Section 264 of the Income Tax Act provides, Powers to the Commissioner of Income Tax (CIT) to exercise the order in favour of the assessee. Order passed under this section, cannot be overall prejudicial to the assessee. Meaning thereby, CIT can increase the income under one head and decrease in another head but overall decreasing the total income, is a valid order, for the purpose of this section.
This remedy is, an alternative to the CIT(A), available to the Assessee but, is not in addition to the appeals. It is known as a departmental remedy but it cannot be considered, as a secondary to appeal to CIT(A) u/s 246A of the Act. Commissioner cannot reject an application u/s 264 on the grounds that assessee has appeal remedy available in the Act.
Orders for the purpose of this section have wide connotations, meaning thereby that intimation u/s 143(1) or application u/s 197, is also covered in the "order" under this section apart from covering orders u/s 143(3), 147, 153A & 153C.
Although the scope of this section is narrower than that of CIT(A), but CIT still has wide enough powers and has all the trappings of the judicial powers. CIT has a discretion to grant or refuse the relief. These powers are not arbitrary one, it cannot be exercised according to his own fancy. It is the power that is coupled, with a duty to exercise it, in the interest of the justice of the assessee.
CIT has a duty to consider all the facts placed before him, even if the same Is not placed before the AO. The same has been pronounced by honorable Calcutta high court in the judgement of Phool Lata Somani vs CIT (276 ITR 216).
Revision of the assessment order, after its rectification u/s 154 is not valid because rectification order supersedes the assessment order & subsequent cancellation of the assessment order does not validate such revision orders.
Revision order of the CIT, merges with the order of subordinate authority, even if, the revision application has been dismissed. Hence the revision order are not appealable under 246A to CIT(A), 253 to ITAI. However, since this order is judicial or Quasi judicial in nature, it comes within the ambit of article 226 of the constitution.
Revision u/s 264 should be done within 1 year from the date on which, Assessee came to know of the impugned order. Madras High Court in the decision of Muthiah Chettiar vs CIT the expression "Date of Order" means when the order is communicated to the assessee.
In case of a belated revision petition, appropriate reasons should be accompanied and CIT should remain liberal, in the matter of delay. The same has been affirmed MP high court of Parijat chemicals Pvt ltd vs ITO (216 ITR 221).
This section provides wider power, for the revisionary authority, not only to correct the error commitment by the subordinate authorities but also to correct the errors committed by the assessee (Hitech analytical services vs PCIT) (402 ITR 479).
As per section 264(4), CIT shall not accept the revision application, if time limit for filling the appeals to CIT(A) or tribunal has not expired or assessee has not waived his right to appeal. Further, If an order is a subject matter of effective appeal, then revisionary order cannot be accepted. If CIT(A) refuses to entertain the appeal on the ground that there was failure to pay admitted tax or time barred, then revision order can be accepted. Since these grounds are not a subject matter of the effective appeal.
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