It is on this ground, the delay was sought to be condoned.

The respondent CIT, did not find favour with the claim for condonation of delay holding that the decision of the appellant authority for the asst. yr. 1982-83 in favour of the assessee would not give rise to a right to the assessee to have filed belated revision application for 7 years and to claim certain deductions for the incentive bonus given by the LIC. According to him, each assessment year is separate and independent proceedings and each claim has to be taken up within the appropriate time-frame. He, therefore, held that the assessee was not prevented from making a revision application within the stipulated period, and therefore, the revision came to be dismissed on technical ground of barred by limitation.

After having heard the learned advocates appearing for the parties and considering the facts emerging from the record of the present case, it is clear that the respondent, CIT, while determining and deciding the revision under s. 264 of the IT Act had not given an opportunity of hearing. This aspect itself is sufficient to direct the respondent No. 1 to rehear the revision filed by the assessee and to decide it in accordance with law after giving an opportunity of hearing to the petitioner. Obviously, the matter is also not decided on merits. It came to be decided only on the ground of limitation. Since non-hearing of the assessee by the authority strikes at the root of the impugned order, we are left with no alternative but to quash the impugned order. The impugned order is, therefore, required to be quashed. The impugned order dt. 26th March, 1992, as at Annexure A, is quashed and set aside. Obviously, the matter shall go back to him for reconsideration, adjudication and determination, after affording the assessee with an opportunity of hearing. The respondent authority, obviously, shall have to consider the merits of the claims made in the revision in the light of the decision of this Court rendered in CIT vs. Kiranbhai H. Shelat (1998) 147 CTR (Guj) 43 : (1999) 235 ITR 635 (Guj) : TC S58.4483 and objectively, in accordance with law.

In the result, the petition is partly allowed, in the light of the aforesaid observations and directions, leaving the parties to bear their own costs.

[Citation : 247 ITR 828]