Commissioner can hear revision under s.264 for weighted deduction claim under s.35B despite earlier omission; matter remitted

Kerala HC held the Commissioner has jurisdiction under s.264 to entertain a revision petition seeking a weighted deduction under s.35B even if that relief was not raised before lower authorities. The court found departmental circulars binding and available to the assessee, and that refusal to entertain the claim was an error of law. The HC quashed the Commissioner's order, directed restoration of the revision petition, and remitted the matter for fresh disposal with opportunity for the assessee to be heard and to produce documents substantiating the claim.

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Issues Involved:
1. Scope of the revisional power of the Commissioner of Income-tax u/s 264 of the I.T. Act, 1961.
2. Whether the Commissioner can entertain a new claim for relief not raised before lower authorities.
3. Whether the Commissioner's revisional power is analogous to the appellate power of the Appellate Assistant Commissioner.

Summary:

1. Scope of the Revisional Power of the Commissioner of Income-tax u/s 264 of the I.T. Act, 1961:
The petitioner, an assessee, challenged the orders of the Income-tax Officer, Appellate Assistant Commissioner, and the Commissioner of Income-tax (exts. P-1, P-3, and P-5 respectively). The primary issue was the revisional power of the Commissioner u/s 264 of the I.T. Act. The petitioner sought rectification of an assessment to afford a weighted deduction u/s 35B, which was not claimed initially. The Commissioner dismissed the revision, stating that it was not within his quasi-judicial powers to entertain such a claim for the first time due to the assessee's negligence.

2. Whether the Commissioner can entertain a new claim for relief not raised before lower authorities:
The court opined that the powers vested in the Commissioner u/s 264 are not subject to the limitations as contended by the Revenue. The revisional jurisdiction is distinct from the appellate jurisdiction. The Commissioner can revise any order and make such inquiry or cause such inquiry to be made, and pass such order thereon as he thinks fit, not being prejudicial to the assessee. The court emphasized that the Commissioner's power is not limited to revising only erroneous orders.

3. Whether the Commissioner's revisional power is analogous to the appellate power of the Appellate Assistant Commissioner:
The court clarified that the scope of the appellate power u/s 251 and the revisional power u/s 264 are entirely different. The Commissioner's revisional power is broader and not analogous to the appellate power, which includes the power to enhance an assessment. The court referenced various cases to support that the Commissioner can grant relief even if the claim was not made before the lower authorities.

Conclusion:
The court quashed the Commissioner's order (ext. P-5) and directed the Commissioner to restore the revision petition (ext. P-4) and pass appropriate orders after giving the assessee an opportunity to be heard. The court also declined the Revenue's request for a certificate to appeal to the Supreme Court, as no substantial question of law of general importance was found to arise.

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