TaxTMI 
TaxTMI 
2026 (8) TMI 766
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....tioner under Section 264 of the Act. 3. Vide the impugned order, the respondent No.1 declined to interfere with the intimation dated 02.11.2022 issued under Section 143(1) of the Act for the assessment year 2021-22 and rejected the petitioner's application dated 03.04.2024 under Section 264 of the Act, seeking modification of the said Intimation by reducing the income offered for the assessment year 2021-22 by Rs.6,85,02,377/-. 4. The facts of the case are that the petitioner company was engaged in the business of Engineering, Procurement and Construction of solar power projects, and had been awarded a contract for setting up of a 100 MW (AC) Grid Interactive Solar PV Power Project by M/s. NLC India Limited (for short 'NLC Limited') vide Letter of Award dated 09.02.2018, during the financial year 2017-18. The project, though scheduled for completion by 23.04.2019, was actually completed only on 09.09.2019, and the contract levied liquidated damages at the rate of 2% of the contract price per month, or part thereof, for delay in execution. Consequent upon completion, the petitioner during the financial year 2019-20, charged to its Statement of Profit & Loss an amount of Rs.16,....
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.... processed by way of an Intimation dated 02.11.2022 under Section 143(1) of the Act, with an addition of Rs.24,20,004/-, computing the total income at Rs.2,15,47,270/- as against the returned income of Rs.1,91,27,266/-, and raising a demand of Rs.7,54,410/-. Aggrieved by this adjustment, the petitioner filed a rectification application on 30.11.2022, pursuant to which the Intimation was rectified under Section 154 of the Act vide order dated 24.01.2023, recomputing the total income at Rs.1,91,27,266/-, the income as originally returned and reducing the demand to nil. Both the Intimation under Section 143(1) and the order as rectified under Section 154 continued to include the credit of Rs.9,79,12,000/-, and consequently the amount of Rs.6,85,02,377/-. Since the petitioner's application under Section 264 of the Act concerning the double taxation of this very amount was at that stage already pending, the petitioner did not press this issue in the Section 154 rectification proceedings. 7. From the above sequence of events, it stood evident that the amount of Rs.6,85,02,377/- had been brought to tax twice in the petitioner's hands: firstly, by being offered to tax in the assessm....
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....ions of Section 264 would cover within its ambit a scenario where the assessee commits any error / mistake in the return of income. The relevant portion of the judgment is extracted below for ease of reference: "17. Secondly, the question under consideration is 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. This court in the case of Pramod R. Agrawal v. Pr. CIT [(2024) 464 ITR 367 (Bom); 2023 SCC OnLine Bom 2271.] held as under (page 373 of 464 ITR): "11. The other submission of Mr. Suresh Kumar also cannot be accepted in view of the wide powers conferred on respondent No. 1 under section 264 of the Act. As held by this court in Smita Rohit Gupta v. Pr. CIT [(2023) 459 ITR 369 (Bom); 2023 SCC OnLine Bom 1861.], section 264 ....
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....spose of the petitioner's application under section 264 of the Act on the merits." 19. Considering the above, 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. 20. Thirdly, as regards the decision of the hon'ble apex court in the case of Goetze (India) Ltd. v. CIT [(2006) 284 ITR 323 (SC); 2006 SCC OnLine SC 1446.], relied upon by Mr. Chatterjee, we find that this court in the case of Bahar InfoconsPvt. Ltd. v. Pr. CIT [(2025) 476 ITR 615 (Bom); 2024 SCC OnLine Bom 3102.] has already dealt with the said argument of the Revenue (in the context of section 264 itself) and has held as under (page 622 of 476 ITR): "17. Now coming to the decision as cited by Mr. Mohanty, we are not persuaded to accept that the decision in Goetze (India) Ltd. v. CIT [(2006) 284 ITR 323 (SC); 2006 SCC OnLine SC 1446.] in the facts of the present case would at all be applicable. Such decision is not in the context of the revisionary powers as conferred under the provisions of section 264 of the Income-tax Act, but in the context of deduction claimed by the....
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....tive 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 evidence/submissions before respondent No. 1. 12. Learned counsel for the petitioner additionally relied on the case of S.R. Koshti vs. CIT [(2005) 276 ITR 165] wherein the High Court of Gujarat held that regardless of whether revised returns were filed or not, once an assessee is in a position to show that he has been 'over assessed' under the provisions of the Act, regardless of whether the over-assessment is a result of the assessee's own negligence or otherwise, the Commissioner has the power vested with him under Section 264 of the Act to correct such an assessment and he is further duty bound to give relief to the assessee. The relevant portion of the judgment again for ready reference is reproduced hereunder: "19. As to what is the scope of the powers of the Commissioner in revisional proceedings under section 264 of the Act, is well-settled by a decision of this court in C. Parikh and Co. v. CIT ....
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....ommissioner has to exercise is undoubtedly to be exercised judicially and not arbitrarily according to his fancy. Therefore, subject to the limitations prescribed in section 264, the Commissioner in exercise of his revisional power under the said section may pass such order as he thinks fit which is not prejudicial to the assessee. There is nothing in section 264 which places any restriction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detects mistakes on account of which he was over-assessed after the assessment was completed. We do not read any such embargo in the Commissioner's power as read by the Commissioner in the present case. It is open to the Commissioner to entertain even a new ground not urged before the lower authorities while exercising revisional powers. Therefore, though the petitioner had not raised the grounds regarding under totalling of purchases before the Income-tax Officer, it was within the power of the Commissioner to admit such a ground in revision. The Commissioner, was also not right in holding that the over-assessment did not arise from the order of assessment. Once the petitioner was able to....
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.... the order under section 264 of the Act made on March 29, 2004, cannot be sustained. 22. A word of caution. The authorities under the Act are under an obligation to Act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This court, in an unreported decision in the case of Vinay Chandulal Satia v. N.O. Parekh, CIT, Special Civil Application No. 622 of 1981, rendered on August 20, 1981, has laid down the approach that the authorities must adopt in such matters in the following terms: "The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coalfields Ltd., AIR 1962 SC 361; State of West Bengal v. Administrator, Howrah Municipality, AIR 1972 SC 749, and BabhutmalRaichandOswal v. Laxmibal R. Tarte, AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities can....
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....n Article 265 of the Constitution of India. If, it could be established with accuracy and precision that amount of tax is paid beyond permissible limit, it falls within the ambit of error apparent on the face of record. The only caveat, for that purpose is that no long drawn argument should be required to establish the error and such error should be clear, apparent and palpable. 17. We find support in our view from the judgments of Hon'ble Supreme Court and different High Courts. It is apposite to go through the legal journey: a) The Apex Court examined the 'levy' and 'retention' of excise duty on the touchstone of Article 265 of Constitution and poignantly held in Mafatlal Industries Limited vs. Union of India (1997) 5 SCC 536 as follows: "278. In conclusion, I hold that the Government is permitted to levy and retain only that much of excise duty which can be lawfully levied and collected under the Central Excise Act read with the Central Excise Tariff Act, 1985 and the Central Excise Rules and various notifications issued from time to time. Anything collected beyond this is unlawful and cannot be retained by the Government under any ....
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....mmissioner. It was thereby held by the High Court as under: "Though the assessing authority was not aware of the purchase of the property by the petitioner and proceeded on the basis of the admitted facts disclosed in the return. However, the revisional authority could not be oblivious of its duty to accept the contention of the assessee when the facts were brought to its notice about the capital gain being not chargeable to tax under law. What to say of its duty to advice the assessee the revisional authority rejected the contention of the petitioner only on technical grounds. When the substantive law confers a benefit on the assessee under a statute, it cannot be taken away by the adjudicatory authority on mere technicalities. It is settled proposition of law that no tax can be levied or recovered without authority of law. Article 265 of the Constitution of India and Section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law. Admittedly, on the basis of facts disclosed before the revisional authorities and this Court, the petitioner is not liable to tax on the capital gain. Once it is foun....
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.... assessee, particularly when such claim was not revised through filing of a revised return within the prescribed time. b) That the contention regarding 'double taxation' is not acceptable in the facts of the present case as the taxation in assessment year 2020-21 and the offering of income in assessment year 2021-22 arise from distinct events, namely disallowance of provision in one year and voluntary reversal in a subsequent year. c) It is a settled position that the powers under Section 264 are discretionary and are to be exercised in cases where the order sought to be revised is 'erroneous and prejudicial to the assessee'. In the present case, the order under Section 143(1) dated 02.11.2022 is 'neither erroneous nor prejudicial in law' as it merely accepts the income declared by the assessee. 16. Having heard the contentions put forth on either sides and on perusal of records, the question that falls for consideration in this case is 'whether the power of revision vested under Section 264 of the Act extends to granting relief to an assessee against double taxation of the same income across two assessment years and whether respondent No.1 was justified in dec....
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....erred under the Act. 19. This line of authority finds further and more recent reinforcement in Swaminarayan Mandir Trust (supra) wherein it was held in no uncertain terms that the power under Section 264 is not confined to correcting errors committed by subordinate authorities, but extends equally to errors committed by the assessee itself, including situations where a legitimate claim was not put forth at the time of filing the return and is raised for the first time in the Section 264 application. The Bombay High Court, in the aforesaid case went to the extent of quashing the order of rejection and remitting the matter for de novo consideration on merits, a course we find squarely applicable to the case at hand. 20. We are also in respectful agreement with the proposition emerging from the Division Bench judgment of this very Court in BSCPL Infrastructure Ltd. (supra) which is the touchstone for interference in matters of this nature and which mandates that no tax shall be levied or collected except by authority of law. Further, it can be established with accuracy and precision that when an amount of tax has been recovered, or is sought to be retained, in excess of what is ....
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.... 15.03.2022, and the very same amount of Rs.6,85,02,377/- was subsequently disallowed and brought to tax in assessment year 2020-21 vide order dated 25.09.2022, an order passed after the petitioner had already offered the amount to tax for assessment year 2021-22, and after the window for revising the assessment year 2020-21 return was already closed on 31.05.2021. That the two events are separated in point of time, or arise under different assessment years does not detract from the fundamental fact that one and the same sum has been subjected to tax twice over in the hands of the very same assessee, a state of affairs that Article 265 of the Constitution of India does not countenance, and which respondent No.1, being an authority constituted under the Act was bound to remedy rather than perpetuate through a semantic distinction between 'disallowance and voluntary reversal'. 24. As regards the third ground that the Intimation dated 02.11.2022 was neither erroneous nor prejudicial since it merely accepted the returned income, we find this submission to be self-defeating rather than exculpatory. It is precisely because the Intimation mechanically accepted the income as returned wi....
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....itioner on the ground that the claim was not made through a revised return within the prescribed time, and that the double reversal / disallowance resulted, at least in part, from the petitioner's own conduct in offering the amount to tax, proceeds on a premise more appropriate to the exercise of revisional power under Section 263 of the Act than to the power sought to be conferred under Section 264. Section 263 is a provision enacted for the protection of the interests of the Revenue; it empowers the Principal Commissioner or Commissioner to revise an order passed by a subordinate authority only where such order is found to be erroneous and prejudicial to the interests of the Revenue, and the enquiry under that provision is accordingly directed at whether the exchequer has been short-changed, and at correcting orders that operate to the detriment of the Revenue. Section 264, by contrast, occupies an entirely opposite field: it is a 'beneficial and remedial provision engrafted for the protection of the assessee', enabling the Commissioner to revise any order either suo motu or on application, that is prejudicial to the assessee, precisely in order to correct instances where the....