Landmark Cases on Revision under Section 263

A revisionary order under Section 263 is invalid if it is based on the same facts and involves extensive enquiry after the assessment proceedings were completed, implying a lack of application of mind during the original assessment.

When an assessment is reopened under Section 263, the Assessing Officer's power to make a fresh assessment is confined only to the specific issues directed by the Commissioner for revision. The Assessing Officer cannot consider other items not part of the revisional direction.

Revisionary powers under Section 263 are limited to correcting orders that are both erroneous and prejudicial to the revenue. An order is not erroneous merely because the Commissioner disagrees with the Assessing Officer's view if that view is legally sustainable.

A notice under Section 263 of the Income Tax Act cannot be issued if two views are possible on the issue.

A Commissioner's revisional jurisdiction under section 263 is available when an Assessing Officer fails to conduct a necessary enquiry, as this constitutes prejudice to the revenue and allows for remanding the matter for such enquiry.

Revisional proceedings under Section 263 are not sustainable if the conditions for invoking the jurisdiction are not met, meaning there's no objective material to show the Assessing Officer's order was erroneous and prejudicial to the revenue.

An assessment order is erroneous and prejudicial to the revenue if the Assessing Officer accepts the assessee's explanation without conducting proper enquiries into the genuineness of unsecured loans, debts, or other transactions. Mere filing of an explanation by the assessee is not sufficient, and the Assessing Officer must apply their mind and conduct verification.

Proceedings initiated under Section 263 beyond the period of limitation are without jurisdiction and a nullity. When an assessment order is reopened, the previous order is set aside, and proceedings start afresh, but this does not imply that the entire process is invalidated if the subject matter of reassessment is distinct.

An order passed by the Assessing Officer is considered erroneous and prejudicial to the interest of the revenue if it allows a deduction or claim without proper application of mind or necessary inquiries.

The Commissioner cannot invoke revisionary powers under Section 263 if the Assessing Officer has adopted one of two possible views, even if the Commissioner disagrees. An assessment order is not erroneous and prejudicial to the revenue merely because a different view could be taken.

An order passed under Section 263 is set aside if the Principal Commissioner of Income Tax (PCIT) erroneously passes it without proper justification. The PCIT must have a valid reason to believe the assessment order was both erroneous and prejudicial to the revenue's interests.

A Commissioner cannot exercise revisionary powers under Section 263 if the Assessing Officer's order is not erroneous or prejudicial to the revenue, and the Commissioner merely substitutes his own judgment for that of the Assessing Officer.

Revision under Section 263 of the Income Tax Act is not valid if the Assessing Officer has applied his mind to the facts and materials placed before him. A mere lack of elaborate discussion does not render an assessment order erroneous.

The Assessing Officer's order cannot be set aside under Section 263 if a due enquiry was made and a possible view was accepted, even if the Revenue believes further examination was warranted.

The Principal Commissioner of Income-tax (PCIT) cannot undertake a roving inquiry under the guise of limited scrutiny when initiating proceedings under Section 263. The PCIT must clearly state why an inquiry was considered improper to justify the invocation of Section 263 powers.

The Assessing Officer's failure to bring income from other sources, specifically interest on refund and miscellaneous income, to tax under Section 56 constitutes an erroneous assessment justifying revision under Section 263.

A Principal Commissioner's revisionary order under section 263 cannot be based on guesswork or estimations, as it requires proper reconciliation and examination of accounts by the Assessing Officer.

The Assessing Officer's failure to conduct an inquiry on issues raised by the Commissioner is a key factor that can lead to upholding a revisional order under section 263. The Commissioner does not need to conduct further inquiries before cancelling the Assessing Officer's assessment order if the AO's order is found to be erroneous due to lack of inquiry.

Where the Assessing Officer (AO) has conducted an inquiry and is satisfied about the genuineness and creditworthiness of creditors, the revisional power under Section 263 of the Income Tax Act cannot be exercised merely because the Commissioner believes a different view could have been taken. The assessment order cannot be termed erroneous and prejudicial to the revenue unless the AO's view is unsustainable in law.

For the revisional powers under Section 263 of the Income-tax Act to be exercised, the order under revision must be both erroneous and prejudicial to the revenue; a mere error does not grant the jurisdiction.

An Assessing Officer's allowance of a deduction under Section 35(2AB) based on DSIR approval is generally final and not subject to revision by the Principal Commissioner, unless it is erroneous or prejudicial to revenue interests and not already examined.

The Commissioner cannot revise an assessment order under section 263 solely because they deem the Assessing Officer's inquiries inadequate, especially when the Assessing Officer has conducted inquiries and accepted the assessee's explanations after due verification. The Assessing Officer's view is permissible if supported by facts and evidence.

Revisionary action under Section 263 is not justified solely on the grounds of inadequate inquiry if the Assessing Officer (AO) has conducted sufficient inquiries and adopted a permissible view, even if the Commissioner believes further inquiries were warranted.

An assessment order can be set aside and a fresh assessment directed if the Assessing Officer fails to examine a claim for deduction under Section 80IB(10), making the original assessment erroneous and prejudicial to the revenue's interest.

The Commissioner can initiate proceedings under section 263 if the Assessing Officer makes an assessment without proper application of mind or without conducting necessary inquiries, especially when such inquiries were warranted by the facts.

Revision under Section 263 is not valid if all particulars were furnished to the Assessing Officer and the Assessing Officer applied his mind to them.

An assessment order made without proper inquiry is considered erroneous and prejudicial to the interests of the revenue, making it liable for revision under Section 263.

The Principal Commissioner cannot invoke revision jurisdiction under section 263 merely because the view taken by the Assessing Officer, after applying his mind and making due inquiries, was not acceptable to him, provided the Assessing Officer took a plausible view.

Revisional powers under Section 263 cannot be exercised solely based on an audit objection. The Commissioner must independently apply their mind, and a borrowed opinion from an audit party renders the revision untenable.

An ex-parte and non-speaking order passed under Section 263 without affording sufficient opportunity to the assessee is liable to be set aside. The mistake of a lawyer or accountant can be a good reason for condoning delay in filing appeals.

A revisionary order under section 263 is not sustainable if the assessment order was passed without making any inquiry or calling for explanation on a claim, as this indicates a lack of application of mind by the Assessing Officer.

An assessment order that is null and void cannot be given new life through revision proceedings. Furthermore, an assessment cannot be revised based solely on an audit objection without proper inquiry.

An assessment order cannot be characterized as erroneous and prejudicial to the revenue if the Assessing Officer (AO) has made inquiries, examined the issue from the record, and reached a legally possible conclusion in favour of the assessee. Revisionary power under section 263(1), even with Explanation 2, is not legally exercisable if none of its clauses apply.

The Commissioner is justified in invoking revisional jurisdiction when an assessment order has been framed without full enquiries.

A Principal Commissioner (PCIT) cannot assume jurisdiction under Section 263 merely because the Assessing Officer's (AO) view is not acceptable, if the AO has made due enquiries and taken a plausible view.

A revisional order under section 263 cannot be made to reopen an assessment for further inquiries if the Assessing Officer took one of the possible views. Entries in books of account are not conclusive for taxability if the value has depreciated due to the passage of time.

The CIT can revise an assessment order under Section 263 for issues not forming part of the assessee's appeal to the appellate authority, even if other parts of the order were appealed. This is because the doctrine of merger does not apply to those unappealed issues.

An assessment order is considered erroneous and prejudicial to the interests of the revenue under section 263 if the Assessing Officer has failed to conduct an adequate or requisite enquiry into the issues raised by the Commissioner. A lack of enquiry, or an inadequate enquiry, by the Assessing Officer provides a valid basis for the Commissioner to assume jurisdiction for revision.

An assessment order is erroneous and prejudicial to the revenue if the Assessing Officer accepts the assessee's submissions without obtaining details or conducting further inquiry, indicating a routine completion without applying his mind.

Orders of assessment are considered prejudicial to the interest of the revenue if they are not in accordance with law, leading to the non-realization or inability to realize lawful tax revenue. The revisional power under Section 263 must be exercised within these limitations and cannot be arbitrary.

Proceedings under Section 263 of the Income Tax Act are invalid if the Assessing Officer has conducted due inquiry during the assessment and arrived at a possible view, even if the Commissioner disagrees.

A revisionary proceeding under section 263 is initiated based on a discrepancy that occurred in the original assessment order.

The Commissioner of Income Tax (Appeals) cannot confirm an addition solely on the grounds that the assessee failed to produce sufficient evidence to prove the genuineness of transactions undertaken in a prior year.

If the Assessing Officer has adopted a plausible view, the Commissioner cannot revise the assessment order under Section 263 of the Income Tax Act.

An assessment order cannot be considered erroneous and prejudicial to the Revenue's interests, thus not subject to revision under section 263, if the Assessing Officer has considered all facts and completed the assessment after due application of mind.

Disallowance under section 40A(3) for cash payments exceeding the prescribed limit can lead to increased taxable income and tax liability, satisfying the conditions for revision under section 263(1).

Explanation 2 to Section 263 of the Income Tax Act does not grant the Commissioner unfettered power to revise every order. It does not override the preconditions stipulated in Section 263(1).

When an assessment order is erroneous and prejudicial to the revenue, the Commissioner has the jurisdiction under Section 263 to revise it, which can include directing a fresh assessment that encompasses the assessment of penalties.