Allowing the petition the Court held that there was no delay in filing the application under section 264 of the Income-tax Act, 1961, because the application under section 264 of the Act was against the order passed under section 154 of the Act and not that passed under section 143(3) of the Act. The order under section 154 of the Act was passed within one year from the date of application filed under section 264 of the Act. In the assessment order passed in the case of another co-owner of the flat, the Assessing Officer had accepted certain amount as the cost of indexed renovation. Therefore, the amount had to be accepted as correct and suitable allowance should be made while arriving at the long-term capital gains. The order was quashed and set aside. The matter was remanded to the first respondent for de novo consideration and to pass a reasoned order after providing the assessee with an opportunity of hearing. Court also observed that, Section 264 confers wide jurisdiction on the Commissioner. The proceedings under section 264 of the Act are intended to meet a situation faced by an aggrieved assessee, who is unable to approach the appellate authorities for relief and has no other alternate remedy available under the Act. The Commissioner is bound to apply his mind to the question whether the assessee was taxable on that income and his powers are not limited to correcting the error committed by the subordinate authorities but could even be exercised where errors are committed by the assessee. It would even cover situation where the assessee because of an error has not put forth legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264 of the Act.  (AY.2007-08)