The single bench of Kerala High Court quashed the order rejecting the rectification application. The court viewed that the department failed to Dispose Rectification application within time under section 154 (7) of the Income Tax Act, 1961 and to consider a circular issued by the Central Board of Direct Taxes ( CBDT ). The petitioner, M/S Premier Exports International applied for rectification of order under Section 154 of the Income Tax Act, 1961 ( ‘the Act’ ). The said application of the petitioner has been rejected by order on the finding that no orders can be passed on rectification in terms of the provisions contained in sub-section (7) of Section 154 of the Act.

The counsel appearing for the petitioner submitted that in terms of the circular issued by the Central Board of Direct Taxes, applications that were filed in time have to be disposed of on merits even though the same has not been disposed of within the time specified in sub-section (7) of Section 154 of the Act. The Standing Counsel submitted that the matter can be considered in terms of circular. Taking into consideration the submissions of the counsel for the petitioner and the Standing Counsel appearing for the respondent Department, Justice Gopinath P quashed the order and directed the 2nd respondent to pass fresh orders on the application also taking note of the provisions contained in the circular.  Adv S Arun Raj appeared for the petitioner and Cyriac Tom appeared for the respondent revenue.