2026 (1) TMI 140 - HC - Income Tax

Tax assessment challenge choice between appeal s.246A or revision s.264 upheld; revision rejection quashed, rehearing ordered.

An assessee has a statutory choice to challenge an appealable assessment order either by appeal under s.246A of the IT Act or by revision under s.264, and ... Revision application filed u/s 264 - CIT rejected the application - Discretion to file an appeal under the provisions of Section 246A or revision u/s 264 - HELD THAT:- We are in agreement with the submissions made that the assessee has the discretion to either file an appeal under the provisions of Section 246A of the IT Act before the Commissioner of Income tax (Appeals) against an appealable order or to apply for revision under Section 264 of the IT Act before the prescribed authorities. There is nothing in the statute which mandates the assessee only to pursue the appeal remedy and deny the remedy under Section 264 (when no such appeal is filed). This Court in the case of Kamal Pasricha As Trustee of Kuldip Kaur Trust [2025 (2) TMI 656 - BOMBAY HIGH COURT] and Aafreen Fatima Fazal Abbas Sayed [2021 (4) TMI 1034 - BOMBAY HIGH COURT] has consistently held that the Revisional Authority under Section 264 cannot refuse to exercise its revisional jurisdiction on the ground that order impugned was appealable before the appellate authority. Whether the prescribed authority can exercise its power under Section 264 to make good the mistakes/errors which are committed by the assessee itself in the return of income? - This aspect is no longer res-integra. This Court has time and again held that the powers conferred on the Commissioner under Section 264, are not only wider in its scope but are also intended for the purpose of preventing miscarriage of justice and for providing relief to an assessee, which it is otherwise entitled to. We are of the view that the provisions of Section 264 would cover within its ambit even a scenario where the assessee commits any error/mistake in the return of income. Respondent No. 1 ought to have considered the revision application under Section 264 of the Petitioner even though the mistakes/errors were committed by the Petitioner itself in the return of income. Thus, in view of the foregoing discussion, we quash and set aside the Impugned Order dated 29.03.2024 pertaining to the Assessment Year 2018-19 whereby the application filed by the Petitioner under Section 264 of the IT Act was rejected, and pass the following order:- (i) The Petition stands allowed. (ii) The impugned order dated 29.03.2024 stands quashed and set aside. (iii) The revision application stands restored to the file of Respondent No. 1 and remitted back for a de novo consideration. Respondent No. 1 shall consider the representation of the Petitioner with respect to the errors/mistakes committed by the Petitioner in the return of income or audit report and grant the relief as claimed, if tenable in law. (iv) Respondent No. 1 shall provide an effective opportunity of hearing to the Petitioner with adequate advance notice, and decide the revision application in accordance with law within a period of 12 weeks from the communication of this order. The Petitioner shall be entitled to submit its explanation/documentary evidences/ submissions before Respondent No. 1. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the revisional authority can decline to entertain or decide a revision under Section 264 merely because the order sought to be revised was appealable under Section 246A and the assessee did not file an appeal. (ii) Whether Section 264 empowers the revisional authority to consider and grant relief in respect of mistakes/punching errors committed by the assessee in the return of income/audit report, including where such mistakes resulted in denial of exemption under Section 11. (iii) Whether reliance on the decision in Goetze (India) Ltd. bars consideration of a claim/mistake in revision proceedings under Section 264 where the assessee did not file a revised return. 2. ISSUE-WISE DETAILED ANALYSIS (i) Maintainability of revision under Section 264 despite availability of appeal under Section 246A Legal framework: The Court examined the interplay between the discretionary choice of remedies under Section 246A (appeal) and Section 264 (revision), as discussed in the judgment. Interpretation and reasoning: The Court held that an assessee has discretion to either pursue an appeal against an appealable order or seek revision under Section 264. The statute does not mandate that only the appellate remedy must be pursued to the exclusion of revision when no appeal is filed. The Court expressly accepted the proposition that the revisional authority cannot refuse to exercise jurisdiction merely because the impugned order was appealable. Conclusion: The revisional authority was not justified in rejecting or avoiding consideration of the revision on the ground that an appeal remedy existed. (ii) Scope of Section 264 to correct assessee's own return/audit-report errors leading to denial of Section 11 benefit Legal framework: The Court addressed the breadth of powers under Section 264 as 'wide', intended to prevent miscarriage of justice, and capable of granting relief otherwise permissible under law. Interpretation and reasoning: The Court conclusively held that Section 264 'would cover within its ambit' scenarios where the assessee itself committed errors/mistakes in the return of income. The Court accepted that the revisional authority's powers are not confined to correcting errors of subordinate authorities and can extend to considering legitimate claims that were not properly put forth due to inadvertent mistakes in the return. On this basis, the Court found the rejection of revision-premised on the reasoning that processing was correct because it followed the figures punched by the assessee-to be unsustainable, as the revisional authority ought to have examined the assessee's representation about the errors and the entitlement to relief. Conclusion: The Court quashed the rejection of the revision and remitted the revision application for de novo consideration, directing the revisional authority to consider the assessee's explanation of errors in the return/audit report and to grant relief if tenable in law, with an effective hearing and a time-bound decision. (iii) Applicability of Goetze (India) Ltd. to Section 264 revision proceedings Legal framework: The Court examined whether Goetze (India) Ltd. restricts consideration of claims not made in the original return in the context of Section 264 revision. Interpretation and reasoning: The Court held that Goetze (India) Ltd. was 'wholly inapposite' because it was not rendered in the context of revisionary powers under Section 264. The Court therefore rejected the revenue's contention that absence of a revised return bars relief in revision proceedings. Conclusion: Goetze (India) Ltd. did not bar the revisional authority from considering the assessee's mistakes/claims under Section 264; the revision had to be considered on merits.