Revision under Section 264 vis-à-vis Appeal under Section 246A: Scope of Discretion, Errors in Return and the Preventive Role of Revisional Jurisdiction — An Analysis of the Bombay High Court decision in Swaminarayan Mandir Trust

 

The recent decision of the Bombay High Court in Swaminarayan Mandir Trust Versus Commissioner of Income Tax (Exemptions), Mumbai & Ors., Writ Petition No. 2162 of 2025, decided on 24 December 2025, once again brings into sharp focus the true width and remedial character of the revisional jurisdiction under Section 264 of the Income-tax Act, 1961, particularly when juxtaposed with the appellate remedy available under Section 246A. The judgment is significant not merely for charitable trusts claiming exemption under Section 11, but for all assessees who, owing to inadvertent or bona fide errors in return filing, find themselves denied substantive relief despite being otherwise eligible in law.

 

At the outset, it is important to appreciate the statutory framework. Section 143(1) provides for summary processing of returns through an automated mechanism, with limited adjustments permitted by statute. Section 154 enables rectification of mistakes apparent from the record, but its scope is narrowly circumscribed and does not extend to debatable issues or matters requiring detailed examination.

 

Section 246A enumerates appealable orders, including intimations under Section 143(1), thereby conferring on the assessee a right of appeal.

 

Section 264, on the other hand, confers revisional powers on the Commissioner, enabling him to call for records, make inquiries, and pass such orders as he thinks fit, subject to the condition that no appeal lies or that no appeal has been filed. Unlike appellate jurisdiction, revision under Section 264 is intended as a benevolent, corrective jurisdiction, designed to mitigate hardship and prevent miscarriage of justice.

 

 

This appellate remedy is adversarial in nature and proceeds on grounds of challenge to the correctness, legality or propriety of the order appealed against. In contrast, Section 264 embodies a distinct and independent revisional jurisdiction, intended to operate as a corrective and equitable mechanism where an assessee seeks relief from an order which is prejudicial to him, irrespective of whether such order is appealable, so long as no appeal has actually been filed. The statute does not mandate exhaustion of the appellate remedy as a condition precedent to invoking Section 264, nor does it prescribe that an appeal must be preferred in priority to revision. The choice of remedy is consciously left to the assessee, and the revisional authority cannot decline jurisdiction merely because the order impugned could have been appealed under Section 246A. The High Court reiterated that revision under Section 264 is not an inferior or residual remedy, but a substantive statutory right designed to prevent miscarriage of justice, particularly in situations where the assessee seeks rectification of bona fide errors, omissions or inadvertent mistakes which may not squarely fall within the narrow confines of appellate adjudication or rectification under Section 154. The Court thus reaffirmed that appeal and revision operate in parallel statutory domains, serving different remedial purposes, and that the existence of an appellate remedy under Section 246A does not eclipse, dilute or curtail the wide discretionary powers vested in the Commissioner under Section 264, provided the statutory conditions for invoking revision are otherwise satisfied

 

 

In the present case, the petitioner trust, registered under Section 12A and otherwise entitled to exemption under Section 11, filed its return for Assessment Year 2018–19 declaring income of Rs. 16.46 lakhs. Owing to inadvertent punching errors and incorrect disclosure of receipts in inappropriate schedules, the return, when processed under Section 143(1), resulted in denial of exemption and creation of a tax demand. Notably, the acknowledgment of return still reflected the correct tax liability and refund, reinforcing the assessee’s bona fide belief that the return particulars were accurate. Multiple rectification applications under Section 154 failed on the ground that there was no “mistake apparent from the record”. Faced with this impasse, the assessee invoked Section 264, seeking revision of the intimation. The Commissioner, however, rejected the revision on the reasoning that the return had been processed strictly on the basis of figures furnished by the assessee and that similar errors in other years showed negligence on the part of the trust.

 

The High Court categorically disapproved this approach. One of the central issues addressed was whether an assessee has a discretion to choose between filing an appeal under Section 246A and invoking revision under Section 264. The Court answered this in the affirmative, holding that there is nothing in the statute which mandates that an assessee must necessarily pursue the appellate remedy where the revisional remedy is otherwise available. Consistent with earlier precedents, the Court reiterated that the Commissioner cannot refuse to exercise revisional jurisdiction merely because the order sought to be revised is appealable. The choice of remedy lies with the assessee, and the existence of an appellate remedy does not eclipse the revisional power, so long as no appeal has been filed.

 

Equally important is the Court’s exposition on the scope of Section 264 in dealing with errors committed by the assessee itself. The Revenue’s contention that Section 264 can only correct errors of subordinate authorities, and not mistakes originating in the return filed by the assessee, was emphatically rejected. Relying on a consistent line of Bombay High Court authority, including Pramod R. Agrawal, Diwaker Tripathi, Bahar Infocons (P.) Ltd. and Hapag Lloyd India Pvt. Ltd., the Court reaffirmed that Section 264 confers wide and plenary powers. These powers extend to granting relief even where the assessee, due to human error or inadvertence, failed to make a legitimate claim in the return or disclosed particulars incorrectly. The underlying principle is that an assessee should not be subjected to tax which is not otherwise exigible in law merely because of clerical or procedural mistakes.

 

The judgment also clarifies the oft-misunderstood application of the Supreme Court’s decision in Goetze (India) Ltd. v. CIT. The Revenue’s reliance on Goetze to contend that new claims cannot be entertained without a revised return was held to be misplaced. The High Court correctly distinguished Goetze as a decision rendered in the context of assessment proceedings and the powers of the assessing authority, not in the context of revisional jurisdiction under Section 264. The Court reiterated that Goetze does not curtail the powers of the Commissioner under Section 264, which are meant to operate as a safety valve against technical denials of substantive relief.

 

From a jurisprudential perspective, the decision reinforces the remedial philosophy embedded in Section 264. The revisional power is not adversarial or punitive; it is corrective and equitable. It obliges the Commissioner to apply his mind to the real taxability of the assessee and to ensure that the charge of tax aligns with substantive law rather than procedural lapses. The Court’s emphasis on the absence of mala fides, deliberate misstatement, or tax evasion intent further underscores that where errors are plainly human and bona fide, the tax administration must respond with fairness rather than rigidity.

 

In conclusion, the ruling in Swaminarayan Mandir Trust decisively settles two critical propositions. First, an assessee has a statutory discretion to choose between appeal under Section 246A and revision under Section 264, and the revisional authority cannot abdicate jurisdiction merely because an appeal was possible. Second, the scope of Section 264 is wide enough to correct even those errors which originate from the assessee’s own return, including incorrect disclosures and omission of legitimate claims, provided the relief sought is otherwise tenable in law. The decision serves as an important reminder that tax administration is ultimately concerned with lawful taxation and not with penalising procedural imperfections, and it restores Section 264 to its rightful place as a potent instrument for preventing miscarriage of justice.

 

Disclaimer:
This article is intended solely for academic and professional discussion for tax practitioners and scholars. It reflects the author’s understanding and interpretation of the judicial decision discussed and the statutory provisions as on the date of writing. It does not constitute legal advice or a professional opinion. Readers are advised to examine the original judgment, relevant statutory provisions, and applicable case law, and to seek independent professional advice before acting on the basis of the contents of this article.