No Sufficient Cause to Revise Income Tax Exemption Order after 7 Years: Supreme Court Backs Telangana HC in Tata Projects Case [Read Order]

The Supreme Court of India recently declined to interfere with a ruling by the Telangana High Court where it was found that an application filed by Tata Projects seeking revision of an income tax order pertaining to exemptions was filed after nearly seven years, and contained no sufficient cause to warrant revision.

The petitioner Tata Project Provident Fund Trust, which manages provident fund contributions of employees and is registered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Tata had claimed exemption of its income under Section 10(25) of the Income Tax Act, 1961 for the assessment year 2014-15. The exemption of ₹10,21,72,442 was disallowed by the Department on March 10, 2016, resulting in a consequential tax demand of over ₹4,43,48,179.

Aggrieved by the disallowance, the assessee filed a rectification application which was rejected on December 1, 2016. Under Section 264 of the Act, any revision against such an order is required to be filed within one year from the date of communication of the order or the date on which the assessee otherwise became aware of it.

Nearly seven years later, the assessee approached the Principal Commissioner of Income Tax seeking revision of the rejection of its rectification request.

The Principal Commissioner rejected the application on August 1, 2025 citing an inordinate delay of 91 months, gross negligence and laches.

The Commissioner further noted that the assessee, being an institutional assessee with dedicated tax handling mechanisms was expected to exercise reasonable diligence, including periodic review of the e-filing portal where the rejection had been uploaded in 2016.

Additionally, Tata Project’s explanation that the rejection email was sent to the e-mail ID of a former employee was found to be unsupported by evidence and insufficient to justify such delay.

The assessee challenged this rejection before the Telangana High Court, contending that the delay was not deliberate and that exemption under Section 10(25) had been allowed in earlier and subsequent years.

The Division Bench of Aparesh Kumar Singh and Justice G.M. Mohiuddin dismissed the writ petition, holding that the issue was not about whether the exemption was allowable, but about the petitioner’s failure to establish sufficient cause for condoning the long delay in invoking the revisional jurisdiction.

Before the Supreme Court, a Bench of Justice Dipankar Datta and Justice Satish Chandra Sharma declined to interfere with the order of the Telangana High Court, thus affirming that income tax revision proceedings cannot be reopened after such a prolonged delay in the absence of sufficient cause to do so.

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