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 the revisional authority cannot decline jurisdiction merely because an appellate remedy existed, where no appeal was filed; the rejection on that ground was unlawful, so the order was quashed and the revision was restored for de novo consideration. Further, s.264 confers wide, justice-oriented powers enabling the Commissioner to correct even mistakes attributable to the assessee in the return or audit report; the authority was therefore required to consider the revision on merits, and the matter was remitted with directions to grant relief if legally tenable after hearing.

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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.

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