Revision of Income Tax Order

Revision of an Income Tax order is performed when a taxpayer feels that an income tax assessment order forwarded by the assessing officer was unjust or unreasonable. Income Tax orders can also be revised in a manner which causes enhancement of the taxpayer's tax liability. A Principal Commissioner or Commissioner of the Income Tax Department is empowered with the rights to enhance, annul or modify an income tax order if the officer feels that the interests of the revenue are at stake due to the erroneous passing of orders by the Assessing Officer. This article discusses the roles of a Principal Commissioner/Commissioner pertaining to revision of income tax orders.

Income Tax Order Revision

The Principal Commissioner/Commissioner has the powers to revise the following income tax orders:

An order of assessment made by the Assessment Commissioner or Deputy Commissioner or other Income Tax Officer based on the directions issued by the Joint Commissioner.
An order made by the Joint Commissioner in the exercise of the powers or in the performance of the functions of Assessing Officer conferred on him under the orders or directions issued by CBDT/Principal Chief Commissioner/Chief Commissioner/Principal Director/Commissioner authorized by CBDT under Section 120.

Errors in Passing of Orders

The Income-tax Act mentions the circumstances where the Assessing Officer has erred in the passing of orders and the orders can be revised. The circumstances, as explained under this provision, could be any of the following:

Orders passed without making necessary inquiries or verification.
Orders passed allowing any relief without investigating the claim.
The order is not in par with any order, direction or instruction issued by the Board under Section 119.
The order hasn't been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court in the case of the assessee or any other person.

Time Limit for Revision of Income Tax Order

Orders of the Assessment Officer must be revised within a period of two years from the date of the original order. The following periods are to be excluded while computing the period of limitation:

The time which is utilised for giving an opportunity to the assessee to be re-heard.
Any period during which any proceeding under this section is stayed by an order or injunction of any court.

Taxpayers should note that revisionary orders can be passed even after the expiry of two years under certain extraordinary circumstances.

Procedure for Revision of Income Tax Order

The following are some of the major powers enjoyed and aspects considered by the Principal Commissioner or Commissioner while considering a revision of an Income Tax order:

Examination of Records

The Principal Commissioner or Commissioner may call for and examine the records of any proceedings under the Income Tax Act while revising an Income Tax order. He/she need not provide any reason for the same.

Entitled to Revise Parts of Other Order

The Principal Commissioner or Commissioner is entitled to revise other parts of the order which was ignored or taken up by the Assessing Officer.

Errors of Fact/Errors of Law

The Principal Commissioner/Commissioner is by no means restricted in revising the errors. The errors can be revised, be it errors of fact/errors of law.

Opportunity to be Heard

As is the case with many provisions of the Income Tax Act or for that matter the entire realms of taxation, the assessee must be given an opportunity to be heard before the Principal Commissioner or Commissioner goes on to pass the revised order.

Opinion of Subordinates Valued

The order or part of it can be taken for review even if the point of error is pointed out by a sub-ordinate, provided the Principal Commissioner/Commissioner is satisfied with the cause of review.

Approval from an Authority of a Higher Rank

The Principal Commissioner/Commissioner may undertake the review of any order or part of it on the discretion of a higher authority.

When Income Tax Orders Cannot Be Revised

The Principal Commissioner or Commissioner cannot revise an income tax order which is subject to appeal. Also, the Principal Commissioner or Commissioner is restricted from reviewing any orders passed by the High Court, even if the said authority considers it erroneous.