Landmark Cases on Revision under Section 263
278 decisions, ranked by how many judgments on BharatTax rely on them.
An order passed under Section 263 of the Income Tax Act is bad in law and liable to be annulled if the Principal Commissioner forms an opinion without undertaking or causing an enquiry on his own.
The High Court's decision in Smt. Lila Chowdhury v. CIT is cited as authority regarding the application of Section 263 of the Income-tax Act.
A Division Bench of the same strength cannot take a view contrary to an existing view unless the matter is referred to a Larger Bench. This principle is invoked when assessing whether conditions for invoking jurisdiction under Section 263 are met, requiring positive material for the Commissioner to objectively conclude the Assessing Officer's order was erroneous and prejudicial to revenue.
The Commissioner can validly exercise revisionary jurisdiction under Section 263 even without recording a final conclusion on the allowability of a deduction, if the assessment order was made in a perfunctory manner without adequate enquiries and is prejudicial to the revenue.
An order is not 'erroneous' for the purposes of revision unless it is contrary to law or applies legal principles incorrectly.
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 assessment order that fails to consider disallowance under section 14A, especially when exempt income is reflected, can be deemed erroneous and prejudicial to the interest of revenue, thus justifying revision under section 263.
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 is not valid if the Assessing Officer has applied his mind to the facts furnished.
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 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 that fails to examine a deduction claim under section 80IB(10) is erroneous and prejudicial to the revenue, justifying revision under section 263.
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.
