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Updated On : July 28, 2025

Section 264 – Revision Order by CIT (In Favour of Assessee)

Section 264 of the Income Tax Act, 1961, grants expansive powers to the Principal Commissioner or Commissioner of Income-tax (CIT) to revise any order passed by an officer subordinate to him, but critically, only in a manner not prejudicial to the assessee. This provision stands in contrast to Section 263, which is primarily a revenue protection measure. Section 264 acts as a benevolent safety net, allowing taxpayers to seek genuine relief even when regular appeal channels are unavailable, exhausted, or simply not the appropriate recourse.

It provides a discretionary administrative avenue for the higher tax authorities to correct errors, rectify injustices, or grant legitimate relief to the taxpayer, ensuring that substantive justice prevails beyond strict legal technicalities.

Core Principles of Section 264

1. Application by Assessee (Who Can Apply?)

The power under Section 264 is exclusively invoked upon an application made by the assessee or any person authorized by them (such as a tax consultant or Chartered Accountant). The CIT cannot initiate proceedings under this section suo motu (on their own motion), unlike Section 263.

2. Nature of Order Subject to Revision

The CIT can revise any order passed by an authority subordinate to him. This broad scope includes, but is not limited to:

Assessment Orders (e.g., scrutiny assessments, best judgment assessments, reassessment orders).
Penalty Orders (e.g., for concealment of income, default in TDS).
Orders related to TDS or TCS defaults.
Orders denying certain deductions or exemptions.

Crucially, even an implicit refusal or a deemed order (e.g., an AO's failure to grant a specific, legally admissible relief) can, in certain circumstances, be subject to revision under this section.

3. The Guiding Principle: "Not Prejudicial to Assessee"

This is the bedrock of Section 264. The CIT can pass an order only if it is **not detrimental or harmful to the financial interests of the assessee**. This means the CIT is expressly barred from enhancing the assessee's assessment, reducing a legitimate refund, or imposing a new penalty under this section. The revision can only provide relief or benefit to the taxpayer.

4. Discretionary and Equitable Power

The power granted under Section 264 is discretionary, meaning the CIT has the authority to decide whether or not to grant the relief. However, this discretion is not arbitrary; it must be exercised judiciously, fairly, and in line with principles of equity and justice, considering all facts and circumstances presented by the assessee.

Conditions and Limitations for Section 264 Application

To successfully invoke Section 264, certain conditions must be met:

1. No Pending Appeal Against the Same Order

An application under Section 264 cannot be made if the assessee has already filed an appeal to the Commissioner of Income-tax (Appeals) (CIT(A)) or the Income Tax Appellate Tribunal (ITAT) against the *same order* for the *same issues* on which revision is sought. This provision prevents parallel proceedings and ensures administrative efficiency.

2. Time Limit for Application

An application under Section 264 must typically be made within one year from the date on which the order sought to be revised was communicated to the assessee.

**Condonation of Delay:** A crucial proviso exists: the CIT has the power to condone the delay in filing the application if they are satisfied that the assessee was prevented by **sufficient cause** from making the application within the prescribed period. Examples of sufficient cause can include:
- Serious illness or medical emergency of the assessee or a close family member.
- Natural calamities (floods, earthquakes) affecting the assessee's ability to act.
- Genuinely mistaken belief that an appeal was not required or could not be filed.
- Incorrect legal advice from a professional, provided in good faith.
The burden of proving sufficient cause lies with the assessee, and the CIT will examine the facts carefully.

3. Order Not Subject to Section 263 Revision

The CIT cannot revise an order under Section 264 if it has already been subject to a revision order by a higher authority under Section 263, as the latter pertains to protecting revenue interests and would have already addressed any errors prejudicial to the revenue.

Distinction from Section 154 (Rectification): While both sections allow for correction of errors, Section 154 is limited to "mistakes apparent from the record" – errors that are obvious and do not require elaborate arguments or investigation. Section 264, conversely, grants a much wider power, allowing the CIT to consider facts not originally on record, examine legal positions, and exercise discretion to ensure justice, even if the error wasn't "apparent." This makes Section 264 a more powerful and flexible tool for assessees.

Procedure for Applying Under Section 264

The process for seeking revision under Section 264 involves several key steps:

1. Application in Writing: The assessee must submit a formal written application to the Principal Commissioner or Commissioner of Income-tax who has jurisdiction over the case.
2. Clear Grounds for Revision: The application must clearly state:
- The specific order sought to be revised (e.g., assessment order for AY XXXX-XX, penalty order under Section YYY).
- The exact nature of the error, injustice, or hardship suffered by the assessee.
- The legal and factual grounds on which the revision is sought, supported by relevant documents and arguments.
- If there's a delay, detailed reasons for condonation of delay with supporting evidence.
3. Opportunity of Being Heard: Adhering to the principles of natural justice, the CIT is obligated to provide the assessee a reasonable opportunity of being heard. This may involve submitting additional written explanations, attending virtual or in-person hearings, and presenting supporting evidence.
4. Faceless Regime Compliance: In the current era of faceless proceedings, applications and responses under Section 264 are typically filed electronically through the income tax e-filing portal. Hearings may be conducted via video conferencing, and all communications are electronic.
5. Passing of Speaking Order: After considering all submissions and evidence, the CIT must pass a "speaking order." This means the order must be detailed, articulate the reasons for the decision (whether granting or denying relief), and demonstrate proper application of mind to the facts and legal arguments presented. This ensures transparency and allows the assessee to understand the basis of the decision.

Finality of Order: An order passed by the CIT under Section 264 is generally considered final, and no further appeal lies to the CIT(A) or ITAT against it. This is because it is a discretionary power exercised for the benefit of the taxpayer, upon their own application. However, if the CIT's order under Section 264 is arbitrary, violates natural justice, or exhibits a clear error of law, the assessee may have recourse by filing a writ petition before the jurisdictional High Court under Article 226/227 of the Constitution of India.

Practical Scenarios for Invoking Section 264

Section 264 proves invaluable in various real-world situations, including:

**Missed Appeal Deadline:** When an assessee genuinely missed the deadline to file an appeal to the CIT(A) due to reasons constituting "sufficient cause."
**Minor Errors/Omissions:** For rectifying a minor clerical error, factual oversight, or an allowable deduction/exemption that was unintentionally missed in the Income Tax Return or during assessment, and which cannot be addressed under Section 154.
**Non-Appealable Orders:** Where the specific order or issue cannot be challenged through regular appeal channels (e.g., certain intimation orders under Section 143(1) if a revised return route isn't viable).
**Genuine Hardship Cases:** For seeking relief in cases of genuine financial hardship or unforeseen circumstances where strict application of a provision might lead to an unfair outcome, provided it does not compromise revenue interests.
**Consequential Relief:** Seeking consequential relief arising from an order of a higher court or tribunal on a related matter, which the assessee believes should impact their own assessment.

Checklist for Applying under Section 264

Before making an application under Section 264, consider the following checklist:

Is an appeal pending? Ensure no appeal is pending before the CIT(A) or ITAT for the same order and issue.
Is the time limit met? Verify the one-year deadline from the communication of the order. If delayed, prepare strong evidence for "sufficient cause."
Is the order revisable? Confirm the order was passed by a subordinate officer and has not been subjected to Section 263 revision.
Identify the specific error/hardship: Clearly pinpoint the error, omission, or injustice in the original order that needs correction.
Gather supporting documents: Collect all relevant documentary evidence to substantiate your claim (e.g., original assessment order, supporting invoices, medical certificates for delay, legal opinions).
Draft a comprehensive application: Prepare a concise yet detailed application explaining the facts, legal grounds, and the relief sought.
Be ready for hearing: Prepare to present your case effectively, whether through written submissions or virtual/in-person hearings.

Conclusion

Section 264 of the Income Tax Act is a valuable statutory provision designed to serve as a remedy for taxpayers seeking administrative relief. It provides the Principal Commissioner or Commissioner with equitable powers to rectify genuine hardships and errors, fostering a more just tax administration. While the power is discretionary, a well-prepared and legally sound application, coupled with timely submission and proper representation, significantly increases the likelihood of a favorable outcome for the assessee.

Seeking Relief from an Income Tax Order? Explore Section 264 with DisyTax!

If you're facing an income tax order that seems unjust or erroneous, and other appeal routes are closed or not suitable, Section 264 could be your pathway to relief. The expert team at DisyTax possesses a deep understanding of this discretionary power and extensive experience in navigating its nuances, ensuring your case is presented effectively and comprehensively.

Our specialized services include:

Thorough Eligibility Assessment: We meticulously review your case to ascertain its suitability and maximize your chances of success under Section 264, including assessing "sufficient cause" for any delays.
Precision Application Preparation: Crafting a robust, legally sound, and compelling application that clearly outlines the facts, legal grounds, and the specific relief you are seeking from the CIT.
Comprehensive Documentation Support: Assisting you in identifying, gathering, and organizing all necessary supporting documents and evidence to strengthen your claim.
Strategic Representation: Expertly representing your case during hearings with the Principal Commissioner or Commissioner of Income-tax, ensuring all your arguments are put forth cogently and persuasively.
Guidance on Future Steps: Providing clear advice on potential next steps, should the outcome not be in your favour.

Don't leave potential tax relief on the table. If you believe you have a strong case for revision under Section 264, protect your interests by partnering with experienced professionals. Contact DisyTax today for a consultation and strategic guidance.

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Section 264 of Income Tax Act: FAQs on Revision Orders (Assessee Friendly)

1. What is Section 264 of the Income Tax Act?

Section 264 of the Income Tax Act, 1961, empowers the Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) to revise any order passed by a subordinate authority (like the Assessing Officer), *other than* orders covered by Section 263 (which are prejudicial to revenue). This revision power can be exercised either on the Commissioner's own motion (suo motu) or upon an application filed by the assessee, and importantly, the order passed under Section 264 must *not* be prejudicial to the assessee. It's a significant relief mechanism for taxpayers.

2. How does Section 264 differ from Section 263?

The primary difference lies in their purpose and beneficiary:

**Section 264:** Allows revision *in favor of the assessee*. The Commissioner corrects errors in orders that are disadvantageous to the taxpayer.
**Section 263:** Allows revision *prejudicial to the revenue*. The Commissioner intervenes when an order passed by a subordinate authority is erroneous and causes a loss to the government's revenue.

3. What types of orders can be revised under Section 264?

The PCIT/CIT can revise almost any order passed by a subordinate income tax authority, including:

Assessment orders (e.g., under Section 143(3), 144)
Intimations under Section 143(1) (even if deemed an intimation, it's considered an order for Section 264 purposes)
Orders related to penalties, refunds, or any other order that is not covered by Section 263.

The key condition is that the revision must not be prejudicial to the assessee.

4. What is the time limit for an assessee to file an application under Section 264?

An assessee must file a revision application under Section 264 within **one year** from the date on which the order sought to be revised was communicated to them, or the date on which they otherwise came to know of it, whichever is earlier. The Commissioner has the power to condone delays if the assessee can show sufficient cause for not making the application within the prescribed period.

5. Can I file a Section 264 application if an appeal is pending?

No, Section 264(4) specifically restricts revision in certain cases:

If an appeal against the order lies to the Commissioner (Appeals) or the Appellate Tribunal but has not been made, and the time for making such appeal has not expired.
If the order is currently pending on an appeal before the Commissioner (Appeals).
If the order has already been made the subject of an appeal to the Commissioner (Appeals) or the Appellate Tribunal.

Essentially, if an appeal remedy is available or already pursued for that specific order, Section 264 cannot be used for the same issue. It's often seen as an alternative remedy when an appeal is not feasible or time-barred.

6. What is the fee for filing a Section 264 application?

Every application by an assessee for revision under Section 264 must be accompanied by a fee of **Rs. 500**.

7. What is the timeframe for the Commissioner to pass a revision order?

For applications filed by an assessee on or after October 1, 1998, the Commissioner must pass an order under Section 264 within **one year from the end of the financial year** in which the application was made. However, this time limit does not apply if the order is being passed to give effect to findings or directions of the Appellate Tribunal, High Court, or Supreme Court.

8. Can the Commissioner reject a Section 264 application without considering its merits?

The Commissioner's power under Section 264 is wide and is intended to do justice. While they can decline to interfere, this decision is often subject to judicial review if it appears arbitrary or if they fail to consider relevant facts or legal precedents. The Commissioner has a duty to examine the record and address the issues raised by the assessee on merits, particularly if the assessee points out an error leading to an over-assessment or incorrect demand.

9. Can a claim inadvertently missed in the original return be raised in a Section 264 application?

Yes, judicial pronouncements have often held that Section 264 has a broad scope and can be used to rectify errors or claim deductions/exemptions that the assessee inadvertently missed in their original return, provided such claims are admissible under the law and the mistake is apparent from the record or easily verifiable. The Commissioner's power is to ensure that no assessee pays more tax than legally due.

10. Is an intimation under Section 143(1) revisable under Section 264?

Yes, it has been clarified by courts and even the CBDT (though sometimes ambiguously) that an intimation issued under Section 143(1) is indeed considered an "order" for the purposes of Section 264 revision, even if it's merely a processing of the return. This means if there's an apparent error in the intimation that leads to an incorrect demand or denial of refund, an assessee can seek revision under Section 264.

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