Revisional powers under Section 264 allow reconsideration despite taxpayer's own errors in the original return, leading to the order being set aside

Revisional powers under Section 264 permit the revenue to reopen and correct assessments even where the assessee committed mistakes in the original return; the court held such powers are wide and aimed at preventing miscarriage of justice, and distinguished Goetze (India) Ltd. as inapplicable because that decision concerned a deduction sought by letter after filing without a revised return. For failure to consider the revision application on its merits despite the self-caused errors, the impugned order under the revisional provision was set aside.

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Issues: (i) Whether the Commissioner, exercising revisional jurisdiction under Section 264 of the Income-tax Act, 1961, is empowered to entertain and decide an application raising a claim of exemption which was not made in the original return of income due to an error by the assessee.

Analysis: The issue is examined on the basis of the scope and purpose of Section 264, earlier decisions of the High Court establishing that revisional powers are wide and meant to prevent miscarriage of justice, and the applicability (or inapplicability) of precedents which declined relief where a claim was sought by correspondence without revision of the return. The analysis considers authorities holding that Section 264 empowers the revisional authority to correct errors committed by subordinate authorities and to grant relief where an assessee, by mistake, failed to make a legitimate claim in the return. The analysis distinguishes decisions where the claim was sought by post-return correspondence without filing a revised return and concludes those decisions do not restrict the revisional power under Section 264 to address mistakes made by the assessee in the return.

Conclusion: Issue (i): The Commissioner is empowered under Section 264 to consider and decide a revision application that seeks relief for a claim not made in the original return due to an assessee's mistake; the impugned order rejecting such an application solely because the claim was not made in the original return is set aside and the matter is remanded for de novo consideration with opportunity of hearing to the assessee.

Ratio Decidendi: Section 264 of the Income-tax Act, 1961 confers wide revisional jurisdiction enabling the Commissioner to correct errors and grant relief even where the assessee failed to make a claim in the original return, subject to de novo consideration and observance of natural justice.

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