Taxpayer Cannot Revise Income-Tax Return Under Garb Of Revision After Deadline: Supreme Court

The Supreme Court has ruled that an assessee cannot use a revision remedy to effectively alter an income-tax return after the time allowed for filing a revised return has expired.

A bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran held that the assessee could not invoke Section 264 of the Income Tax Act, 1961 to revise its return after failing to do so within the prescribed period. The court set aside a Bombay High Court order that had remanded the case of Om Siddhakala Associates for fresh consideration.

“The issue of tolerance limit was not raised in the self-assessment nor was the assessment revised within the time provided,” the court observed. It noted that the assessee, having not claimed the same in its returns, 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 court ruled.

The matter arose from a return filed by the assessee on self-assessment. The Centralised Processing Centre of the Income Tax Department, Bengaluru processed the return and issued an intimation under Section 143(1). A subsequent notice under Section 156 demanded the outstanding tax arising from the return.

The assessee then approached the Principal Commissioner of Income Tax under Section 264. The Principal Commissioner rejected the revision application on the ground of unexplained delay.

The Principal Commissioner also held that the tolerance limits under Section 43CA were prospective and that the assessee was attempting, “by side-wind”, to revise its return under Section 264 after the prescribed period had expired.

The assessee subsequently approached the Bombay High Court, which remanded the matter for fresh consideration.

The revenue challenged that order before the Supreme Court. It argued that the demand had been raised in accordance with the return filed by the assessee and that no revised return had been filed.

The assessee contended that the High Court had merely remanded the matter and that its contentions could still be considered by the appropriate authority.

The Supreme Court held that the remand was not permissible in the facts of the case. It noted that the assessee could have revised its return within the time provided under the Act but had not done so.

The court held that there was no question of revision under Section 264 in these circumstances, as that would amount to revising the return “under the garb of a revision.”

The court accordingly set aside the Bombay High Court judgment. It also held that any reassessment made pursuant to the remand would have no effect because it was a dependent order.

The assessee would therefore have to pay tax on the basis of the return originally filed, on which the intimation was issued and the demand was raised.

The court made clear that it had not decided whether the tolerance limit under Section 43CA operates retrospectively or prospectively.

For Petitioner: Advocate Venkataraman Chandrashekhara Bharathi; AOR Sudarshan Lamba; Advocate Udai Khanna; Advocate Padmesh Mishra; Advocate Mukesh Kumar Verma

For Respondent: AOR Rajat Mittal; Advocate Sanket S. Bora; Advocate Vidhi K. Punmiya; Advocate Subham Kumar