Income Tax | Taxpayers Cannot Raise Fresh Claims Based On New Facts In Revision Proceedings: Supreme Court

The Supreme Court has recently reiterated that taxpayers cannot use revision proceedings to introduce fresh claims based on facts that were never placed before the Assessing Officer, bypassing the deadline for filing a revised income tax return.

A bench of Justices Prashant Kumar Mishra and Shree Chandrashekhar held that the revisional authority can entertain a new question of law, but cannot consider a claim that goes beyond the facts available to the Assessing Officer.

“In our considered view, the power of the Revisional Authority is for entertaining for the first time a new question of law or point of law, and not anything which is beyond the facts which were available with the Assessing Authority,” the court observed.

The case arose from an income tax assessment of Orissa Rural Housing Development Corporation Ltd. for the assessment year 2006–07. The Corporation had filed its return declaring a loss of ₹1.94 crore. The Assessing Officer subsequently raised a demand of ₹10.08 crore, comprising ₹7.58 crore in tax, surcharge and education cess, and ₹2.50 crore in interest under Section 234B of the Income Tax Act.

The Corporation had petitioned the Assistant Commissioner of Income Tax to revise its return, but the request was not taken into account while passing the assessment order dated December 23, 2008.

Its subsequent revision petition under Section 264 of the Act was dismissed on the ground that a fresh claim could be made only through a revised return. The Commissioner of Income Tax also dismissed its first appeal as not maintainable, since the Corporation had already invoked the revision remedy. The Orissa High Court later dismissed its writ petition, prompting it to approach the Supreme Court.

Before the Supreme Court, the Corporation relied on Wipro Finance Ltd. v. Commissioner of Income Tax, Dwarka Nath v. Income Tax Officer and Sirpur Paper Mills Ltd. v. Commissioner of Wealth Tax to argue that fresh claims could be raised before the revisional authority.

The Revenue relied on the Supreme Court's August 5 decision in Deputy Commissioner of Income Tax v. Om Siddhakala Associates, which held that a taxpayer cannot use revision proceedings under Section 264 to introduce a claim that was not made in the return and could no longer be raised through a timely revised return.

Rejecting the Corporation's argument, the court warned that allowing fresh claims based on facts unavailable to the Assessing Officer would leave the assessment process open-ended.

“Allowing this, would make the assessment procedure and the assessment order endless, and any party can raise fresh claim before the Revisional Authority even though there are no foundational facts available before the Assessing Authority to consider such claim,” the court observed.

The court also explained, relying on Shriram Investments v. Commissioner of Income Tax, that Wipro Finance concerned the appellate powers of the Income Tax Appellate Tribunal under Section 254, not the Assessing Officer's power to entertain a claim after the deadline for filing a revised return had expired.

Reiterating the principles laid down in Goetze (India) Ltd. v. Commissioner of Income Tax and Om Siddhakala Associates, the Supreme Court dismissed the appeals, finding no merit in the Corporation's challenge.

For Appellant(s): Advocate-on-Record Siddhartha Chowdhury; Senior Advocate S K Bagaria; Advocates Snehasish Mukherjee, Shaffi Mather and Tamal Sanyal.

For Respondent(s): Additional Solicitor General N Venkataraman; Advocate-on-Record Sudarshan Lamba; Advocates V Chandrashekhara Bharathi, Gaurav Arya, Sushant Singh, Alok Kumar and Nakul Madhan.