Rajesh Parmanand Shah v. Principal Commissioner of Income Tax 17

Bombay HC5 Jan 2026WP/1315/2025

Case brief

AI extract

What is this about?

Section 264 Income Tax Act 1961 application rejected; Section 45(5A) capital gains; A.Y.2022-23; certificate of completion; revised return deadline 31 December 2022; concealment of income; de novo hearing; order set aside; writ petition allowed; Principal Commissioner of Income Tax-17 Mumbai; Rajesh Parmanand Shah; contentions kept open; disposal by 31 March 2026.

What did the court decide?

Impugned order dated 27 February 2024 set aside; Petitioner's application under Section 264 restored to the file of the Commissioner to be heard de novo on all aspects; all contentions kept open; Commissioner requested to dispose of the application expeditiously, preferably on or before 31 March 2026. ¶¶22

Rajesh Parmanand Shah vs Principal Commissioner of Income Tax 17 — Income Tax | Bombay HC (2026)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the writ petition challenging the order dated 27 February 2024 passed by Respondent No.1 under Section 264 of the Income Tax Act, 1961 (rejecting the Petitioner's Section 264 application) should be allowed and the order set aside. +1 more

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Court's answer

This is a fit case where the order passed under Section 264 needs to be set aside and the Commissioner be directed to give a de novo hearing on all aspects to the Petitioner.

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Ratio / Principle

The argument canvassed by the Revenue before the Court — that the capital gains are not assessable in A.Y.2022-23 but only in the previous year in which the certificate of completion is issued (Section 45(5A)) — is diametrically opposite to what the Commissioner held under Section 264.

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Key takeaways

All contentions of the parties are expressly kept open to be agitated before the Commissioner.ratio¶¶26

Detailed headnote1 paragraphs

Bombay High Court (B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.; order dated 05 January 2026) allowed a writ petition against the order dated 27 February 2024 passed by the Principal Commissioner of Income Tax-17, Mumbai under Section 264 of the Income Tax Act, 1961 rejecting the petitioner's Section 264 application. The Assessing Officer and the Commissioner had held the capital gains assessable in A.Y.2022-23, not originally brought to tax, with the revised-return window having expired on 31 December 2022; the application was rejected as an attempt to conceal particulars of income. Before the High Court the Revenue advanced a contrary plea under Section 45(5A) — that the gains are assessable only in the previous year in which the certificate of completion for the project is issued — which the Court found diametrically opposite to the Commissioner's own view. The Court accordingly set aside the impugned order, restored the Section 264 application to the Commissioner for a de novo hearing on all aspects, expressly kept all contentions of the parties open, and requested disposal expeditiously, preferably on or before 31 March 2026.

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21.wp.1315.2025.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO.1315 OF 2025

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Rajesh Parmanand Shah .. Petitioner

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Versus

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Digitally signed by UTKARSH UTKARSH KAKASAHEB KAKASAHEB BHALERAO BHALERAO Date: 2026.01.09 13:58:07 +0530

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Principal Commissioner of Income Tax-17, Mumbai & Ors.

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.. Respondents

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Mr.Percy Pardiwalla, Senior Adovcate a/w Dharan Gandhi, Aanchal Vyas, Advocates for the Petitioner.

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Mr.Ravi Rattesar, Advocate for the Respondents.

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CORAM : B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ. DATE : JANUARY 05, 2026

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P. C.

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1. The above Writ Petition challenges the order dated 27^th

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February 2024 passed by Respondent No.1 under Section 264 of the Income Tax Act, 1961.

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2. We find from the record that the Assessing Officer as well as

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the 1^st Respondent (under Section 264) have held that the capital gains are to be assessed in A.Y.2022-23 and which were not originally brought

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Page 1 of 3 JANUARY 05, 2026

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Utkarsh

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21.wp.1315.2025.doc

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to tax, and the time to file a revised return of income also expired on 31^st December 2022. It is in this light that the application under Section 264 was rejected as the Commissioner was of the opinion that this was an attempt to conceal the particulars of income before filing of the return of income. However, before us, an entirely new argument is canvassed on behalf of the Revenue, namely that the capital gains are not assessable at all in A.Y.2022-23 but would be assessable in the previous year in which the certificate of completion for whole or part of the project is issued by the Competent Authority. In other words, before us what is pressed into service is Section 45(5A) of the Income Tax Act. We find that this argument canvassed before us is diametrically opposite to what has been held by the Commissioner under Section 264.

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3. Considering these facts and circumstances, we are of the opinion that this is a fit case where the order passed under Section 264 needs to be set aside and the Commissioner be directed to give a de novo hearing on all aspects to the Petitioner.

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4. Accordingly, we hereby set aside the impugned order dated 27^th February 2024 and restore the application filed by the Petitioner under Section 264 to the file of the Commissioner to be heard de novo .

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Page 2 of 3 JANUARY 05, 2026

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Utkarsh

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21.wp.1315.2025.doc

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5. All contentions of parties in this regard are expressly kept open to be agitated before the Commissioner.

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6. We would request the Commissioner to dispose of the application filed by the Petitioner (under Section 264), as expeditiously as possible, and preferably on or before 31^st March 2026.

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7. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

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[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]

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Page 3 of 3 JANUARY 05, 2026

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Utkarsh

Rajesh Parmanand Shah v. Principal Commissioner of Income Tax 17

Case brief

What is this about?

What did the court decide?

Rajesh Parmanand Shah v. Principal Commissioner of Income Tax 17

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

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