Revisional Authority u/s 264 of Income tax cannot Dismiss Petition after Condoning Delay: Karnataka HC Remands Matter for Reconsideration [Read Order]

The Karnataka High Court in a recent case set aside the order of the Revisional Authority under Section 264 of the Income Tax Act, 1961, which had dismissed the assessee’s revision petition despite having condoned the delay in filing holding that once delay is condoned, the authority cannot subsequently reject the petition on the same ground, and must consider the matter on merits.

The petitioner, Gopalan Enterprises, challenged the assessment order dated 31 December 2018 for AY 2014–15 by filing a revision petition under Section 264. The petition was filed with a delay of 82 days, accompanied by an application for condonation.

The Principal Commissioner initially condoned the delay but later dismissed the revision petition, citing delay, without adjudicating the merits. Aggrieved, the assessee approached the High Court under Articles 226 and 227 of the Constitution.

Counsel for the petitioner argued that the Revisional Authority’s conduct was contradictory and contrary to law. Once a delay was condoned, the petition could not be dismissed on the same ground. The petitioner sought remand for reconsideration on the merits, citing several precedents on the scope of deductions and revisional powers.

The petitioner relied on the Supreme Court’s ruling in Commissioner of Income Tax v. Canara Workshops (P) Ltd. [(1986) 161 ITR 320 (SC)], where the Court held:

“The object in enacting s. 80E is properly served only by confining the application of the provisions of that section to the profits and gains of a single industry… Each industry must be considered on its own, working only when adjudging its title to the deduction under s. 80E. It cannot be allowed to suffer because it keeps company with some other industry in the hands of the assessee.”

This precedent was invoked to highlight that statutory provisions must be interpreted to advance their object, and procedural technicalities such as delay should not defeat substantive rights.

The petitioner also relied on the more recent decision in CIT v. Reliance Energy Ltd. (Civil Appeal No. 1328 of 2021), where the Supreme Court reiterated that deductions under Chapter VI‑A must be computed in accordance with the specific section and allowed against income of that nature, reinforcing the principle that statutory interpretation must be consistent and purposive.

Justice SR Krishna Kumar observed that the Revisional Authority had erred in dismissing the petition after condoning the delay. The Court said that Section 264 confers wide powers on the Commissioner to revise orders prejudicial to the assessee, and such powers must be exercised fairly and judiciously. The Court noted that principles of natural justice require the authority to consider the merits once delay has been condoned.

Applying these principles, the High Court held that the Revisional Authority’s dismissal was unsustainable. Justice Krishna Kumar observed:

“After condoning the delay in filing the revision petition, the Revisional Authority committed an error in dismissing the petition on the ground of delay. The impugned order deserves to be set aside and the matter remitted for reconsideration on merits and in accordance with law.”

Accordingly, the writ petition was allowed, and the matter was remitted to the Principal Commissioner for fresh consideration.

GOPALAN ENTERPRISES vs THE PRINCIPAL COMMISSIONER OF INCOME TAX , 2025 TAXSCAN (HC) 2620 , WRIT PETITION NO. 14394 OF 2022 (T-IT) , 27 November 2025 , SRI. K R PRADEEP, ADVOCATE , SRI. E I SANMATHI, ADVOCATE