The Supreme Court has ruled that taxpayers cannot use section 264 of the Income-tax Act as a workaround to introduce late tax claims after the revision window has closed, reinforcing the importance of timely filing and correction of returns.
The Supreme Court has ruled that section 264 of the Income-tax Act cannot be used as a workaround to introduce a tax claim after the deadline for filing a revised return has passed. In Deputy Commissioner of Income Tax, CPC & Ors. v. M/s Om Siddhakala Associates, the court said the taxpayer was, in effect, trying to revise its return through a revision petition, which the law does not permit.
The dispute arose after M/s Om Siddhakala Associates filed its self-assessment return and the Centralised Processing Centre issued an intimation under section 143(1), leading to a demand under section 156. The company later sought the benefit of the tolerance provision under section 43CA, but it had not claimed that relief in the original return and had not filed a revised return within the statutory time limit. When it approached the Principal Commissioner under section 264, the request was rejected. The Principal Commissioner also took the view that the section 43CA tolerance limit was prospective.
The Bombay High Court later remanded the matter for fresh consideration, but the Supreme Court set that order aside. It said the taxpayer could have corrected the omission by filing a revised return in time, and that section 264 could not be used to achieve the same result after limitation had expired. The court described the attempt as revising the return “under the garb of a revision”. At the same time, it made clear that it was not deciding whether the section 43CA tolerance limit applied retrospectively or prospectively.
The ruling leaves section 264 intact as a genuine remedial provision, but draws a firm line between correcting an assessment error and trying to add a fresh claim long after the return-revision window has closed. For taxpayers and advisers, the practical message is straightforward: claims that can be made in the original return, or corrected through a revised return, should not be left until the revision period has expired. Once that happens, section 264 cannot automatically be used to reopen the return.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
