Landmark Cases on Revision under Section 263

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).

The Commissioner does not have unfettered power to revise every order under Section 263(1) of the Act, as Explanation 2 does not grant such authority.

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.

Proceedings under section 263 of the Income-tax Act must be confined to the findings recorded by the Assessing Officer.

Revision under Section 263 of the Income-tax Act, 1961, cannot be invoked by the Principal Commissioner of Income-tax if the Assessing Officer has adopted a plausible view, even if another view is possible. The revisional power is not available if the Assessing Officer has made an enquiry as deemed appropriate in the facts and circumstances.

An assessment order is not erroneous and prejudicial to the interest of the revenue if the Assessing Officer has made a proper inquiry and taken a view supported by law, even if the Commissioner disagrees.

A revisional order passed under section 263 is not sustainable if the Assessing Officer, after making due enquiries, had adopted a plausible view or one of the possible views permissible in law, even if another view was possible. This is because the revisional powers cannot be used to substitute the Assessing Officer's view with the Commissioner's view when the Assessing Officer's view is not erroneous and prejudicial to the revenue.

A revisional authority under section 263 of the Income-tax Act, 1961, cannot examine issues not specified in a limited scrutiny assessment.

An Assessing Officer's order under Section 263 is not justified if the AO made an inquiry, even if it was insufficient, rather than a complete lack of inquiry.

A revision under section 263 is unjustified if reassessment proceedings were already invoked and completed based on the same information that formed the basis for the revision.

A 'fresh opinion/report' obtained by the Principal Commissioner of Income Tax (PCIT) during revisional proceedings is only a reiteration of an earlier view if it does not present a new opinion or view.

For a revision under Section 263 to be valid, the Commissioner must independently apply their mind to the material placed before them and be satisfied that the assessment order was erroneous and prejudicial to the revenue, even if the Assessing Officer brought the material to their notice.

Revision under Section 263 by the Commissioner is not sustainable if the issues forming the basis of revision were already considered by the Assessing Officer during limited scrutiny and the assessee provided proper explanations that were taken into account.

If two possible views exist on a given set of facts, and the Assessing Officer has adopted one, this alone is insufficient for the Commissioner to exercise revisionary powers under section 263.

An Assessing Officer (AO) must investigate facts stated in a return when circumstances warrant it, and the term 'erroneous' in Section 263 includes a failure to make such an inquiry. Uncertainty about the nature of trees sold requires investigation by the AO after the assessee provides data.

Revisional jurisdiction under section 263 cannot be exercised in a way that deprives an appellate authority of its power to examine the correctness of an order when an appeal has already been filed and is pending.

The word 'record' in the context of revisionary powers under section 263 of the Income Tax Act refers to material available with the Commissioner, including subsequently obtained material, when the revenue's interests are prejudiced. This distinguishes it from section 264.

A Tribunal converting itself into a court of first instance to decide an issue on merits is an usurpation of power and is impermissible.

If an Assessing Officer has raised questions and considered an issue during assessment proceedings, the fact that the issue is not discussed in the assessment order does not automatically mean the Assessing Officer did not apply their mind. A revisional authority cannot direct a fuller inquiry if the Assessing Officer has already conducted a proper inquiry and adopted a possible view.

The assessment order is not based on incorrect application of law or facts, or non-application of mind. The conditions for exercising revisional powers under Section 263 are not satisfied.

An assessment order is considered erroneous if it is based on an incorrect assumption of facts, an incorrect application of law, a lack of application of mind, or insufficient material. If an order is found to be erroneous, no specific finding is required to show it is prejudicial to the revenue's interest for invoking revisionary powers under section 263.

An inadequate inquiry by the Assessing Officer (AO) does not automatically render an order erroneous and prejudicial to the interest of the revenue for the purpose of revision under Section 263 of the Income Tax Act. Lack of inquiry, however, can be a valid ground for revision.

A Commissioner can revise an assessment under section 263 if the Assessing Officer failed to conduct an independent inquiry or made an error in the assessment order. The revision is not justified if the Assessing Officer considered the assessee's submissions and relied on relevant case laws.

An assessment order completed under section 143(3) after the Assessing Officer conducted sufficient inquiries, considered survey records, and evaluated the assessee's surrender and submissions cannot be considered an erroneous order prejudicial to the interest of revenue for revision under section 263.

Revision proceedings under section 263 are valid even when the Commissioner acts on records placed before him, rather than calling for them himself.

The Commissioner cannot revise an assessment order under Section 263 if the Assessing Officer had already considered the issue and made an addition, even if the assessee had offered a concession. Such an order would not be considered erroneous or prejudicial to the revenue.

Revision under section 263 requires the Principal Commissioner to show that the assessment order was both erroneous and prejudicial to the interests of the revenue, and not merely based on a difference of opinion. The Assessing Officer must have made an inadequate enquiry or failed to consider material available on record.