Commissioner Bound by ITAT Special Bench in Section 264 Revision | HC

Case Details: Samir N. Bhojwani vs. Principal Commissioner of Income-tax - [2026] 182 taxmann.com 787 (Bombay)

Judiciary and Counsel Details

• B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.
• Atul K. Jasani & J. D. Mistri, Sr. Adv. for the Petitioner.
• Subir Kumar, Niyanta Trivedi, Advs. & Diksha Pandey for the Respondent.

Facts of the Case

The petitioner, an individual, filed an application under section 264 before the Principal Commissioner seeking revision of the tax treatment of capital gains computed under section 50. He contended that such gains were taxable at the rate prescribed under section 112 in view of the decision of the jurisdictional Tribunal Special Bench in SKF (India) (2024) 168 taxmann.com 328 (Mumbai – Trib.).

The Principal Commissioner, by order passed under section 264, declined to grant relief and refused to follow the Special Bench decision. Aggrieved by the order, the petitioner filed a writ petition to the Bombay High Court.

High Court Held

The High Court held that the Commissioner completely misdirected himself by failing to follow the Tribunal’s binding decision in SKF (India) (supra). It is not for the Commissioner to decide whether the Tribunal was correct in its decision or not. Even though he may, in his personal opinion, believe the decision wrongly applied the law, he is bound to follow it. If lower authorities are permitted to disregard binding decisions because they believe those decisions are wrong, it would lead to complete chaos in the administration of tax laws.

Accordingly, the writ petition was allowed, and the impugned order passed under section 264 was set aside. The matter was remanded to the Commissioner to pass a fresh order on the assessee’s application, following the decision of the Special Bench of the Tribunal in SKF (India).

List of Cases Reviewed

• Union of India v. Kamlakshi Finance Corporation Ltd 1992 taxmann.com 16 (SC) (para 7)
• Om Siddhakala Associates v. Dy. CIT, CPC [Writ Petition No. 14178 of 2023, dated 28-3-2024] (para 8)
• Dipti Enterprises v. Asstt. DIT, Centralised Processing Centre [2025] 181 taxmann.com 10 (Bombay) (para 8) followed.

List of Cases Referred to

• SKF India Ltd. v. Dy. CIT [2024] 168 taxmann.com 328 (Mumbai – Trib.)/[2025] 210 ITD 1 (Mumbai – Trib.) (para 2)
• Union of India v. Kamlakshi Finance Corporation Ltd 1992 taxmann.com 16 (SC) (para 7)
• Om Siddhakala Associates v. Dy. CIT, CPC [Writ Petition No. 14178 of 2023, dated 28-3-2024] (para 8)
• Dipti Enterprises v. Asstt. DIT, Centralised Processing Centre [2025] 181 taxmann.com 10 (Bombay) (para 8).