The Supreme Court has ruled that a revision petition under Section 264 of the Income Tax Act cannot serve as a backdoor route to revise a self-assessment return once the statutory deadline for filing a revised return has lapsed.
A bench of Justices J B Pardiwala and K Vinod Chandran set aside a Bombay High Court order that had remanded the matter for fresh consideration.
The court observed that such remands should not be ordered when the underlying claim seeks to circumvent the procedural requirements for revising returns under the Act.
The case arose from an appeal filed by the Deputy Commissioner of Income Tax, CPC, and others against the High Court’s decision. The department argued that the tax demand was based on the returns filed by the assessee.
Without submitting a revised return, the assessee challenged the demand under Section 264. After the Principal Commissioner of Income Tax rejected the revision petition, the assessee approached the High Court.
The assessee, M/s Om Siddhakala Associates, had filed a self-assessment return that was processed by the Centralised Processing Centre in Bengaluru. Notices under Sections 143(1) and 156 followed, raising a demand for outstanding tax.
The firm then invoked Section 264, but the Principal Commissioner dismissed the plea, citing unexplained delay, the prospective nature of tolerance limits under Section 43CA, and the attempt to revise the return by the side door after the limitation period had expired.
The Supreme Court noted that the issue of tolerance limits had neither been claimed in the original self-assessment return nor raised through a timely revised return.
“The assessee having not claimed the same in the returns filed could have revised the return within the time provided under the Act. When that was not done, there is no question of revision under Section 264, which would be an attempt to revise the return under the garb of a revision,” the bench held.
The court set aside the High Court’s remand order. It also clarified that any subsequent re-assessment order passed pursuant to the remand would stand nullified. The assessee must pay tax as per the original returns on which the intimation and demand were issued.
The bench explicitly declined to examine whether the tolerance limit under Section 43CA is retrospective or prospective.
