Time spent in appeal filed with bona fide mistake to be excluded for computing limitation period for sec. 264 revision: HC

Case details: KLJ Organic Ltd. v. CIT - [2022] 136 taxmann.com 353 (Delhi)

Judiciary and Counsel Details

• • Manmohan and Navin Chawla, JJ.
  • Gaurav Jain, Ms. Akshita Goyal, and Shubham Gupta, Advs. for the Petitioner. 
  • Sanjay Kumar, Adv. for the Respondent.

Facts of the Case

The assessee filed a revision petition filed under section 264. The Commissioner of Income-tax rejected said petition on the ground of limitation. The assessee filed the writ petition seeking a direction for the Commissioner of the Income-tax (CIT) to consider the revision petition under section 264.

Assessee contended that it was under bonafide mistake of law and relying upon previous orders passed on the same issue, filed an appeal under section 248 under the belief that order passed by AO was appealable.

Later assessee came to know that the said appeal was not maintainable as it had not paid the tax determined in the order passed under section 195(2). Thus, it withdrew the appeal without wasting any time and filed a review petition under section 264. However, the CIT dismissed the revision petition on the ground of limitation.

High Court Held

The Delhi High Court held that the assessee, under bonafide belief, filed an appeal which was not maintainable as the tax required to be paid wasn’t deposited. Thus, Section 14 of the Limitation Act, 1963 is attracted, and the assessee is entitled to the exclusion of time spent in prosecuting the proceeding bona fide in a court without jurisdiction.

Accordingly, the time spent by the assessee in prosecuting the appeal under section 248 was to be excluded; thus, the revision petition filed under section 264 would be within time.