I left a legitimate deduction out of my return and the assessment is over. Can the Commissioner allow it under s.264?
Yes. The Bombay High Court held that s.264 confers wide jurisdiction, that it is not confined to correcting the errors of subordinate authorities, and that it covers a claim the assessee failed to make in the return and discovered only later. The rejection was quashed and the Commissioner was directed to decide the application afresh, by a reasoned order, after a hearing.
Decided by the High Court (Bombay High Court - K. R. Shriram and Rajesh S. Patil, JJ.) on 2023-10-13, reported as (2024) 464 ITR 367 / [2023] 156 taxmann.com 126 (Bom)(HC); Writ Petition No. 2435 of 2017. It bears on section 264, section 154, section 50C of the Income Tax Act 1961, in Revision & Rectification, Capital Gains and Appeals matters.
This is the answer to the standard rejection line - that a claim raised for the first time in a revision application is a new claim and cannot be entertained. It also fixes the point limitation runs from: the application there was directed at the s.154 order, not at the assessment order, so the one year was counted from the s.154 order. Where the officer has already allowed the identical claim to a co-owner, that is material the Commissioner must deal with.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2007-08 the assessee, a resident individual, filed his return on 21 August 2007 declaring Rs 8,49,118. He had inherited a Mumbai flat along with three other persons on his father's death in 2002 and was a 25 per cent co-owner. He offered Rs 8,83,763 as capital gain, computed without the indexed cost of improvement of Rs 2,95,859 for renovation carried out in September 1990. The assessment order of 30 November 2009 added Rs 6,05,765 under s.50C on the stamp duty value. The Commissioner (Appeals), by an ex parte order of 21 September 2010, directed a reference to the Departmental Valuation Officer under s.50C(2); the valuation report of 23 May 2011 put the fair market value at Rs 1,57,21,000 against a stamp duty value of Rs 1,69,23,060, giving relief of Rs 3,00,515. A second appeal against the order giving effect to that was dismissed for default on 13 August 2013, which the assessee says he learned of only when a recovery notice arrived. A second Chartered Accountant then advised that the other co-owners had claimed the renovation cost — one had claimed the whole Rs 4,15,000 and been allowed a quarter share, another who claimed Rs 2,95,859 had had Rs 93,000 added and later reduced on a s.154 application. The assessee filed his own s.154 application on 4 November 2015; it was rejected on 8 December 2015 on the ground that the claim had never been put to the Assessing Officer or the Commissioner (Appeals), and the s.264 application against that rejection, filed on 18 January 2016, was rejected on 22 March 2017.
The order of 22 March 2017 was quashed and the matter remanded to the Principal Commissioner, whose order it was, for de novo consideration: a personal hearing on at least five working days' notice, a reasoned order dealing with all the assessee's submissions, and disposal of the s.264 application within eight weeks, counsel undertaking not to seek an adjournment. Section 264 confers wide jurisdiction; the power is not limited to correcting the errors of subordinate authorities and extends to errors committed by the assessee, including a legitimate claim omitted from the return and raised for the first time in the s.264 application. There was no delay, because the application was directed against the s.154 order of 8 December 2015 and was made within one year of it — which is also the answer to the objection that the assessee, having appealed against the assessment, could not apply under s.264.
The revenue argued that the assessee, having already appealed against the assessment order, could not apply under s.264; that the application was out of time because more than a year had passed since the s.143(3) order; that he could not plead his own ignorance; and that s.154 does not reach a claim never made during scrutiny (paragraph 9). The Court answered the first two together: the s.264 application was directed against the s.154 order, not the assessment, and was filed within one year of it, the appeals having been against the assessment (paragraph 10). On the substance it held that s.264 confers wide jurisdiction, that proceedings under it are intended to meet the situation of an aggrieved assessee who cannot approach the appellate authorities and has no other remedy, that the Commissioner is bound to apply his mind to whether the assessee was taxable on the income, and that his powers extend to errors committed by the assessee, including the case where a legitimate claim was not made in the return through error and is raised for the first time in the s.264 application — adopting paragraphs 7 and 8 of Smita Rohit Gupta, which in turn reproduce paragraph 6 of Hindustan Diamond Co. and paragraph 35 of Vijay Gupta v. CIT (Delhi) (paragraph 11). It applied Asmita A. Damale, that the Commissioner exercising revisionary powers must ensure relief is given where the law permits (paragraph 12), and set out Selvamuthu Kumar (Mad.) at length for the proposition that 'record' in s.264 is not confined to what was before the Assessing Officer at assessment, declining to follow the contrary view of the Andhra Pradesh High Court in M.S. Raju (paragraph 13). On proof, the Court held the assessee need not produce documents establishing his share of the Rs 2,95,859, but for a specific reason: in the assessment of the co-owner Ravi R Agarwal, made under s.143(3) on 30 December 2010, the Assessing Officer had himself accepted that figure as the indexed cost of renovation, so it had to be accepted and a suitable allowance made (paragraph 14).
The Commissioner is bound to apply his mind to the question whether petitioner was taxable on that income and his powers are not limited to correct the error committed by the subordinate authorities but could even be exercised where errors are committed by assessee. It would even cover situation where assessee because of an error has not put forth legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under Section 264 of the Act.
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Handle my notice → Ask a CA on WhatsAppYes. The Bombay High Court held that s.264 confers wide jurisdiction, that it is not confined to correcting the errors of subordinate authorities, and that it covers a claim the assessee failed to make in the return and discovered only later. The rejection was quashed and the Commissioner was directed to decide the application afresh, by a reasoned order, after a hearing. This was decided by the High Court (Bombay High Court - K. R. Shriram and Rajesh S. Patil, JJ.) and bears on section 264, section 154, section 50C of the Income Tax Act 1961. It is reported as (2024) 464 ITR 367 / [2023] 156 taxmann.com 126 (Bom)(HC); Writ Petition No. 2435 of 2017. This is the answer to the standard rejection line - that a claim raised for the first time in a revision application is a new claim and cannot be entertained. It also fixes the point limitation runs from: the application there was directed at the s.154 order, not at the assessment order, so the one year was counted from the s.154 order. Where the officer has already allowed the identical claim to a co-owner, that is material the Commissioner must deal with. If it applies to you, the first step is this: Identify precisely which order you are revising, because the one year runs from the communication of that order - a s.154 order carries its own fresh period.
For assessment year 2007-08 the assessee, a resident individual, filed his return on 21 August 2007 declaring Rs 8,49,118. He had inherited a Mumbai flat along with three other persons on his father's death in 2002 and was a 25 per cent co-owner. He offered Rs 8,83,763 as capital gain, computed without the indexed cost of improvement of Rs 2,95,859 for renovation carried out in September 1990. The assessment order of 30 November 2009 added Rs 6,05,765 under s.50C on the stamp duty value. The Commissioner (Appeals), by an ex parte order of 21 September 2010, directed a reference to the Departmental Valuation Officer under s.50C(2); the valuation report of 23 May 2011 put the fair market value at Rs 1,57,21,000 against a stamp duty value of Rs 1,69,23,060, giving relief of Rs 3,00,515. A second appeal against the order giving effect to that was dismissed for default on 13 August 2013, which the assessee says he learned of only when a recovery notice arrived. A second Chartered Accountant then advised that the other co-owners had claimed the renovation cost — one had claimed the whole Rs 4,15,000 and been allowed a quarter share, another who claimed Rs 2,95,859 had had Rs 93,000 added and later reduced on a s.154 application. The assessee filed his own s.154 application on 4 November 2015; it was rejected on 8 December 2015 on the ground that the claim had never been put to the Assessing Officer or the Commissioner (Appeals), and the s.264 application against that rejection, filed on 18 January 2016, was rejected on 22 March 2017. The matter was decided on 2023-10-13 by the High Court (Bombay High Court - K. R. Shriram and Rajesh S. Patil, JJ.). On those facts the High Court held as follows. The order of 22 March 2017 was quashed and the matter remanded to the Principal Commissioner, whose order it was, for de novo consideration: a personal hearing on at least five working days' notice, a reasoned order dealing with all the assessee's submissions, and disposal of the s.264 application within eight weeks, counsel undertaking not to seek an adjournment. Section 264 confers wide jurisdiction; the power is not limited to correcting the errors of subordinate authorities and extends to errors committed by the assessee, including a legitimate claim omitted from the return and raised for the first time in the s.264 application. There was no delay, because the application was directed against the s.154 order of 8 December 2015 and was made within one year of it — which is also the answer to the objection that the assessee, having appealed against the assessment, could not apply under s.264.
The revenue argued that the assessee, having already appealed against the assessment order, could not apply under s.264; that the application was out of time because more than a year had passed since the s.143(3) order; that he could not plead his own ignorance; and that s.154 does not reach a claim never made during scrutiny (paragraph 9). The Court answered the first two together: the s.264 application was directed against the s.154 order, not the assessment, and was filed within one year of it, the appeals having been against the assessment (paragraph 10). On the substance it held that s.264 confers wide jurisdiction, that proceedings under it are intended to meet the situation of an aggrieved assessee who cannot approach the appellate authorities and has no other remedy, that the Commissioner is bound to apply his mind to whether the assessee was taxable on the income, and that his powers extend to errors committed by the assessee, including the case where a legitimate claim was not made in the return through error and is raised for the first time in the s.264 application — adopting paragraphs 7 and 8 of Smita Rohit Gupta, which in turn reproduce paragraph 6 of Hindustan Diamond Co. and paragraph 35 of Vijay Gupta v. CIT (Delhi) (paragraph 11). It applied Asmita A. Damale, that the Commissioner exercising revisionary powers must ensure relief is given where the law permits (paragraph 12), and set out Selvamuthu Kumar (Mad.) at length for the proposition that 'record' in s.264 is not confined to what was before the Assessing Officer at assessment, declining to follow the contrary view of the Andhra Pradesh High Court in M.S. Raju (paragraph 13). On proof, the Court held the assessee need not produce documents establishing his share of the Rs 2,95,859, but for a specific reason: in the assessment of the co-owner Ravi R Agarwal, made under s.143(3) on 30 December 2010, the Assessing Officer had himself accepted that figure as the indexed cost of renovation, so it had to be accepted and a suitable allowance made (paragraph 14). In the words reproduced by the source cited on this page: "The Commissioner is bound to apply his mind to the question whether petitioner was taxable on that income and his powers are not limited to correct the error committed by the subordinate authorities but could even be exercised where errors are committed by assessee. It would even cover situation where assessee because of an error has not put forth legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under Section 264 of the Act."
It was decided by the High Court on 2023-10-13 and is reported as (2024) 464 ITR 367 / [2023] 156 taxmann.com 126 (Bom)(HC); Writ Petition No. 2435 of 2017. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 264, section 154, section 50C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The order of 22 March 2017 was quashed and the matter remanded to the Principal Commissioner, whose order it was, for de novo consideration: a personal hearing on at least five working days' notice, a reasoned order dealing with all the assessee's submissions, and disposal of the s.264 application within eight weeks, counsel undertaking not to seek an adjournment. Section 264 confers wide jurisdiction; the power is not limited to correcting the errors of subordinate authorities and extends to errors committed by the assessee, including a legitimate claim omitted from the return and raised for the first time in the s.264 application. There was no delay, because the application was directed against the s.154 order of 8 December 2015 and was made within one year of it — which is also the answer to the objection that the assessee, having appealed against the assessment, could not apply under s.264. It arises in Revision & Rectification, Capital Gains and Appeals matters, on section 264, section 154, section 50C of the Income Tax Act 1961, and was decided by Bombay High Court - K. R. Shriram and Rajesh S. Patil, JJ.. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Set out the omitted claim with the computation and the evidence in the application itself; do not assume the Commissioner will call for it. Where the same claim has been allowed to a co-owner, a partner or another year, put that order on record - it was decisive here. Ask in terms for a personal hearing and a reasoned order, and keep the record complete, because the only route from a s.264 order is a writ petition.
Still good law. Applied by a later Division Bench of the same High Court, which is the positive treatment the status requires. In GM Modular (P.) Ltd. v. Pr. CIT [2026] 185 taxmann.com 495 / (2026) 310 Taxman 431 (Bombay), B.P. Colabawalla and Firdosh P. Pooniwalla, JJ., Writ Petition No. 378 of 2026, decided 30 March 2026, the Court set out paragraph 11 of this judgment verbatim, with emphasis supplied, as the authority for the proposition that the powers under s.264 are very wide and that the Commissioner was duty bound to examine the merits, and on that footing quashed a summary rejection of a s.264 revision against a penalty order under s.270A. A cognate Bombay line runs alongside it: Swaminarayan Mandir Trust v. CIT (Exemptions) [2026] 182 taxmann.com 209 / 309 Taxman 159 (Bombay), 24 December 2025, holds that the assessee has a discretion to choose s.264 over an appeal under s.246A. No note of a special leave petition appears on the report and it carries no citator banner. The earlier observation that Bahar Infocons Pvt. Ltd. v. PCIT, 23 September 2024, does not cite this judgment may still be so, but it is no longer the last word. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The full text of the judgment has been read at https://indiankanoon.org/doc/21541076/. It is Writ Petition No. 2435 of 2017, decided 13 October 2023 by K.R. Shriram and Rajesh S. Patil, JJ., the oral judgment delivered per Shriram, J.; it runs to sixteen numbered paragraphs, with the disposal at paras 15 and 16. Two conclusions in the earlier note must be withdrawn. The date of judgment is 13 October 2023 and the case number is Writ Petition No. 2435 of 2017, both of which the note recorded as unavailable; where 7 November 2023 circulates as the date of this judgment it is a publication date and not the date of decision. And the reasoning that the quoted sentence must be a reporter's wording, because one report prints it without quotation marks and another renders it differently, was wrong: the passage stands verbatim in paragraph 11 of the judgment, in the Court's own voice, and is quoted here to that paragraph - only the capitalisation of 'Section 264' has been corrected against the text. Paragraph 11 is long: it opens by rejecting the Department's remaining submission, sets out the width of s.264 following this Court's own Smita Rohit Gupta, carries the sentence quoted here, and closes with the point that the Department's objection is hyper technical and runs counter to the stand it took in three earlier assessment orders of the same assessee. One trap for a reader working from a digest: some renderings say the matter was remanded to the Assessing Officer. The judgment remands to respondent no. 1, the Principal Commissioner whose order under s.264 was quashed, and fixes the terms - five working days' notice of a personal hearing, a reasoned order dealing with all submissions and disposal within eight weeks. The co-owner whose assessment accepted the same renovation cost is named in the judgment as Ravi R Agarwal, and his assessment order under s.143(3) is dated 30 December 2010 (para 14). The other authorities are at paras 12 (Asmita Damle), 13 (Selvamuthukumar, and the Andhra Pradesh view in M.S. Raju not followed) and 8 (the petitioner's list, including Hindustan Diamond, Smita Rohit Gupta, Shah Brothers and Vijay Gupta). It does not decide whether the Commissioner must allow such a claim, only that he must consider it — the matter went back for a fresh decision within eight weeks. The holding that the assessee need not prove the quantum is narrower than it looks: it rests on the Assessing Officer having accepted the identical figure in the co-owner's own assessment, so it does not decide what proof is needed where no such order exists. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The order of 22 March 2017 was quashed and the matter remanded to the Principal Commissioner, whose order it was, for de novo consideration: a personal hearing on at least five working days' notice, a reasoned order dealing with all the assessee's submissions, and disposal of the s.264 application within eight weeks, counsel undertaking not to seek an adjournment. Section 264 confers wide jurisdiction; the power is not limited to correcting the errors of subordinate authorities and extends to errors committed by the assessee, including a legitimate claim omitted from the return and raised for the first time in the s.264 application. There was no delay, because the application was directed against the s.154 order of 8 December 2015 and was made within one year of it — which is also the answer to the objection that the assessee, having appealed against the assessment, could not apply under s.264.
TaxSphere, “Pramod R Agrawal v PCIT”, https://taxnotice.vittsphere.com/caselaw/case/pramod-r-agrawal-v-pcit-264-claim-not-made-in-return/ (validity last checked 2026-08-23)
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I let the 30 days to appeal my 143(1) intimation lapse. Can I still go to the PCIT under s.264?
Two years after Form 5 the Assessing Officer has issued a section 154 notice saying the tax on my settled additions was computed at the wrong rate. Can he reopen a completed Vivad se Vishwas settlement?
The deductor credited the TDS late, so it turned up in 26AS only after I had filed. The department says I should have revised my return, and refuses credit because I never offered the income to tax. Is there a way back?
The Assessing Officer has rectified my old s.143(1)(a) intimation under s.154 after already completing a s.143(3) assessment. Can he do that?
