RAMESH MADHUKAR DEOLE vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX MUMBAI -20

This petition under Article 226 of the Constitution of India challenges an order dated 24 March, 2023 passed by respondent no. 1-Principal Commissioner of Income tax (PCIT) whereby the petitioner’s Revision Application filed under the provisions of Section 264 of the Income-tax Act (for short “I.T. Act”) against an ex-parte assessment order dated 2 June, 2021 passed by respondent no. 3-NFAC under Section 143(3) read with the provision of Section 144B of the I.T. Act, has been dismissed on the ground that the Revision Application was not maintainable.

The petitioner’s contention is that although a reasoned order is passed 2024:BHC-OS:18842-DB CNR No : HCBM020210922023 Uploaded on - 21/11/2024 Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC by PCIT accepting the petitioner’s case as seen from paragraph 6 of the impugned order, the same has been erroneously and contrary to the well- settled position in law, has been held to be not maintainable. The PCIT inter alia held that the refund was also not maintainable for a reason that the petitioner had failed to produce certain materials in response to the notice dated 15 April 2021 issued to the petitioner. It is in these circumstances, the petitioner is before the Court assailing the impugned order passed by the PCIT rejecting the petitioner’s Revision Application.

The Assessment Year in question is 2018-19, for which the petitioner filed its return of income on 31 July, 2018. The petitioner, however, realized that the return of income was filed in the wrong form (ITR-4) on an incorrect advice. The petitioner therefore filed the corrected return of income under ITR-3 wherein he claimed deductions and exemptions from capital gains under Section 54F in the context of the petitioner’s acquisition of Flat No. 1001, which was a consequence of surrender of tenancy, and having acquired a flat in the redevelopment of the building, for which the petitioner had paid consideration as also some amounts were paid for additional area.

The petitioner has contended that the petitioner’s case was selected for scrutiny and a notice under Section 142(1) was accordingly served on the petitioner on 18 January, 2021. The petitioner engaged a Chartered Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC Accountant to represent him before the department, who had made submissions on the issue of capital gains, which according to the petitioner, was exempt from tax under Section 54F. This for the reason that the amount represented gain from sale of long term capital asset (tenancy rights in house) which was reinvested in the new house.

On such backdrop, show cause notice dated 15 April, 2021 was issued to the petitioner requiring documentation substantiating the capital gains of Rs.52.12 lakhs, however, the petitioner-Chartered Accountant did not comply with the notice dated 15 April, 2021 and consequently the Assessing Officer proceeded to pass ex-parte assessment order dated 2 June, 2021. We need not delve on the details of the assessment order, suffice it to observe that the petitioner being aggrieved by the ex-parte assessment order had approached PCIT in Revision filed under section 264 of the I.T. Act praying for deletion of additions which were made of Rs.25,29,600/- and Rs.52,12,446/-. The petitioner submitted all materials in that regard, before the Revisionary Authority. However, by the impugned order, the Revision came to be rejected by the PCIT being not maintainable as noted by us hereinabove.

Mr. Nandiwadekar, learned counsel for the petitioner primarily has two- fold submissions to assail the impugned order. Firstly, he contends that the impugned order passed by PCIT is completely oblivious of the powers and Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC jurisdiction vested in the PCIT under section 264 of the I.T. Act, which according to him, are well-settled to be very wide referring to the decision of this Court in Smita Rohit Gupta vs. Principal Commissioner of Income-tax1 and Bahar Infocons (P.) Ltd. vs. Principal Commissioner of Income-tax2. Second contention of Mr. Naniwadekar is that once in paragraph 6 of the impugned order, the PCIT has taken into consideration and not disputed the petitioner’s case on merits, the conclusion as arrived by it was certainly erroneous, namely, to hold that the petitioner’s revision application was not maintainable. It is, therefore, his submission that it is appropriate that the impugned order is set aside and the proceedings are remanded to the Revisionary Authority for a fresh decision.

Ms. Omle has relied on the reply affidavit of Mr. Sanjay Kumar filed on behalf of the department. She supported the impugned order. However, insofar as the position in law as urged on behalf of the petitioner is concerned, she would not dispute the principles of law.

Having heard the learned counsel for the parties and having perused the impugned order and the record, we may observe that certainly considering the well-settled principles in law, the PCIT should not have rejected the 1 (2024) 158 taxmann.com 157 (Bombay) 2 (2024) 167 taxmann.com 179 (Bombay) Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC petitioner’s revision application as not maintainable. Mr. Naniwadekar would that since Section 264 uses the expression “any order”, which would imply that the section does not limit the power to correct mere errors committed by the 3 (2003) 175 Taxation 91 4 (2016) 68 taxmann.com 131 Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC subordinate authorities but could even be exercised where errors are committed by assessees. It was observed that it would even cover situations where the assessee on an error has not put forth a legitimate claim, at the time of filing the return and such error is subsequently discovered and raised for the first time in an application under section 264. 10. In Bahar Infocons (P.) Ltd. (supra), the Division Bench of this Court, to which one of us (G.S. Kulkarni, J.) was a member, observed that Section 264 was a salutary provision which bridges the gap and/or removes the vacuum to remedy a bona fide mistake and/or for correction of an inadvertent situation, which may take place in the assessment proceedings. It was observed that by remedying such mistake by orders being passed under Section 264 of the Act, any illegality or injustice which would otherwise be caused to the assessee can be corrected, so as to maintain a lawful course of action being followed in the course of assessment. The Court also observed that the object of such provision appears to be that the law would not be oblivious to any bona fide human mistake which may occur at the end of the assessee and which if otherwise permitted to remain, may lead to injustice or the provisions of law being breached.

In this view of the matter, considering the aforesaid position in law, we are of the clear opinion that the cause in the present case warranted that the Downloaded on - 31/10/2026 00:11:09

WPL21084_2023.DOC revision be decided on merits and more particularly considering the case of the petitioner, which although was noticed in paragraph 6 of the impugned order, was not taken to its logical conclusion, merely on a erroneous presumption in law that the revision is not maintainable for a reason that the petitioner had failed to produce certain materials in response to notice dated 15 April, 2021. In our opinion, there is a manifest error on the part of PCIT in coming to such conclusion to hold the revision not maintainable in the facts of the present case.

In light of the above discussion, Writ Petition needs to succeed. Hence, the following order: O R D E R (i) The impugned order dated 24 March, 2023 is quashed and set aside. (ii) The petitioner’s Revision application are remanded to PCIT to be decided in accordance with law and an appropriate order be passed thereon within a period of three months from today.

Disposed of in the aforesaid terms. No costs. (ADVAIT M. SETHNA, J.) (G. S. KULKARNI , J.) Downloaded on - 31/10/2026 00:11:09 Powered by TCPDF (www.tcpdf.org)