Income Tax Act: Section 264 Revision Cannot Be Used To Revise Return After Statutory Deadline, Says SC

The Supreme Court has held that a revision under Section 264 of the Income Tax Act, 1961, cannot be used as a means to revise a self-assessment return after the statutory time limit for filing a revised return has expired.

A Bench of Justices J B Pardiwala and K Vinod Chandran said courts should not remand matters where the underlying claim amounts to an attempt to bypass the procedural requirements for revising returns under the Act.

Section 264, Income Tax Act allows a taxpayer to ask the Commissioner of Income Tax to revise/correct an income-tax order in the taxpayer’s favour, such as reducing wrongly assessed tax or allowing a missed deduction, subject to certain conditions and time limits.

The Bench made the observation while allowing an appeal filed by the Deputy Commissioner of Income Tax, CPC & Others against an order of the Bombay High Court, which had remanded the matter for fresh consideration of the assessee's revision claim.

Why did the Supreme Court reject the remand?

Court held that the remand was not permissible because the assessee had not revised its return within the prescribed time and was attempting to raise a claim later through Section 264.

The Income Tax Department's counsel submitted that the demand raised was in accordance with the returns filed by the assessee. The assessee, without filing a revised return, challenged the demand by invoking Section 264 of the Income Tax Act.

After the revision was dismissed, the assessee approached the Bombay High Court, which remanded the matter for fresh consideration.

The Department argued that the claim could not have been made at that stage, particularly when the assessee had not revised its returns within the statutory period.

The assessee, on the other hand, submitted that the high court had only remanded the matter and that all its contentions could be raised before the appropriate authority.

The Supreme Court, however, said it was "not convinced that the remand, in the facts and circumstances of the case, was permissible".

What was the dispute over the self-assessment return?

Court noted that the assessee, M/s Om Siddhakala Associates, had filed a self-assessment return, which was processed by the Centralised Processing Centre of the Income Tax Department in Bengaluru.

An intimation was thereafter issued under Section 143(1), followed by a notice under Section 156 demanding the outstanding tax based on the self-assessment return.

The assessee subsequently filed a revision under Section 264 before the Principal Commissioner of Income Tax.

The Principal Commissioner rejected the revision, citing unexplained delay and holding that the tolerance limits under Section 43CA were prospective. The authority also found that the attempt was, in effect, to revise the return after the prescribed period had expired by invoking Section 264.

The Supreme Court noted that the issue concerning the tolerance limit had not been raised in the self-assessment return and that the assessment had also not been revised within the time provided under the Act.

Can Section 264 be used to revise a return after the deadline?

No, the Supreme Court held.

"The high court, hence, fell in error, insofar as the remand made. 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.

Court therefore set aside the Bombay High Court's judgment.

The assessee's counsel informed the court that a reassessment had been carried out after the matter was remanded.

The Supreme Court held that once the remand order was set aside, the reassessment order would also have no effect as it was a dependent order.

"Necessarily, if the remand order is set aside, the order passed on re-assessment will also have no effect, being a dependent order," the Bench said.

Court consequently held that the assessee would have to pay tax on the basis of the returns filed, on which an intimation had been issued and a demand raised.

The Supreme Court clarified that it was not deciding whether the tolerance limit under Section 43CA was retrospective or prospective.

The appeal was accordingly allowed.

Case Title: Deputy Commissioner of Income Tax, CPC & Ors Vs M/s Om Siddhakala Associates

Bench: Justices J B Pardiwala and K Vinod Chandran

Date of Judgment: August 05, 2026