Revision of other orders by Principal Commissioner of Income Tax (PCIT) or Commissioner of of Income Tax (CIT) under section 264 of the Income Tax Act, 1961
The Principal Commissioner or Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and subject to the provisions of this act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
Page Contents
- Text of Section 264 of Income Tax Act, 1961
- Nature of Jurisdiction under section 264
- CIT has the power under section 264 to issue directions to Assessing Officer
- [A] Pre conditions for revision of other orders
- [B] Time limit for filing revision petition under section 264 [Section 264(3)]
- [C] Situations where any order under section 264 can not be revised [Section 264(4)]
- [D] Disposal of Revision petition [Section 264(6)]
- [E] Application for revision under section 264 is maintainable
- [F] Revision under section 264 before Commissioner is not maintainable
Text of Section 264 of Income Tax Act, 1961
REVISION OF OTHER ORDERS.
264. (1) In the case of any order other than an order to which section 263applies passed by an authority subordinate to him, the Principal Commissioner or Commissioner may, either of his own motion or on an application by the assessee for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit.
(2) The Principal Commissioner or Commissioner shall not of his own motion revise any order under this section if the order has been made more than one year previously.
(3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier :
PROVIDED that the Principal Commissioner or Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.
(4) The Principal Commissioner or Commissioner shall not revise any order under this section in the following cases –
(a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or
(b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or
(c) where the order has been made the subject of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal.
(5) Every application by an assessee for revision under this section shall be accompanied by a fee of five hundred rupees.
(6) On every application by an assessee for revision under this sub-section, made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision.
Explanation. – In computing the period of limitation for the purposes of this sub-section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.
(7) Notwithstanding anything contained in sub-section (6), an order in revision under sub-section (6) may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court.
Explanation 1. – An order by the Principal Commissioner or Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee.
Explanation 2. – For the purposes of this section, the Deputy Commissioner (Appeals) shall be deemed to be an authority subordinate to the Principal Commissioner or Commissioner.
Nature of Jurisdiction under section 264
The power of revision conferred by Section 264 on the CIT is not an administrative power. It is a quasi – judicial power. He can not permit his judgement to be influenced by matters not disclosed to the assessee nor by dictation of another authority including any circular. – [Sirpur Paper Mills Ltd v. CWT (1970) 77 ITR 6 (SC)]
CIT has the power under section 264 to issue directions to Assessing Officer
Section 264 is not a provision of law dealing with the question of imposition of liability on the assessee. It is only a part of machinery section. It cannot be construed in a narrow manner. The CIT has the power under section 264, to issue directions to the Assessing Officer – [Mohammadi Begum v. CIT (1986) 158 ITR 622 (AP)]
[A] Pre conditions for revision of other orders
An assessee aggrieved by an order passed by the Assessing Officer may file an appeal against the same, to the DyCIT (A) or the CIT(A). As an alternative remedy the assessee may prefer an application to the CIT for revising the orders passed by the Assessing Officer. A remedy under section 264 is contemplated by the Legislature only to meet a situation faced by an aggrieved assessee who is unable to approach the appellate authorities for relief and has no other alternative remedy under the Act. Even those orders which are not appealable before the Dy CIT(A) or CIT(A), may be referred by the assessee to the CIT for seeking revision or modification.
Section 264
- Applicable to any order other than an order to which section 263 applies;
- Commissioner may act suo moto or on application made by the assessee;
- Commissioner may call for the record of any proceedings under the Act in which such order has been passed;
- Order may be passed not being prejudicial to the assessee. However an order declining to interfere is not an order prejudicial to the assessee;
Assessee seeking CIT blessing under section 264 can not be surprised with revisionary order under section 263
Section 264 debars Commissioner from passing any order which is prejudicial to assessee and, therefore, once assessee approaches Commissioner for getting relief under section 264, Commissioner can not pass an order by invoking provisions of section 263.
Whether section 264 debars Commissioner from passing any order which is prejudicial to assessee and, therefore, once assessee approaches Commissioner for getting relief under section 264, Commissioner can not pass an order by invoking provisions of section 263 – Held, yes [Para 11] [In favour of assessee]
From the above, it is evident that under Section 264, the CIT can revise any order passed by any authority subordinate to him on his own motion or on the application made by the assessee. He can pass the order as he thinks fit not being an order prejudicial to the assessee. Thus, it is very clear that under Section 264, the CIT cannot pass any order which is prejudicial to the assessee. Now, in the case under appeal before us, it is evident that the assessee moved revision petition under Section 264 before the CIT, Central-II for quashing the penalty order. On the other hand, the CIT, Central-II initiated proceedings under Section 263 of the Income-tax Act and passed order thereon which was prejudicial to the interests of the assessee. That Section 264 of the Income-tax Act debars the CIT from passing any order which is prejudicial to the assessee. Therefore, in our opinion, when the CIT cannot pass the order prejudicial to the assessee under Section 264, once the assessee approached him for getting relief under Section 264, if he is allowed to pass order under Section 263 prejudicial to the assessee, it would make prohibition under Section 264 that the CIT cannot pass the order prejudicial to the assessee as nullity. Therefore, in our opinion, on the facts of the assessee’s case, the order under Section 263 cannot be sustained. (Related Assessment years : 2005-06 & 2006-07) – [Vineet Sharma v. CIT (2014) 148 ITD 619 : 41 taxmann.com 141 (ITAT Delhi)]
Order under section 264 cannot be prejudicial to the assessee
As per the provisions of Section 264(1), the order passed by the CIT under section 264, cannot be prejudicial to the assessee. An order by the CIT declining to interfere shall not be deemed to be an order prejudicial to the assessee, according to Explanation – 1 to Section 264.
Order passed by the CIT under section 264 should not be prejudicial to the assessee even indirectly
In this case, on a petition under section 264 by the assessee the CIT set aside the assessment, with a direction to make a fresh assessment. The Assessing Officer completed the fresh assessment without any change in total income and tax originally assessed. The Assessing Officer also initiated penalty proceedings under section 271(1)(c), though no such penalty proceedings were initiated in the original order of the Assessing Officer. The Tribunal held that order under section 264 of the CIT, had indirectly resulted in the levy of penalty under section 271(1)(c) and as such was prejudicial to the interest of the assessee. The cancellation of order under section 271(1)(c) was accordingly held to be justified. – [ACIT v. M.V. Kenlucky (1997) 60 ITD 492 (ITAT Pune)]
[B] Time limit for filing revision petition under section 264 [Section 264(3)]
Section 264(3) provides that in the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier.
The Principal Commissioner or Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period
| Section | Particulars | Time limit |
| 264(2) | Revising orders prejudicial to revenue by Principal Commissioner or Commissioner | Within 1 year of order sought to be revised |
| 264(3) | FILING OF APPLICATION FOR REVISION UNDER SECTION 264 BY THE ASSESSEE
Filing revision application to Principal Commissioner or Commissioner (order not to be prejudicial to taxpayer) |
Within 1 year from date on which the order in question was communicated to him or the date on which he otherwise came to know of it, which ever is earlier or within extended time |
Condonation of delay in filing petition under section 264 [Proviso to Section 264(3)
Proviso to Section 264(3) empowers the CIT to admit and entertain an application for revision under section 264(1), if the assessee is prevented by ‘sufficient cause’ from making the application within the specified period.
Text of Proviso to Section 264(3)
PROVIDED that the Principal Commissioner or Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.
Court should adopt a liberal approach in the matter of condonation of delay
The word ‘sufficient cause’ occurring in the proviso to Section 264(3) should receive a libral construction so as to advance substantial justice. The expression ‘sufficient cause’ employed by the legislature in section 5 of the Indian Limitation Act, 1963 is adequately elastic to enable the Courts to do substantial justice to parties by disposing of matters on merits. It was held that the court should adopt a liberal approach in the matter of condonation of delay. – [Collector, Land Acquisition v. Mst. Katiji & others (1987) 167 ITR 471 (SC),
Dismissal on the ground that the petition was time barred is held to be not proper he has to examine whether there was any justifiable reason for delay
Allowing the petition the Court held that; Dismissal on the ground that the petition was time barred is held to be not proper he has to examine whether there was any justifiable reason for delay. (Related Assessment year : 2012-13) – [Hargovind Pandey v. PCIT (2017) 249 Taxman 528 (Del)]
Application Fee [Section 264(5)
Every application by an assessee for revision under this section shall be accompanied by a fee of five hundred rupees.
[C] Situations where any order under section 264 can not be revised [Section 264(4)]
Text of Section 264(4)
264(4). The Principal Commissioner or Commissioner shall not revise any order under this section in the following cases—
(a) where an appeal against the order lies to the Deputy Commissioner (Appeals) or to the Commissioner (Appeals) or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired, or, in the case of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal, the assessee has not waived his right of appeal; or
(b) where the order is pending on an appeal before the Deputy Commissioner (Appeals); or
(c) where the order has been made the subject of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal.
Scope of the expression ‘Subject of an appeal’
The CBDT has, vide circular No 367 dated 26.07.1983, clarified the scope of the expression ‘Subject of an appeal’ as used in Section 264(4)(c). The aforesaid circular is reproduced as follows :
CBDT Circular : No. 367 [F. No. 273/21/80-ITJ], dated 26.07.1983.
Subject : Situations where order can be said to have been made “subject of an appeal” in terms of clause (c) of sub-section (4)
Section 264(4)(c) provides that the Commissioner shall not revise any order under that section where the order has been made the subject of an appeal to the Commissioner (Appeals) or to the Appellate Tribunal. A doubt has been raised whether in the following situations the order can be said to have been made “subject of an appeal” :
(i) where the appeal was withdrawn by the assessee and it was dismissed as such;
(ii) where the appeal was dismissed on the ground that the appeal was incompetent;
(iii) where the appeal was dismissed on ground of limitation.
The Board are of the view that the order cannot be said to have bean made “subject of an appeal” if the appeal has been disposed of by the Commissioner (Appeals) or the Appellate Tribunal without passing on order under section 251(1) or 254(1) on merits.
No revision till period of limitation for filing appeal, expires
As per Section 264(4)(a) the CIT cannot revise any order where an appeal against that order lies to the CIT(A) or to the Appellate Tribunal but the same has not been made and the period, within which such appeal may be made, has not expired.
But so far the orders appealable to the CIT(A) or to the Appellate Tribunal, are concerned, the CIT may revise such orders even before the expiry of the period of limitation for filing such appeals, if the assessee waives his right of such appeal. The fact of such waiver of right is to be specifically stated in the application for revision.
Order not appealable, may be made subject – matter of revision petitions
A petition for revision under section 264, may be made against orders which are not appealable under the Statute. – [Dwarka Nath v. ITO (1965) 57 ITR 349 (SC)]
Revision of other orders – Condonation of delay – Commissioner (Appeals) – Doctrine of merger – Order rejecting appeal by Commissioner (Appeals), further revision before Commissioner is not maintainable [Section 264(4)(c)]
The assessee filed an application before the Commissioner (Appeals) to condone the delay. He declined to condone the delay and dismissed the appeal. Subsequently, the assessee filed a revision application under section 264 of the Act,, and along with it he also filed an application to condone the delay. The Commissioner rejected the revision application. In the order, he had dealt with the maintainability of the revision, the tenability of the request for condonation of delay and also the merits of the revision itself. On all these grounds, he decided against the assessee. On a writ petition by assessee, dismissing the petition, the Court held that the order dismissing the appeal filed by the assessee was an order in the appeal filed by the assessee. The assessee had not waived his appellate right to maintain an application for revision under section 264. Thus, the finding of the Commissioner that in view of section 264(4), the revision filed by the assessee was not maintainable, had to be upheld. (Related Assessment year : 2000-01) – [K. H. Traders v. CIT (2013) 351 ITR 1 : 213 Taxman 41 : 85 DTR 287 (Mag.)(Ker)]
Section 264(4)(b) places a ban on the CIT to revise any order where an appeal is pending before the DyCIT (Appeals), against that order. Further by virtue of Section 264(4)(c) where the order has been made subject of an appeal to the CIT(A) or to the Appellate Tribunal, the revisional powers of the CIT under section 264 come to an end. In other words, it cannot be excercised at tall during the pendency, or even after the disposal, of the appeal. The position does not change even if the order of the appellate authority is challenged before the Appellate Tribunal by the Income Tax Department and not by the assessee.
Once an appeal is filed against the order of the AAC before the Tribunal, a revision petition under section 25(1) of the Wealth Tax Act would not lie even if it is the Department who has filed the appeal before the Tribunal. – [CWT v. Mrs. Kasturbai Walchand and others (1989) 177 ITR 188(SC)]
Remedy available to an assessee under section 264 is an alternative remedy, who does not want to avail remedy by way of appeal and assessee is not permitted to pursue both remedies either simultaneously or one after another. – [Orissa Rural Housing Development Corpn Ltd (2012) 343 ITR 316 : 247 CTR 137 : 204 Taxman 673 : 17 taxmann. com 186 (Orissa)]
[D] Disposal of Revision petition [Section 264(6)]
Section 264(6) provides that on every application by an assessee for revision made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision. In computing the period of limitation for the purposes of this sub-section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.
Text of Section 264(6)
264(6) On every application by an assessee for revision under this sub-section, made on or after the 1st day of October, 1998, an order shall be passed within one year from the end of the financial year in which such application is made by the assessee for revision.
Explanation.—In computing the period of limitation for the purposes of this sub-section, the time taken in giving an opportunity to the assessee to be re-heard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.
| Section | Particulars | Time limit |
| 264(6) | Passing order on revision application made by taxpayer on or after 01.10.1998 | Within 1 year from the end of the financial year in which application is made by the assessee for revision |
Section 264(7) provides that notwithstanding anything contained in sub-section (6), an order in revision under sub-section (6) may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court. An order by the Principal Commissioner or Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee.
Text of Section 264(7)
(7) Notwithstanding anything contained in sub-section (6), an order in revision under sub-section (6) may be passed at any time in consequence of or to give effect to any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court.
Explanation 1. – An order by the Principal Commissioner or Commissioner declining to interfere shall, for the purposes of this section, be deemed not to be an order prejudicial to the assessee.
Explanation 2. – For the purposes of this section, the Deputy Commissioner (Appeals) shall be deemed to be an authority subordinate to the Principal Commissioner or Commissioner.
[E] Application for revision under section 264 is maintainable
Rejection of application on the ground that availability of remedy of appeal – Commissioner is directed to decide the application on its merits
The Commissioner rejected the application filed by the assessee under section 264 of the Income-tax Act, 1961 on the ground that remedy of appeal was available. On a writ the High Court set aside the order and directed the Commissioner to decide the application on its merits and in accordance with law. Followed Kewal Krishna Jain v. CIT (CWP No. 1818 of 1995 dated 11.10.2013) – [Hirdey Ram v. CIT (2020) 421 ITR 4 (P&H)]
Accumulation of income -Mistake in form no 10- Delay in filing the form – CIT is directed to consider whether cogent reason exists for condonation of delay
The assessee Trust filed the return of income under section 139(4A) disclosing nil income, after claiming exemption under section 11(2) of the Act. In the intimation passed by the Assessing Officer under section 143(1) of the Act accumulation of income to the extent of Rs 58,00,000 was refused on the ground that form No 10 as required to be filed was filed beyond the period specified in Section 11( 2) of the Act. The assessee trust moved application under section 264 of the Act to condone the delay in filing of form no 10, which was rejected. On writ it was contended that, the there was error while filing up form No 10 electronically and for this error entire claim ought not to be rejected. Court held that there was no finding in the order as to whether the entry was made due to error or it was a deliberate act. The Court remanded the matter to CIT (E) to decide on merits and also whether cogent reason exists for condonation of delay. [St. Thomas Orthodox Syiran Church v CIT (E) (2020) CTCJ –Feb – P.120 (WP No. 3633 of 2019 dated : 03.01.2020 (Bom)]
Writ Petition for non-grant of refund: Though an order refusing to issue refund is not an appeallable order under section 246A, it is subject to revision under section 264. As the alternate remedy of revision is available, the Writ is not maintainable (Larsen & Toubro (2010) 326 ITR 514 (Bom) referred)
If one contrasts section 264 of the Act with section 246A of the Act which provides for appeal, it would be noticed that unlike section 246A of the Act which specifies sections of the Act from which an appeal would lie, section 264 of the Act provides for revision from ‘any order’ under the Act. This is another indication that the Commissioner of Income Tax has very wide powers to correct any order passed by an officer subordinate to him. (Related Assessment year : 2005-06) – [Aditya Marine Ltd. v. DCIT – Date of Judgement : 03.10.2019 (Bom)]
Revision petition seeking rectification of return accepted by department in respect of which intimation is sent under section 143(1) is maintainable – Taxpayer is allowed to file a revision petition against an intimation to claim a tax benefit which was not claimed in the return of income
The taxpayer, a non-resident company, earned service fees from Indian company for providing management related services. Service fees being in the nature of fees for technical services (FTS) was taxable at 25 per cent under Section 115A of the Act and at 20 per cent under Article 13 of the tax treaty. The Assessing Officer by an intimation under Section 143(1) of the Act processed the return of income.
Subsequently, the taxpayer realised that it had failed to claim the benefit of MFN clause (Under the India-Spain tax treaty) in the original as well as revised return of income. The taxpayer filed a revision petition under Section 264 of the Act to revise the order passed under Section 143(1) of the Act. The taxpayer on the basis of MFN clause adopted 10 per cent tax on FTS provided under the India-Sweden tax treaty. The taxpayer relied on the Delhi High Court’s decision in the case of Steria India Limited3 to claim MFN benefit. However, the Commissioner of Income Tax (CIT) rejected the contentions of the taxpayer and held that Section 264 of the Act cannot be invoked to rectify the taxpayer’s mistake if any The taxpayer relied on the decision of Vijay Gupta4 wherein it was held that an intimation under Section 143(1) of the Act is regarded as an ‘order’ for the purpose of Section 264 of the Act. However, the tax department referred the decision of the Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Private Limited (2008) 14 SCC 208 and contended that an intimation under Section 143(1) of the Act could not be treated as an ‘order’ and therefore no petition under Section 264 of the Act could be maintained against such ‘intimation’.
The Delhi High Court distinguished the decision in the case of Rajesh Jhaveri Stock Brokers Private Limited since it was rendered in the context of Sections 147 and 148 of the Act. However, in the present case there was no attempt by the tax department to re-open the assessment by invoking Sections 147 and 148 of the Act. The taxpayer realised the mistake made by it while filing the return of income paying a higher rate of tax. In such a context, the intimation received by the taxpayer from the Assessing Officer accepting the return under Section 143(1) of the Act would partake the character of an order for the purpose of Section 264 of the Act. The question in the case of Vijay Gupta was precisely whether a petition under Section 264 of the Act was maintainable against an intimation under Section 143(1) of the Act. In the case of Vijay Gupta, the Court considered the decision of the Supreme Court in the case of Rajesh Jhaveri Stock Brokers Private Limited and held that an intimation under Section 143(1) of the Act is regarded as an ‘order’ for the purpose of Section 264 of the Act.
The Delhi High Court held that the taxpayer is allowed to file a revision petition under Section 264 of the Act against an intimation under Section 143(1) of the Act to rectify the mistake committed by the taxpayer while filing its tax return. (Related Assessment year : 2014 -15) – [EPCOS Electronic Components S.A v. UOI (2019) 266 Taxman 23 (Del)]
Powers and duties of the CIT while dealing with a revision application filed by an assessee explained
CIT was not justified in holding that assessee, for some unexplained reasons, deliberately did not file an appeal against the assessment order for impugned, though it had filed appeals for other years and this was an attempt to invoke section 264 as a backdoor entry to file an appeal since the impugned reasoning could not be sustained for it was contrary to the legislative mandate of section 264. Assessee was a non-resident company and a tax resident of Australia. It was engaged in the business of providing and developing software enabled solutions to the oil and gas industry and annual maintenance services in relation to the solutions supplied by it. It had filed return applying provisions of 44BB. Whereas Assessing Officer taxed the receipts as Royalty/ Fee from technical services applying section 44DA. Assessee did not file an appeal against the order but filed a revision petition under section 264. CIT held that assessee wanted to invoke section 264 as a backdoor entry to file an appeal thus the Revision petition was dismissed. Held: The impugned reasoning could not be sustained for it was contrary to the legislative mandate of section 264 and the revisionary power conferred on the Commissioner. The assessee had waived his right to file appeal since time to file an appeal against the order of Assessing Officer had been expired. The order of the Commissioner should have contained reasons for the conclusions arrived at and ought to have dealt with the issue on merits as required under section 264. – [Paradigm Geophysical (P) Ltd. v. CIT (International Taxation) (2018) 400 ITR 497 : 300 CTR 27 (Del)]
The Assessing Officer did not accept assessee’s claim for deduction of commission paid to Societies under Sugarcane Act on ground that payment related to Assessment year 2012-13 and therefore could not be allowed as deduction in Assessment year 2013-14. Assessee filed a revision application under section 264 before PCIT claiming deduction of commission in Assessment year 2012-13 along with an application for condonation of delay but the application was rejected on ground of delay in filing. The assessee filed a writ petition against such rejection and the Court condoned the delay in filing application, noting that since the commission was paid in Assessment year 2013-14 pursuant to order dated 19.06.2012, the assessee had taken a view that deduction was allowable in Assessment year 2013-14 only and it is only after the Assessing Officer disallowed the claim in Assessment year 2013-14, assessee had filed the revision application within month of order of Assessing Officer for Assessment year 2013-14. Further, it directed the PCIT to consider the application on merits. – [Dwarikesh Sugar Industries Ltd. v. DCIT (2018) 102 CCH 162 (Bom)]
Intimation can be considered in revision application, Commissioner was directed to consider the revision application
Dismissing the revision application Commissioner held that the intimation under section 143 (1) was not an order of assessment for the purpose of section 264, whereas it was deemed to be a notice of demand under section 156 of the Act. On writ allowing the petition the Court held that; section 143 had undergone certain changes with effect from June 1, 1999. The statute uses the word intimation and not order. It was in the light of the change in the statutory provision that one had to consider the scope and effect of the revisional powers under section 264 . Though not as a challenge to section 143 (1) notice, when the assessee filed a revised return and sought for interference by the Commissioner, necessarily the claim had to be considered in accordance with law. Matter was remanded. (Related Assessment year : 2013-14) – [Agarwal Yuva Mandal (Kerala) v. UOI (2017) 395 ITR 502 : 246 Taxman 78 (Ker)]
Revision of other orders – Record includes all records relating to any proceedings – Commissioner has the power to entertain the claim
On appeal against the single judge, allowing the petition the Court held that; The embargo placed on an Assessing Officer in considering a new claim would not impinge on the power of the appellate authorities or the revisional authority. Record includes all records relating to any proceedings. Commissioner has the power to entertain the claim. The order under section 144A ought to have been taken into consideration and applied. The remedy under section 264 was appropriate and ought to have been exercised in favour of the assessee by the Commissioner. (Related Assessment years : 2003-04 & 2005-06) – [Sri Selvamuthukumar v. CIT (2017) 394 ITR 247 : 246 Taxman 185 : 149 DTR 38 (Mad)]
Application for revision is maintainable if appeal against assessment order withdrawn
The Commissioner would be precluded from exercising revisional powers under sub-section (1) of section 264 of the in the situations listed under sub-section (4) thereof. Merely because at one stage, the assessee preferred an appeal against the order of assessment but withdrew it, on a reasonable bona fide apprehension about maintainability of such appeal arising at a future date in view of the provisions contained in sections 246 and 246A of the Act, that would not prevent the assessee from presenting a revision petition within the framework provided under section 264 of the Act. (Related Assessment year : 2011-12) – [M.T. Maersk Mikage v. DIT (IT) (2017) 390 ITR 427 (Guj)]
Revision of other orders – Salary received by a non-resident for services rendered abroad accrues outside India and is not chargeable to tax in India. The source of the receipt is not relevant. The CIT has wide powers under section 264 and has to exercise them in favour of the assessee in terms of CBDT Circular No. 14 (XL-35) dated 11.04.1955
The petitioner was working as a marine engineer and had rendered services as such to a foreign shipping company during the assessment year 2011-12. The petitioner had filed income tax return for such assessment year under the residential status as non-residential Indian. He disclosed a receipt of a remuneration of Rs. 5,63,850/- in US Dollars. The petitioner was issued an assessment order cum intimation under Section 143 (1). The petitioner did not file any appeal. The petitioner had applied under Section 264 of the Income Tax Act, 1961 claiming that the income had accrued outside India and was not taxable in India. The CIT rejected the assessee’s claim. On a Writ Petition by the assessee, allowing the claim held that salary received by a non-resident for services rendered abroad accrues outside India and is not chargeable to tax in India. The source of the receipt is not relevant. The CIT has wide powers under section 264 and has to exercise them in favour of the assessee in terms of CBDT Circular No. 14 (XL-35) dated 11.04.1955. Relied CIT v. Mahalaxmi Sugar Mills Ltd (1986) 160) ITR 920 (SC) The matter was remanded to the assessing officer to do the needful. – [Utanka Roy v. DIT (2017) 390 ITR 109 : 291 CTR 501 : 146 DTR 27 (Cal)]
Salary payable pursuant to recommendation of 5th Pay Commission – Claim, rejection of petition was held to be not justified, claim was directed to be allowed
The Petitioner pursuant to assessment order passed filed an application before CIT under section 264 for revision of the order, claiming deduction of provision for wage arrears which was rejected by the CIT on the ground that the Petitioner had not claimed the deduction in respect of provision for wage arrears by revising the return and therefore, the issue did not arise from the assessment order. The Court relied on Gujarat High Court’s decisions in the case of C. Parikh & Co. v. CIT (1980) 122 ITR 610 (Guj) and Jammu and Kashmir High Court’s decision in the case of Smt. Sneh Lata Jain v. CIT (2004) 192 CTR 50 wherein it was held that under section 264, the Commissioner was empowered to call for the record of any proceeding or pass such order thereon and held that the mere fact the Petitioner did not make any claim in the original return and also in its revised return before the passing of the assessment order by the Assessing Officer would not stand in the way of the CIT exercising revisionary jurisdiction to grant relief. It further held that the Apex Court’s decision in Goetze India Limited v. CIT (2006) 284 ITR 323 would also not restrict the scope of the revisionary jurisdiction of the CIT. Accordingly, it held that the CIT erred in rejecting the application of the Petitioner on the ground of maintainability. – (Related Assessment year : 1998-99) – [Rites Ltd. v. CIT (2017) 249 Taxman 244 : 154 DTR 121 : 99 CCH 74 (Del)]
Even an order passed in violation of the principles of natural justice can be corrected under section 264
Even an order wherein the principles of natural justice have been ignored, can be corrected in exercise of revisional powers under section 264. – [Mohammadi Begum v. CIT (1986) 158 ITR 622 (AP)]
Kerala High Court in Parekh Brothers v. CIT observed as under :
“We hold, that even though a mistake was committed by the Assessee and it was detected by him after the order of assessment, and the order of assessment is not erroneous, none the less it is open to the Assessee to file a revision before the Commissioner under Section 264 of the Act and claim appropriate relief. But it should not be forgotten that the power to be exercised under Section 264 is a revisionary one. The limitations implicit in the exercise of such power are well known. The jurisdiction is discretionary; Whether in a particular case, on the basis of facts disclosed, the Commissioner will exercise his jurisdiction and interfere in the matter, is a matter of discretion. It is certainly a judicial discretion vested in the Commissioner, to be exercised in accordance with law. We are not called upon to pronounce on the scope and amplitude of the revisional power. The only question mooted for our consideration in this case is whether the Commissioner has got revisional jurisdiction at all, where the Assessee having included the income for assessment, can claim the relief of weighted deduction under Section 35B of the Act, for the first time, in a petition filed under Section 264 of the Act. On that aspect of the question, we have no doubt in our mind that the Commissioner has jurisdiction to entertain a revision petition under Section 264 of the Act.” – [Parekh Brothers v. CIT (1984) 150 ITR 105 (Ker)]
In C. Parekh & Co. v. CIT (1980) 122 ITR 610 (Guj), the Gujarat High Court observed as under:
“It is clear that under Section 264, the Commissioner is empowered to exercise revisional powers in favour of the Assessee. In exercise of this power, the Commissioner may, either of his own motion or on an application by the Assessee, call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the Assessee, as the thinks fit. Sub-sections (2) and (3) of section 264 provide for limitation of one year for the exercise of this revisional power, whether suo motu, or at the instance of the Assessee. Power is also conferred on the Commissioner to condone delay in case he is satisfied that the Assessee was prevented by sufficient cause from making the application within the prescribed period. Sub-section (4) provides that the Commissioner has no power to revise any order under section 264(1) : (i) while an appeal against the order is pending before the AAC, and (ii) when the order has been subject to an appeal to the Income-tax Appellate Tribunal. Subject to the above limitation, the revisional powers conferred on the Commissioner under section 264 are very wide. He has the discretion to grant or refuse relief and the power to pass such order in revision as he may think fit. The discretion which the Commissioner has to exercise is undoubtedly to be exercised judicially and not arbitrarily according to his fancy. Therefore, subject to the limitation 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.” – [C. Parekh & Co. v. CIT (1980) 122 ITR 610 (Guj)]
Assessee can file a revision petition against an addition erroneously accepted by him
The CIT cannot reject a petition for revision on the ground that the assessee itself had returned income which it claims in the revision petition as not its income. In such a situation the CIT is bound to apply his mind to the question whether the assessee is liable to be taxed in respect of that income. What applies to a revision should logically apply to an appeal, as the appellate power is wider than the revisional power. – [Pt. Sheonath Prasad Sharma v. CIT (1967) 66 ITR 647 (All)]
[F] Revision under section 264 before Commissioner is not maintainable
Hosing projects – Failure to claim deduction in return – Commissioner cannot grant the deduction in revisional jurisdiction by virtue of Section 80A(5) of the Act
The assessee did not claim deduction under Section 80-IB(10) of the Act on its income earned from housing development projects. Assessment was completed under section 143(3) of the Act. The revision petition was filed after the stipulated period of limitation. The Commissioner refused to condone the delay. The assessee filed writ petitions against such order. The court ordered the condonation of delay and directed the Commissioner to decide the revision applications on its merits. The Commissioner rejected the revision application on the ground that the assessee had not made a claim under section 80-IB(10) in the return of income and that by virtue of section 80A(5), the claim could not be granted. In a writ petition the assessee contended that the restriction imposed by section 80A(5) applied only to the powers of the Assessing Officer and not to the Commissioner in exercise of revisional powers. Dismissing the petition the Court held that sub-section (5) of section 80A mandated that if the assessee failed to make a claim in his return of income for any deduction under the provisions specified therein, it would not be granted to the assessee. This condition or restriction was not relatable to the Assessing Officer or the Income-tax authority. The provision contained in sub-section (5) of section 80A was a statutory interdiction which would prevent the Commissioner from granting a fresh claim in exercise of his revisional jurisdiction under section 264. The width of the powers of the Commissioner under section 264 would not permit him to ignore the requirement of section 80A(5) or allow the claim of an assessee in breach of the condition contained therein. The assessee having given up the challenge to the Constitutionality of the retrospectivity of section 80A(5), could not bring in the concept of reading down of the provision in order to save it from being unconstitutional. The provision contained in sub-section (5) of section 80A was to be enforced as it stood in the statute book. (Related Assessment year : 2008-09) – [EBR Enterprises v. UOI (2019) 415 ITR 139 : 311 CTR 698 : 266 Taxman 15 : 180 DTR 73 (Bom.)]
Assessee had not raised any dispute regarding subsidy received by it during entire Settlement proceedings till settlement order was passed by Commission, it could not urge Commissioner to examine said issue in exercise of revisional powers
Dismissing the petition the Court held that ; assessee had not raised any dispute regarding subsidy received by it during entire Settlement proceedings till settlement order was passed by Commission, it could not urge Commissioner to examine said issue in exercise of revisional powers. (Related Assessment years : 2006-07 to 2013-14) – [Mandhana Industries Ltd. v. PCIT (2019) 309 CTR 1 : 262 Taxman 137 : 178 DTR 57 : (Bom)]
Assessee filing of revision application under section 264 instead of appeal before the Learned CIT(A) – not justified
The assessee had made a revision application under section 264 against the Assessing Officer’s order passed under section 144 (since the assessee had not complied with the notice issued under section 148) bringing to tax the long-term capital gains on the sale of agricultural lands, just before the expiry of period available for making such application (i.e. one year from the date of passing of the Assessing Officer’s order) instead of filing an appeal against the Assessing Officer’s order. The said application was rejected by the PCIT on the ground that the assessee could not produce adequate documentary evidences to support its contentions (that they were entitled to only 1/3rd share in the property and that also that the sale consideration was utilised for purchase of agricultural land, entitling deduction under section 54B). On writ been filed against the PCIT’s order rejecting the application, the Court at the outset held that the PCIT had rightly rejected the assessee’s prayer. In the writ, the assesse also contended that they being illiterate agriculturists could not avail the regular remedy of appeal and later on, preferred the said petition under section 264 which ought to have been allowed in the facts and circumstances of the case. The Court held that the remedy by way of revision under section 264 could not be treated as a regular remedy by passing regular remedy of appeals against impugned assessment orders and one could not be allowed to avail said revisional remedy in a routine manner by passing requirement of payment of tax and allowing regular appellate authorities to apply their minds to relevant facts and evidence on record. It held that the fact that the assessee preferred the revision petitions under section 264 just before the expiry of one year of passing of Assessing Officer’s order reflects that they were very conscious and aware of the legal provision and deliberately avoided the availing of the regular remedy by way of an appeal and at the nick time of the expiry of the time period, preferred the present revision petition under section 264, which for good reasons, came to be dismissed by the PCIT. (Related Assessment year : 2006-07) – [Nataraju (HUF) v. PCIT – (2018) 91 taxmann.com 467 (Karn)]
Assessment of third person – Under writ jurisdiction – Cannot examine whether documents seized were incriminating – Rejection of revision application was held to be justified
Dismissing the petitions,against the order under section 264, the Court held that; in writ proceedings, it was difficult for the court to examine the documents seized and determine if in fact the documents were incriminating for each of the assessees. The documents listed out in the satisfaction notes were not non-incriminating on a bare perusal. There was sufficient opportunity for both the assessees to demonstrate how they were not. But the assessees had failed to avail of the opportunity. In the writ jurisdiction, the court has to be satisfied that the Commissioner’s orders were not unfair, unjust or irrational and were consistent with the basic procedural requirements. On none of these counts, did the orders of the Commissioner warrant interference. (Related Assessment years : 2004-05 to 2009-10) – [Ganpati Fincap Services (P) Ltd. v. CIT (2017) 395 ITR 692 : 298 CTR 174 : 152 DTR 250 : 82 taxmann.com 408 (Del)]
Revision of other orders – Writ – Appellate remedy – Writ was held to be not maintainable
The Assessing Officer made addition to assessee’s income treating a sum received as unexplained investment. Taking note of factual aspects of case, the Commissioner declined to interfere with the order of Assessing Officer under section 264. The assessee filed a writ petition. Held, since alternative remedy of filing appeal under statute was available to assessee, writ petition need not be entertained. (Related Assessment year : 2003-04) – [S. Thilakam v. CIT (2013) 218 Taxman 29 (Mag.)(Mad)]
Author Bio
Dear Ram Dutt ji,
Well written article. Only one small correction, if you permit. The CIT cannot pass an order prejudicial to the assessee u/s 264 whether on his own motion or on application by the assessee. Section 264(2) does not allow the CIT to pass an order revising any order prejudicial to the revenue within one year. It only permits the CIT to pass an order even suo motto, on his own motion, within one year. After one year, he can pass an order but only on application by assessee. Revising an order prejudicial to the revenue is in the domain of 263.. I think it was an inadvertent mistake. Otherwise an excellent, erudite article.