Section 264 Cannot Become a Backdoor for a Time-Barred Revised Return: Supreme Court
Supreme Court holds that where a taxpayer omitted a claim from the original return and failed to revise it within the statutory period, Section 264 cannot be used to introduce that claim later “under the garb of a revision”
You missed a legitimate tax claim in your Income Tax Return.
The time limit for filing a revised return has expired.
Can you then approach the Principal Commissioner under Section 264 and ask for the missed claim?
The Supreme Court has now given a significant answer:
Section 264 cannot be used as a substitute for a belated revised return.
In Deputy Commissioner of Income Tax, CPC & Ors. v. M/s Om Siddhakala Associates, Civil Appeal No. 10175 of 2026, the Supreme Court held that where an assessee had not made a claim in the original return and had failed to revise the return within the prescribed statutory period, Section 264 could not be invoked to effectively make that claim later.
The judgment is an important reminder that limitation matters in tax law.
A good claim on merits does not necessarily mean that it can be introduced at any stage through an alternative procedural route.
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The case in simple words
The assessee filed its return on a self-assessment basis.
The return was processed by the Centralised Processing Centre (CPC), Bengaluru under section 143(1).
An intimation was issued.
A consequential demand under section 156 followed.
The assessee subsequently realised that it had not claimed the benefit of the tolerance limit under section 43CA.
The problem?
The claim had never been made in the original return.
And:
No revised return had been filed within the prescribed time.
The assessee therefore tried another route.
It approached the Principal Commissioner under Section 264.
That became the central legal issue.
—
What is Section 264?
Section 264 gives the Principal Commissioner/Commissioner revisionary powers in respect of certain orders.
It is a remedial provision that can provide relief to an assessee in appropriate circumstances.
But does that mean that every claim omitted from an Income Tax Return can subsequently be introduced through section 264?
The Supreme Court has now made an important distinction:
Section 264 is a revisionary remedy.
It cannot automatically be converted into:
A mechanism for filing a revised return after the limitation period has expired.
—
The missing Section 43CA claim
The particular claim involved the tolerance limit under section 43CA.
The assessee had not claimed the benefit while filing its self-assessment return.
Instead of revising the return within the statutory time, the assessee later approached the PCIT under section 264.
The PCIT rejected the revision petition, taking the view that:
There was unexplained delay;
The tolerance limit under section 43CA was prospective; and
The assessee was effectively trying to revise the return after the permitted period.
The assessee challenged the decision before the Bombay High Court.
—
Bombay High Court remanded the matter
The Bombay High Court, by its judgment dated 28 March 2024 in Writ Petition No. 14178 of 2023, remanded the matter for fresh consideration.
A reassessment was subsequently made pursuant to that remand.
The Revenue challenged the High Court’s decision before the Supreme Court.
And the Supreme Court ultimately disagreed with the High Court’s approach.
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Supreme Court: The claim was never made in the return
The Supreme Court focused on a fundamental fact:
The assessee had not raised the tolerance-limit claim in the self-assessment return.
And it had:
Not revised the return within the statutory period.
Therefore, according to the Supreme Court, permitting the claim through section 264 would effectively allow the assessee to do indirectly what it could no longer do directly.
That is:
Revise the return after the time for revision had expired.
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“Revision under the garb of a revision”
This is the phrase that makes the judgment particularly interesting.
The Supreme Court held, in substance, that allowing such a claim would amount to:
Revising the return “under the garb of a revision.”
The distinction is subtle but important.
The assessee was not merely asking the PCIT to correct an error in an existing assessment order.
It was seeking to introduce a new claim which had never been made in the return, after the time for filing a revised return had already expired.
The Court did not permit Section 264 to be used for that purpose.
—
Why limitation matters
Imagine the law says:
Revised return can be filed up to a specified statutory deadline.
The assessee does nothing until that deadline passes.
Afterwards, the assessee says:
> “I could no longer revise my return, so I will make the same change through Section 264.”
If that were freely permitted, the statutory deadline for filing a revised return could become meaningless.
Every missed claim could potentially be brought through a different procedural route.
The Supreme Court’s judgment prevents such an indirect circumvention of limitation.
—
A simple example
Suppose a taxpayer files an original return showing:
Taxable income: ₹1 crore
The taxpayer later discovers that a legitimate deduction of:
₹20 lakh
was omitted.
The law permits a revised return up to a particular statutory deadline.
But the taxpayer does not revise the return within that period.
Can the taxpayer subsequently approach the PCIT under section 264 and say:
> “Please allow my ₹20 lakh deduction because I genuinely forgot to claim it”?
After Om Siddhakala Associates, the answer is not automatically yes.
If granting the relief would effectively require rewriting the return itself, section 264 cannot be used merely as a substitute for the expired revision mechanism.
—
Section 264 is not a second revised return
This is perhaps the easiest way to remember the judgment.
Revised return
Used by the assessee to revise the return within the statutory framework.
Section 264
A revisionary jurisdiction exercised by the Commissioner/PCIT in accordance with the statutory conditions.
The two mechanisms cannot simply be treated as interchangeable.
Section 264 cannot become:
“Revised Return – Part 2.”
—
But isn’t Section 264 a beneficial provision?
Yes.
Section 264 is generally regarded as a remedial provision intended to provide relief in appropriate cases.
But even a beneficial provision operates within the statutory framework.
The Court’s decision does not mean that section 264 has no remedial role.
It means that its remedial character does not permit it to override the statutory time limit applicable to revision of the return.
That is a critical distinction.
—
The Supreme Court did NOT decide the Section 43CA issue
This is another very important point.
The dispute also involved the question of whether the section 43CA tolerance limit was:
Retrospective; or
Prospective.
But the Supreme Court expressly left that question open.
Therefore, the judgment should not be cited as deciding the substantive retrospective/prospective controversy regarding the tolerance limit.
The Supreme Court decided the case on the procedural limitation issue.
In simple words:
The Court said:
“We do not need to decide whether the tolerance limit applies retrospectively or prospectively because the assessee never made the claim in the return and did not revise the return within time.”
That makes the decision particularly focused.
—
The High Court’s remand could not survive
Since the Supreme Court found that the claim could not be introduced through section 264 in these circumstances, the Bombay High Court’s remand order could not stand.
The Supreme Court therefore:
Set aside the High Court’s judgment.
The reassessment made pursuant to that remand was treated as a dependent order.
Once the foundation—the High Court’s remand—was removed, the consequential reassessment also lost its legal effect.
—
What happens to the tax demand?
The Supreme Court held that the assessee would remain liable to pay tax on the basis of:
The return actually filed
and
The demand raised pursuant to the section 143(1) intimation.
Thus, the Court did not permit the assessee to use the subsequent proceedings to alter the tax liability arising from the original return.
—
The important difference between “correction” and “new claim”
This judgment is best understood by distinguishing two situations.
Situation 1: Correction of an existing assessment issue
Suppose the AO made an apparent error while processing or assessing a claim already made by the assessee.
Different remedial provisions may potentially be available depending on the facts.
Situation 2: Completely new claim omitted from the return
The assessee never claimed the deduction in the return and later seeks to introduce it after the time for revising the return has expired.
That is where Om Siddhakala Associates creates a significant limitation.
The second situation cannot simply be disguised as the first.
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A major lesson for taxpayers
The judgment reinforces one very practical rule:
Get the return right before the revision deadline expires.
Before the revised-return window closes, taxpayers should review:
Capital gains;
Deductions;
Exemptions;
TDS credit;
Foreign income;
Losses;
Business expenditure;
Property transactions;
Section 54/54F claims;
Chapter VI-A deductions; and
Other tax positions.
An omission discovered within the permitted period may be capable of correction through a revised return.
But once the statutory window closes, the available remedies may become substantially narrower.
—
The “I forgot to claim it” problem
Tax professionals regularly encounter situations where a taxpayer says:
“The deduction was available to me. I simply forgot to claim it.”
The natural reaction is:
“If the deduction is legally available, why should the taxpayer lose it?”
That is a fair question.
But tax law has two separate dimensions:
Substantive entitlement
Is the taxpayer legally entitled to the deduction?
Procedural entitlement
Has the claim been made through the mechanism and within the time prescribed by law?
The Supreme Court’s decision shows that substantive eligibility alone does not necessarily overcome a procedural limitation.
—
A missed claim can become a missed opportunity
Consider a taxpayer who discovers a ₹50 lakh deduction after the revised-return deadline.
If the taxpayer could always approach section 264 thereafter, the incentive to comply with the revised-return deadline would diminish.
The statutory limitation would effectively become optional.
The Supreme Court has prevented such an interpretation.
The message is:
Deadlines in tax law are not merely suggestions.
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What tax professionals should do before filing the return
This case also offers a valuable professional lesson.
Before filing an ITR, conduct a proper checklist review.
Income
Salary
Business/professional income
Capital gains
Rental income
Interest
Dividend
Other sources
TDS/TCS
Form 26AS
AIS
TIS
TDS certificates
Credit reconciliation
Deductions
Chapter VI-A
Section 54
Section 54F
Section 80C
Section 80D
Other eligible deductions
Capital gains
Cost of acquisition
Improvement
Indexation where applicable
Stamp duty value
Section 50C/43CA implications
Reinvestment exemptions
Final review
Ask:
> “If I discover an omission tomorrow, can I still revise the return?”
If the answer is no, the opportunity may be gone.
—
Does this mean every Section 264 application will fail?
No.
That would be an overstatement.
The judgment is specifically concerned with a situation where:
1. The claim was not made in the original return;
2. The return was not revised within the prescribed period; and
3. Section 264 was being invoked to effectively introduce the omitted claim thereafter.
Section 264 continues to have its statutory field of operation.
Each revision application must therefore be examined on its own facts and according to the applicable law.
—
The larger principle: Procedure can matter
Taxpayers sometimes think:
> “If my claim is legally correct, I will get it eventually.”
The Supreme Court’s decision is a reminder that this assumption can be dangerous.
Tax law contains:
Limitation periods;
Filing requirements;
Procedural conditions;
Revision mechanisms;
Appeal deadlines; and
Statutory windows for making claims.
Missing one of these can sometimes prevent an otherwise arguable claim from being entertained.
—
The case in one line
The entire judgment can perhaps be remembered through one sentence:
Section 264 cannot be used to do indirectly what the assessee could no longer do directly through a revised return.
—
Conclusion
The Supreme Court’s decision in Deputy Commissioner of Income Tax, CPC & Ors. v. M/s Om Siddhakala Associates, Civil Appeal No. 10175 of 2026, is an important ruling on the relationship between revised returns and revision under section 264.
The Court held that:
The assessee had not made the section 43CA tolerance-limit claim in the original return;
No revised return was filed within the prescribed statutory period;
Section 264 could not be invoked to introduce the omitted claim thereafter;
Doing so would effectively amount to revising the return “under the garb of a revision”;
The Bombay High Court’s remand was therefore set aside;
The reassessment made pursuant to that remand, being a dependent order, had no effect; and
The assessee remained liable according to the return filed and the consequential demand.
Importantly, the Supreme Court left open the question of whether the section 43CA tolerance limit is retrospective or prospective.
The larger lesson is one every taxpayer and tax professional should remember:
> A missed tax claim is not necessarily a lost claim—but once the statutory window for revising the return closes, Section 264 cannot ordinarily be used as a backdoor to reopen the return and introduce a claim that was never made.
So, before the revised-return deadline expires, ask one simple question:
“Have I claimed everything the law allows me to claim?”
Because in taxation, sometimes the biggest tax saving is not knowing a clever provision—it is simply not missing the deadline.
The copy of the order is as under:
