M/s DRS Logistics Private Limited v. 1. The Principal Commissioner of lncome Tax - 2

Counsel for the Petitioner : SRI A.V.A.SIVA KARTIKEYA. Counsel for the Respondents: Ms.J.SUNITHA (JUNIOR SC FOR INCOME TAX) The Court made the following: ORDER TIIE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI.'USTICE NARSIITG RAO NAITDIKONDA WRIT PETITIOIT IiIO.1491O OF 2025 ORDER&er fo n'b'lz srt Jttstlce l{arslng fcoLo'tlortlrdtkonda) This Writ Petition, under Arlicle 226 of the Constitution of India, is frled seeking the following relief: "to issue a Writ of Mandamus or any other approp.iat€ Writ, Order or Direction, declaring (al the order passed by the l"t respond€nt under Section 264 ol the Income Tax Act, 1961, d,ated 22.01-2025, vide DIN No.ITBA/REV/F/REV-7 120.24-2511072430712 (11, for the Assessment Year 2005-2006; &(bl the order passed by tlre 2drespondent, dated 28-10.2013 u/s 154 of tlrc Income Tax Act, 1961, vide DIN No.AAACD7r82K/ AC[T-I(2\/2O13-14, for the Assessment Year 2@5-06, as arbitrary, illegat, bad in [aw, void-ab- initio, violative of the principles of latural justice, apart from being violative of Arti,cles 14, I9(l) (g) and 265 of t].e Constitution of lodia and co[sequently to set aside t]re same in t]re interest ofjustice, after directing the respondents to issue refund in an amount of Rs.3,98,64, 1 02, along with applicable interest..."

2. The petitioner is a private limited company, engaged in the business of providing transport and logistic seryices. It is stated that for the Assessment Year 20A5-20o6, ttre petitioner-company filed income tax returns under Section 139 (1) of the Income Tax Act, 1961 (for short, 'ttle Aet, 1961J declaring tlre incorne of Rs.l,06,8l'1481'and the same was processed under Section 143 (1) of the Act, 1!)61 uid-e intirnatton, dated L4.O7.2OO6. It is further stated that 2 PSru & NNR! I wP-119t0_m25 the petitioner was selected for a .complete scrutiny, ald a notice under Section l4S (2) of the Act, 1961 was issued and thereafter, an Assessment Order, dated, 27.72.2007 was passed by the jurisdictional Assessing Offrce - under Section 143 (3) of the Act, 1961, making add.itions on account of bad debts and miscellaneous expenses.

3. During the course of scrutiny, the Assessing Oflicer sought clarifrcation uLd.e notlce in Ref.No.F.No.D- 92/ ACIT-L{2\/2005-2006, dated tO.Ot.2OoT from the petitioner-company on TDS and depreciatj on issues, for which the petitioner furnished explanation. Further, on

30.12.2OO8, a survey was conducted at business premises of the petitioner to veri.S as to the adherence of TDS provisions ard issued proceedings under the relwant IDS provisions i.e., under Section 2Ot (1) I 2Ot (tA) of the Act, 196 1 and subsequently, the petitioner was served with a notice, dated

22.O2"2OLO r:nder Section 148 of the Act, 196[ for the Assessment Year 2005-2006 and TDS pr< ceedings were concluded and an order, dated t2.O4.2OlO was passed under Section 2Ol (ll/2Ot (1A) of the

961. 3 PSKI & NNR) wP_71970-2025

4. It is further stated that the said order does not contain any shortcomings in deduction of tax at source and in terms of the said order, only interest on some delays was raised and no addition or demand was raised on account of non-deduction of tax at sou-rce. Further, on 29.12-2OLO, respondent No.2 cornpleted the Assessment under Section 143 (3) read with l4T of the Act, 1961 and respondent No.2 made addition only on account of charity expenses. The contention of the petitioner is that lorry hire & vehicte hire charges were agreed by respondent No.2 and accordingly, proposal' was dropped. While the matter stood thus, tlle peliti,oner received a letter, dated 24,05,2012 calling for clarifrcation with regard to the same issue which was ttre subject matter of reassessment proceedings, wherein it was alleged that on ttre aggregate arnount of the hire charges cLaimed, the petitioner did not deduct the tax at source, the respondents have claimed depreciati on @)Oo/" to a tune of Rs.23,38,0O0/- which is not proper. In response to the said ietter, tlhe petitioner gave reply on 05.06.2012. Further, a notice, dated 07.03.2013 was issued by respondent No.2 for ttre impugned Assessment Year on the basis of (a) original assessment order specifrcally the TDS survey, reassessment 4 PSKJ & NNRJ wP_11970_2025 proceedings and clarification proceedings. ltde letter, dated 14,O3-2O13, the petitioner has submitted rep y reiterating the submissions made in the earlier set of procee iings and stated that the pr:ovisions of Section 154 of tJle Act, 1961 are not applicable to the given facts and circumstance s of the case.

5. It is further stated that on 2g.lO.2)13, respondent No.2 passed an order under Section 154 o the Act, 1961 holding that respondent No.2 ought to have c educted the tax at source on amo-dnt of Rs.T,TZ,26,2lZ l- fro:n the petitioner pertaining to the 'hire charges.' Since tax has not been deducted, respondent No.2 had made an addition under Section aO (a)(ia) of the Act, 1961 and he also concluded that the petitioner is not entitled to depreciation of Rs.23,3 8,OOO / _ as the vehicles were purchased on 31.03.2005

6. Against the said rectification ploceedings, the petitioner flrled reminder applications, da. ed 25.11.2O3, 26.12.2017. 25.06.201A for rectificaticrn of, the said order. In spite of repeated follow ups, as no orders Ere passed, the petitioner filed an application, dated 04.. 0.2O24 under Section 264 of the Act, 1961 before respondelrt No.l seeking revision of the order, dated 2g. lO.2Ol3 passec under Section 5 PSKJ & NNRI wP t4970 2025 154 of the Act, 1961. In the said petition, the petitioner stated the petitioner-company had a good ground and reason for not resorLing to revisionar5z jurisdiction of respondents under Sectior 264 of ttre Act, 1961, for the reason that the petitioner regularly filed reminders for deciding Section 154 petition, as such delay occr:rred in fi1ing petition under Section 164. It is also stated that without going into the merits of the case, the respondents have rejected the case of the petitioner on ttre ground of delay, which made the petitioner to approach this Court invoking the provisions under Article 226 of il'rc Constitution of India.

7. The respondents flled counter-aflidavit denying the averments made in the petition, wherein it was contended that respondents in the absence of satisfactory explalation in view of the required clarifications, the Assessing Officer passed an order under Section 154 on 28.10.2013 thereby adding an amount of Rs.7,77,26,217 /- under Section 40 (a)(ia) of the Act, 1961 towards hire charges on which TDS was not deducted and Rs.23,38,OOO/- towards depreciation claimed on vehicles purchased on 31.O3.2025. It is further stated that the reetification order under Section 154 has been> ) J 6 PSK] & NNRJ wP-14910_?,25 passed on:28.10.2013 after considering the relevant facts and records in conformit5r with the prineiples of nzitural justiee. It is further stated on the ground tl.at the asr,essee itself has stated tlrat rectifrcation applications weie filert on 2S.lL.2Ol3 with reminders orr 26.L2.2O12, 25.06.2018 rrrld 2g.OA.2Olg and therefore, the assessee was well aware oI the order, dated

28.10.2013. [t is further stated that t]rere ir; no reasonable cause made by the petitioner in not alrproaching the respondents earlier, as such the petitioner friled to furnish any satisfactory reason for delay in frlin g the revision application and on ttre said ground of tec hnicalities, the revision application liled by the petitioner unrler Section 264 of the Act, I 961 was rejected. a. It is further stated that as per provision (3) of Section 264 of the Act, 1961, it within one ye€-r from the date on which the order in question was commrrnicated to the petitioner or the date of on which he cam<: to know, the petitioner had to file an application for revisior: . However, the assessee has frled the application for rer.ision only on

04.O7.2024, i.e., after a delay of almost 11 yea:s. It is further stated that the provision under Section 1S4 ol the Act, 1961 7 PSK.! & NNR.I wP_14910_2025 provides a limited and specific remedy for rectifying apparent mistakes which are patent, obvious and not debatable and the impugned rectifrcation order was passed strictly in accordance wit-Il law based on the records available. The rectification was necessitated due to a clear and apparent misiake which fell within the scope of Section 154 of t]te Act, 1961 which reads as follows; (1) Due opporlunity was either provided or not as statutorily required in tJre specific factual matrix; (2) The action taken was purely administrative and corrective, not discretionar5l or punitive.

9. Heard Sri A.V.A.Siva KarLikeya, learned counsel for the petitioner and Smt. J. Sunitha, learned Senior Standing Counsel for Income Tax Department appearing for the respondents.

10. karned counsel for the petitioner contended that rejection of application filed by the petitioner under Section 264 of the Act, 1961 is purely on the ground of delay vrithout there being any whisper in the order of respondent No.1 in respect of merits of tl.e case. He further argued that the petitioner has filed rectilication application against the order passed under Section 154 of the Act, 1961 with rerninders on ) --4J f 8 PSKI & NNRI wP_119fi_m25

25.11.2013, 26.12.2OL7, 25.O6.2Ota and :19.08.2018 and without considering the pending applicatio es Iiled by the petitioner under Section 154 of the Act, l')61 ttrough tJle sarne were rigorously followed up by the petitioner by making personal visits and sending reminders and ex eibiting that the application liled by the petitioner in respect of the rectification should be decided finally.

11. We find that there is suJficien t force in the contentions raised by learned counsel for ti Le petitioner for the reason that there is no denial by the rer;pondents as to filing of rectifrcation application by the petitioner on

25.L1.2O13 and also there is no denial in resp:ct of reminders submitted by the petitioner on 26.L2.2OL7, 25.06.2018 and

29.O8.2OI8, which is also very much reflected in the counter- afEdavit frled by respondents at paragraph No.7 of page No.4, which reads as follows: "It is submitted that ttre rectification order u/s.154 of the Act has been passed on 28.10.2013 in accord.ance with the pr ovisions of the Income I'ax Act, 1961 alrd after considering the rele sant facts and records and in conformigr with the principles of n atural justice. However, the assessee has filed the applicatior for revision application ls 264 only on 04.07.204, i.e., after a c elay of almost 11 years. The assessee itself has stated that rectification applications were frled by it on 25.11.2Ot3,26.12.2C j T, 2S.O6.2OLa 9 wP_14970_48 and 29.08.2018 which shows ttrat assessee was well aware of the order dated 2a.LO-2O13 being passed."

12. But, learned Standing Counsel for the respondents vehemently argued and contended that as the Petitioner was having knowledge about passing of the said order under Section 154 of the Act, 1961 and as he did not choose to make an application within one year from the date of the said order, therefore, she is supporling the order passed by the respondents that the petitioner has approached tl.e respondents after 1 1 years from the date of passing of the said order.

13. Though it is an admitted fact that the applications filed by the petitioner are still pending as on this date without passing any orders, obviously in such case, non liling of appeal under Section 264 by ttre petitioner herein pending ) rectifrcation applications cannot be found fault with' as ttre ) ) petitioner was hopeful of his rectification applications would be decided same day. ,{s such, t}re reasons cited by the petitioner for not invoking Section 264 wete justifred and dismissal of the applications by the respondents is liable to be set aside. Therefore, it is a frt case to remand the matter back 10 PSK] A NNFU . wP_tu910_mE to the respondents to decide the applications filed by tl.e petitioner in respect of the rectifrcation.

14. Accordingly, the Writ petition is allowed setting aside the order, dated 22.OI.2025 passed by respondent No.1 vide DIN No.ITBA/REV lF /RE:V-Z 12024-25/ 1oT24sOZ L2 {L) and order, dated 28.10.2013, passed by respondent No.2 vide DIN No.AAACDTL82KIACtT-t(2)I2OL3-14 anrt ttre matter is remarrded back to the respondents for freslr consideration after hearing both parties and giving opporturr ty of hearing to all and thereafter pass appropriate order, in a ccordalce with law. There shalt be no order as to costs. Miscellaneous petitions, if any, pendirrg shall stand closed. sD/- Afll,lED ABDULI-A KHAN ./ /Ast;tSTANT REGTSTRAR ,\ \' \ I $ecnoloFFlcER 1. The Principal commissioner of rncome Tax - Y, Hvderabad. sionature -O"ppoiit" foy"F, .Sl. \o.. 6(P) of Kondapur, Sy. No.. 37(p) cf Xotraguai. Botanical Gardens. serilingampaily tvtandal, Rangh ReJdy Dist"rict, Hyd'erabad - 500 084, Telangana. /ffRUE COPY// ro,

2. The Assistant Commissioner of lncome Tax, Ci cle 1(2), Hyderabad, Signature Towers. Sy. No. 6(p) of Kondapur, Sy. Nc . 37(p) of k6itriouOa. pooosite Botanical Gardens.'s6rilingampdlly Mahda,, Ranla' Reddy OiEiict, Hyderabad - 500 084, Telangana.

3. One CC to SRI A.V.A.S|VA KART|KEYA, Advocate. tOpUCl 4. One CC to Ms.J.SUNITHA, SC for lncome Tax Departrrent. [OPUC] 5. Two CD Copies. BSK .D .=,o r i ,/, HIGH COURT DATED:1010712025 ORDER WP.No.14910 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS q