J.P. Devadhar, J.
1. By this petition, the petitioner challenges the order of the Commissioner of Income-tax, passed under Section 264 of the Income-tax Act, 1961 (for short 'the I. T. Act'). By the said order, the Commissioner of Income-tax has dismissed the revision application filed by the assessee both on the ground of maintainability as well as on the merits.
2. We propose to take up the issue of maintainability of the revision petition first.
3. For the assessment year 1996-97, the return of income was filed on October 30, 1996, disclosing capital gains at Rs. 4,78,19,737 by taking the book value as the cost of acquisition of the asset at Rs. 31,50,000. A revised computation of income was filed and on January 12, 1999, assessment order was passed accepting the revised computation of income.
4. Being aggrieved by the aforesaid order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), inter alia, raising a plea that the assessee is entitled to substitute the book value of asset by the indexed value of the asset as per Section 48 of the Income-tax Act and the Assessing Officer was wrong in rejecting the claim of the petitioner. In response to an intimation regarding short payment of tax on the income returned by the assessee, it was submitted that by a letter dated January 11, 1999, the assessee had requested the Assessing Officer to allow it to substitute the value of the property as on April 1, 1981, as per Section 55(2)(b)(i) of the Income-tax Act. It was submitted that if the value of the asset as on April 1, 1981, was taken there would be no shortfall in payment of tax. The Commissioner of Income-tax (Appeals) held that there was nothing to show that the letter dated January 11, 1999, was filed before the Assessing Officer. However, the Commissioner of Income-tax (Appeals) held that in the absence of revision or modification of the return filed on October 30, 1996, the assessee was liable to pay tax as processed on the basis of the return. It was held that since the tax was not paid as required under Section 249(4) of the Income-tax Act, the appeal cannot be admitted and, accordingly, dismissed it being not maintainable.
5. Thereupon the assessee filed a revision petition before the Commissioner of Income-tax under Section 264 of the Income-tax Act seeking substitution of the book value by the indexed cost of acquisition of the asset as per the letter dated January 11, 1999, which the Assessing Officer failed to take into account. In the revision petition, the assessee had also sought deletion of interest levied. As stated hereinabove, the Commissioner of Income-tax dismissed the revision petition both on the ground of maintainability as well as on merits.
6. There can be no dispute that the assessee is entitled to substitute the cost of acquisition of an asset from book value to indexed cost of acquisition. In the instant case, the issue as to whether the Commissioner of Income-tax was justified in rejecting the revision petition on the merits would arise only if the assessee is able to overcome the hurdle of maintainability of the revision petition. Therefore, the crux of the problem in the instant case is having raised the issue of substituting the cost of acquisition of the asset from the book value to the indexed cost of acquisition before the Commissioner of Income-tax (Appeals), whether the assessee is entitled to file a revision petition under Section 264 of the Income-tax Act raising the very same plea merely because the appeal has been dismissed by the Commissioner of Income-tax (Appeals) even before admission for non-compliance with Section 249(4)(a) of the Income-tax Act
7. Mr. Pandit, learned counsel for the petitioner, contended that since the appeal has been dismissed even before it is admitted for non-compliance with Section 249(4)(a), there was no effective appeal before the Commissioner of Income-tax (Appeals) and, hence, the revision petition under Section 264 was competent. Mr. Pandit relied upon CIT v. Travancore Tea Estates Co. Ltd. : [1988]172ITR733(Ker) ; Jagmohandas Gokaldas v. CWT : [1963]50ITR578(Bom) ; [1965] 56 ITR 349; Warner Lambert Co. v. CIT : [1994]205ITR395(Bom) ; Chiranjilal Daga v. CIT : [1978]113ITR363(Mad) ; CIT v. Sakseria Cotton Mills Ltd., : [1980]124ITR570(Bom) and CIT v. S. Ratnam Pillai [1991] 188 ITR 494 (Ker) and contended that where the appeal was withdrawn or was not maintainable or dismissed as time barred, there being no effective disposal of the appeal, the revision under Section 264 of the Income-tax Act was maintainable. It was submitted that there was no adjudication of the issues before the Commissioner of Income-tax (Appeals) and if the revision is held not maintainable, then the petitioner will be without any remedy. It was submitted that when the appeal was not admitted as not maintainable, the revision was maintainable.
8. Mr. Jetley, learned counsel for the Revenue, on the other hand, contended that the issue is concluded by the decision of the apex court in the case of Hindustan Aeronautics Ltd. v. CIT : [2000]243ITR808(SC) in favour of the Revenue. Mr. Jetley relied upon the judgment of the Madras High Court in the case of Kadri Mills (Coimbatore) Ltd. v. CIT : [2000]243ITR861(Mad) and submitted that the assessee has an option to choose the remedy of pursuing an appeal under Section 246 or perusing the remedy of revision petition under Section 264 in respect of the issues arising out of the assessment order or otherwise. It was submitted that once the remedy of appeal was chosen, it was open for the assessee to seek remedy on all issues in the appeal and whether all issues were raised before the Assessing Officer or not, in view of the specific bar contained in Section 264(4)(a), once the remedy of appeal was chosen, the jurisdiction of the Commissioner of Income-tax under Section 264 was ousted.
9. After hearing learned counsel on both sides and considering the facts on record, we are of the opinion that the contention raised on behalf of the Revenue deserves to be accepted.
10. Under Sections 246 and 246A of the Income-tax Act, the right to file an appeal is conferred on any assessee aggrieved by such orders as more specifically set out in those provisions. Apart from the right of appeal under Section 246, the assessee has a supplemental remedy of revision under Section 264 of the Income-tax Act. Thus, the assessee has the choice of seeking remedy under Section 246 or under Section 264. However, Section 264(4)(c) provides that the Commissioner shall not revise any order which has been made the subject-matter of an appeal. In the instant case, the assessment order was the subject-matter of an appeal before the Commissioner of Income-tax (Appeals), but the same was not admitted and was dismissed at the threshold for non-compliance with Section 249(4)(a) where it is mandatory on the part of the assessee to pay the tax due on the income returned by him.
11. Mr. Pandit, relying upon the decision of the Kerala High Court in the case of C.C. Jayaram v. CIT : [1994]207ITR662(Ker) , contended that refusal to entertain the appeal on the ground that the assessee failed to pay the admitted tax cannot render the order sought to be revised, covered under Section 264(4)(c) of the Income-tax Act. In other words, it was submitted that an order can be said to be the 'subject-matter of an appeal' within the meaning of Section 264(4)(c) only if the appeal was considered and disposed of on the merits. Mr. Pandit brought to our notice that the decision of the Kerala High Court was, inter alia, based upon the decision of the apex court in the case of Board of Revenue v. Raj Brothers Agencies : [1973]3SCR492 , where the identical expression 'the order made subject of an appeal' was construed by the apex court to mean 'subject of an effective appeal'. Mr. Pandit contended that in the instant case, since the appeal was dismissed even before it was admitted, in effect there was no appeal at all and hence the revision under Section 264 was maintainable.
12. In our view, the decision of the Kerala High Court, with respect, does not lay down the correct interpretation of law. As held by the Madras High Court in the case of Kadri Mills (Coimbatore) Ltd. v. CIT : [2000]243ITR861(Mad) , once the assessee has chosen the remedy of appeal, there is a bar under Section 264(4)(c) of the Act to file a revision petition. In the instant case, the assessee did choose to file an appeal against the order of assessment. Moreover, the plea of substitution of indexed cost of acquisition was specifically raised and the Commissioner of Income-tax (Appeals) in his order specifically dealt with that issue and held that the assessee was liable to pay tax due on the income returned by him and not on the basis of the substituted indexed cost of acquisition. Therefore, the order of assessment being the subject-matter of an appeal before the Commissioner of Income-tax (Appeals), the revision petition under Section 264 was clearly barred under Section 264(4)(c) of the Income-tax Act.
13. In our view, the decision of the Kerala High Court referred to hereinabove, runs counter to the decisions of the Supreme Court reported in Mela Ram and Sons v. CIT : [1956]29ITR607(SC) and Hindustan Aeronautics Ltd, v. CIT : [2000]243ITR808(SC) . The apex court in the case of Mela Ram and Sons v. CIT : [1956]29ITR607(SC) while dealing with Section 30(2) of the Indian Income-tax Act, 1922 (similar to Section 249(2) of the Income-tax Act, 1961), held that the dismissal of an appeal as time barred is an order passed in the appeal and hence, an appeal lies from that order to the Appellate Tribunal. It was clearly held by the Supreme Court in that case, that it makes no difference whether the order of dismissal is made before or after the appeal is admitted,
14. Applying the aforesaid ratio to the facts of the present case, even if the appeal was dismissed before it was admitted, the remedy available to the assessee was to file a further appeal to the Tribunal and not to file a revision petition under Section 264 of the Income-tax Act. Once the remedy of appeal was chosen, the only way open to the assessee was to proceed on the same path by availing of the further remedy of appeal before the Tribunal. As soon as the remedy of appeal was chosen and the appeal was filed, the remedy of revision was shut once and for all.
15. The Supreme Court in the case of Hindustan Aeronautics Ltd. v. CIT : [2000]243ITR808(SC) , has clearly held that the Commissioner of Income-tax has no power to revise any order under Section 264 of the Income-tax Act, if the order has been made subject to an appeal, even if the relief claimed in the revision is different from the relief claimed in the appeal and irrespective of the fact whether the appeal is by the assessee or by the Department. The Supreme Court clearly brought out the distinction between the revision powers of the Commissioner of Income-tax under Sections 263 and 264 of the Income-tax Act. It was clearly held that under Section 263, the Legislature intended that the scope of the revision should extend to a part of the order which had not been considered and decided in an appeal and accordingly made suitable amendment to Explanation (c) to Section 263. It was held that when the Legislature does not make such distinction and provides that once the remedy of appeal is chosen, the remedy of revision is barred, it is not open to the asses-see to seek recourse to the revision after the appeal is dismissed.
16. In the light of the aforesaid decision of the Supreme Court, it is not necessary for us to deal with the various decisions cited on behalf of the assessee. Although the decision of the Supreme Court in the case of Board of Revenue v. Raj Brothers Agencies : [1973]3SCR492 , on an analogy supports the contention of the assessee, the same is distinguishable, firstly, on account of it being a matter pertaining to the Madras General Sales Tax and, secondly, in that case, there was a decision of the Madras High Court which was followed for several years and the Supreme Court did not want to disturb the settled position in law.
17. In the instant case, the petitioner did argue before the Commissioner of Income-tax (Appeals), regarding the applicability of Section 249(4) and tried to make out a case on the merits that he was entitled under Section 48 read with Section 55(2)(b)(i) of the Income-tax Act, 1961, to substitute the value of the asset as on April 1, 1981, and, hence, he was not required to comply with Section 249(4)(a) of the Income-tax Act. Having failed in his submission before the Commissioner of Income-tax (Appeals), the assessee has chosen to seek the same relief before the Commissioner of Income-tax under Section 264 of the Income-tax Act. But the fact remains that the original assessment order was the subject-matter of an appeal. Even the issue of substituting the value of the asset as on April 1, 1981, was argued before the Commissioner of Income-tax (Appeals). In this view of the matter, it is difficult to accept that the appeal was not competent or not an effective appeal. Therefore, irrespective of the appeal being dismissed for non-compliance with Section 249(4)(a) of the Income-tax Act, the revision under Section 264 of the Income-tax Act was not maintainable being hit by Section 264(4)(c) of the Income-tax Act.
18. In this view of the matter, we are of the opinion that the revision application filed by the assessee under Section 264 of the Income-tax Act was not maintainable. Once it is held that the appeal is not maintainable, there is no need to go into the merits of the case. However, it is made clear that if the petitioner chooses to pursue the remedy of appeal before the Income-tax Appellate Tribunal against the order of the Commissioner of Income-tax (Appeals), then the findings given by the Commissioner of Income-tax in the order under Section 264 on the merits will not come in the way of the petitioner.
19. Under the circumstances, the petition is dismissed with no order as to costs.