“erroneous and prejudicial”

Rectification & RevisionSection 263Section 2633,136 judgments

The decision most relied on for erroneous and prejudicial is Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), cited in 2,943 judgments on BharatTax.

Leading authorities on erroneous and prejudicial

Malabar Industrial Co. Ltd. v. CIT

243 ITR 83 · 2000 · Supreme Court

2,943

citing judgments

For revision under Section 263, the Assessing Officer's order must be both erroneous and prejudicial to the interests of the revenue; if either condition is not met, the revisionary jurisdiction cannot be invoked. An order is not erroneous merely because the Assessing Officer did not record the details of enquiries conducted, provided due enquiries were made.

CIT v. Max India Ltd.

295 ITR 282 · 2007 · Supreme Court

1,162

citing judgments

Under Section 263, an assessment order is not erroneous and prejudicial to the interest of the revenue merely because the Principal Commissioner disagrees with the Assessing Officer's (AO) view, particularly if the AO has adopted one of two permissible views in law, unless that view is completely unsustainable. If due inquiries were made, the AO's order does not become erroneous solely because the fact of inquiries was not recorded.

CIT v. Gabriel India Ltd.

203 ITR 108 · 1993 · High Court

990

citing judgments

The Commissioner cannot revise an assessment order under Section 263 merely because they hold a different opinion or believe a deeper inquiry was warranted if the Assessing Officer has applied their mind and conducted some inquiry. Revision under Section 263 is permissible only in cases of a complete lack of inquiry or non-application of mind by the Assessing Officer, not for merely inadequate inquiry.

CIT v. Sunbeam Auto Ltd.

332 ITR 167 · 2011 · High Court

897

citing judgments

The Commissioner cannot revise an assessment under Section 263 merely because the assessment order does not explicitly reflect an inquiry, or because the Commissioner holds a different opinion. An inquiry, even if considered inadequate, or an assessment based on a plausible view by the Assessing Officer after due examination, does not automatically make the order erroneous or prejudicial to the interests of the revenue.

Rampyari Devi Saraogi v. CIT

67 ITR 84 · 1968 · Supreme Court

616

citing judgments

An assessment order is erroneous and prejudicial to the Revenue's interests if the Assessing Officer accepts a sum offered as income by an assessee, even when that sum was not actually earned, thereby allowing revision under Section 263.

Gee Vee Enterprises v. Addl. CIT

99 ITR 375 · 1975 · High Court

543

citing judgments

An assessment order is erroneous and prejudicial to the interest of revenue if the Assessing Officer fails to make proper inquiries before accepting the assessee's statements or claims. The Commissioner can revise such an order under Section 263 without conducting further inquiries himself.

ITO v. D.G. Housing Projects Ltd.

343 ITR 329 · 2012 · High Court

438

citing judgments

For exercising revisional jurisdiction under Section 263, the Commissioner must first find that the Assessing Officer's order is erroneous and unsustainable in law, as this is a condition precedent. An order is not erroneous merely because two views are possible, or if the Commissioner disagrees with the Assessing Officer's permissible view, or to simply remit the matter for further enquiries.

CIT v. Vikas Polymers

341 ITR 537 · 2012 · High Court

318

citing judgments

An assessment order is not erroneous and prejudicial under Section 263 merely because the Assessing Officer did not record an enquiry and its satisfactory answer in the assessment order, provided such an enquiry was conducted. For revision under Section 263, the Commissioner must also provide the assessee an opportunity of being heard and examine their explanation.

Judgments citing erroneous and prejudicial

Sun Ark Aluminium Industries Pvt. Ltd., Virudhunagar vs. ITO, Corporate Circle, Madurai

In the result, the appeal of the Assessee is partly allowed

ITA 2071/CHNY/2025[2018-19]Status: DisposedITAT Chennai24 Oct 2025AY 2018-19

Bench: Shri M. Balaganesh & Shri S.S. Viswanethra Raviआयकरअपीलसं./Ita No.:2071/Chny/2025 यनिाारणवर्ा / Assessment Year:2018-19 Sun Ark Aluminium Income Tax Officer, Industries Private Limited, Vs. Corporate Circle, No.22, Chairman A, Madurai. Shanmugam Road, Sivakasi, Virudhunagar, Tamil Nadu-626 123. [Pan:Aalcs3262Q] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थीकीओरसे/Appellant By : Mr.G.Baskar, Advocate, प्रत्यर्थीकीओरसे/Revenue By : Mr.C.P.Solomon, Jcit.

For Appellant: Mr.G.Baskar, AdvocateFor Respondent: Mr.C.P.Solomon, JCIT

Section 142(1)Section 143(2)Section 143(3)Section 263

impugned order without satisfying the twin conditions enumerated u/s 263 of the Act, as original assessment passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. 4. The original assessment having been carried out for a limited scrutiny, PCIT ought to have seen that ... Ld.AO with regard to total purchases of Rs.5,03,57,247/- and accordingly set aside the assessment order considering it as erroneous and prejudicial to the interest of the revenue. Aggrieved, the assessee in appeal before us. 5.0 At the outset, it is not in dispute that the case

J K Patel & Co, Mumbai vs. ITO Ward 41(3)(2), Mumbai

In the result, appeal of the assessee is allowed for statistical purposes

ITA 5071/MUM/2025[2011-12]Status: DisposedITAT Mumbai24 Oct 2025AY 2011-12

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Ms. Kavitha Kaushik (Sr. D/R) (virtually appeared)

Section 143(3)Section 250Section 263Section 271(1)(c)

upon him by the provisions of Section 263 of the Act and set aside the assessment order dated 19/12/2018 holding it to be erroneous and prejudicial to the interest of the revenue. I.T.A. No. 5071/Mum/2025 3 5. Pursuant to the order u/s 263 of the Act, the AO framed

Fairbridge Capital Private Limited, Mumbai vs. Principal Commissioner of Income-Tax, Mumbai - 6, Mumbai, Maharashtra

In the result, appeal of the assessee is allowed

ITA 3626/MUM/2025[2020-21]Status: DisposedITAT Mumbai24 Oct 2025AY 2020-21

Bench: Shri Saktijit Dey, Hon'Ble & Shri Narendra Kumar Billaiya, Hon'Ble

For Appellant: Ms. Chandni Shah a/w Mr. Hardik Nirmal andFor Respondent: Shri Vivek Perampurna, CIT, D/R [virtually

Section 143(3)Section 263

income. 2. On perusal of assessment order u/s 143(3) r.w.s.144B of the Act on 16.09.2022 it is observed that the order is erroneous and prejudicial to the interest of revenue for the following reasons: 2. 1. On verification of the records, it is seen that during the assessment proceedings ... view of the above, it is seen that the order passed u/s 143(3) r.w.s.144B on 16.09.2022 is erroneous and prejudicial to the interests of revenue and is required to be set-aside on the above issue by invoking the provisions of section 263 of the Act. Hence

Nkc Projects Private Limited, Jaipur vs. PCIT Delhi-4, Delhi

In the result, the appeal of the assessee is allowed

ITA 2804/DEL/2025[2020-21]Status: DisposedITAT Delhi24 Oct 2025AY 2020-21

Section 142(1)Section 143(3)Section 263

PCIT and finally the revision order was passed on 19.03.2025 wherein the Ld. PCIT has not only hold the assessment order as erroneous and prejudicial to the interest of the Revenue on the issues which have been raised in the show cause notice but new / fresh issues were raised ... revision order passed while holding the assessment order as erroneous and prejudicial to the Revenue. Against such order, the assessee is in appeal before the Tribunal. 6. Before us, at the outset, the Ld. AR of the assessee submits that the Ld. PCIT has invoked the provisions of section

Ardent Steels Pvt. Ltd., Raipur vs. Pr. Commissioner of Income Tax, Raipur-1, Raipur

The appeal of the assessee is allowed in terms of our aforesaid observations

ITA 337/RPR/2025[2020-21]Status: DisposedITAT Raipur17 Oct 2025AY 2020-21

Bench: Shri Partha Sarathi Chaudhury, Jm & Shri Arun Khodpia, Am आयकर अपील सं. / Ita No: 337/Rpr/2025 (िनधा"रण वष"Assessment Year: 2020-21)

For Appellant: Shri R. B. Doshi, CAFor Respondent: Shri S. L. Anuragi, CIT-DR

Section 143(3)Section 263

Learned CIT erred in initiating revision proceedings without appreciating that the order passed by the Assessing Officer (‘AO’) under section 2022 is neither erroneous nor prejudicial to the interest of revenue. (d) That on the facts and in the circumstances of the case and in law, the Ld. CIT erred ... what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre- condition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have

Navudai Shikshan and Jan Kalyan Sewa Samiti, Kanpur vs. The Commissioner of Income Tax (Exemption), Lucknow

In the result, the appeal of the assessee is partly allowed

ITA 96/LKW/2021[2016-2017]Status: DisposedITAT Lucknow17 Oct 2025AY 2016-2017

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudharya.Y. 2016-17 Navudai Shikshan & Jan Kalyan Sewa Vs. The Commissioner Of Income Samiti, 117/K/30, Sarvodaya Nagar, Tax (Exemption), Lucknow Kanpur-208005 Pan: Aagfn4916N (Appellant) (Respondent) Assessee By: Sh. Rakesh Garg, Advocate Revenue By: Sh. R.K. Agarwal, Cit Dr Date Of Hearing: 01.08.2025 Date Of Pronouncement: 17.10.2025 O R D E R Per Nikhil Choudhary, A.M.: [ This Is An Appeal Filed By The Assessee Against The Orders Of The Ld. Cit (Exemption), Lucknow Under Section 263 Of The Income Tax Act Dated 30.03.2021 Setting Aside The Orders Of The Ld. Assessing Officer Passed Under Section 143(3) Of The Income Tax Act For The A.Y. 2016-17 On 15.12.2018. The Grounds Of Appeal Are As Under:- “01. Because The Order Passed By Cit(E) U/S 263 Of The Act Dt. 30.03.2021 Is Without Jurisdiction, Bad In Law & Be Quashed. 02. Because The Order Passed By Ao, Being Neither Erroneous Nor Prejudicial To The Interest Of The Revenue The Action Of The Cit(E) Set-Asiding The Said Order Is Without Jurisdiction, Contrary To The Provisions Of Law, Be Quashed. 03. Because The Order Passed By The Ao Being Neither Erroneous Nor Prejudicial To The Interest Of The Revenue, The Cit(E) Has Erred In Law In Setting Aside The Same, The Order Passed By Cit(E) Be Quashed & That As Passed By The Ao Be Restored. 04. Because The Cit(E) Has Failed To Appreciate That The Initial Assessment Was A Deep Scrutiny Assessment Framed U/S 143(3) Wherein Voluminous Queries Were Raised Which Were Complied With & Thoroughly Examined/ Verified By The Ao, The Necessary Enquiring Having Being Done, It Is Neither A Case Of No Inquiring Or Lack Of Enquiring, As Such The Cit(E) Has Erred In Setting Aside The Assessment Order, The Order Passed By Cit(E) Be Quashed.

For Appellant: Sh. Rakesh Garg, AdvocateFor Respondent: Sh. R.K. Agarwal, CIT DR

Section 11Section 12ASection 143(3)Section 260ASection 263

without jurisdiction, bad in law and be quashed. 02. Because the order passed by AO, being neither erroneous nor prejudicial to the interest of the revenue the action of the CIT(E) set-asiding the said order is without jurisdiction, contrary to the provisions of law, be quashed. 03. Because ... order passed by the AO being neither erroneous nor prejudicial to the interest of the revenue, the CIT(E) has erred in law in setting aside the same, the order passed by CIT(E) be quashed and that as passed by the AO be restored. 04. Because

Sh. Sukhvinder Singh, Kanpur vs. Pr CIT, Central, Kanpur

ITA 191/LKW/2020[2014-15]Status: DisposedITAT Lucknow17 Oct 2025AY 2014-15

Bench: Shri Kul Bharat & Shri Anadee Nath Misshra

For Appellant: Shri Samrat Chandra, C.AFor Respondent: Shri R. K. Agarwal, CIT(DR)

Section 263

Sh. Sukhvinder Singh, Kanpur vs. Pr CIT, Central, Kanpur

In the result, both appeals filed by the assessee are allowed for statistical purposes

ITA 190/LKW/2020[2012-13]Status: DisposedITAT Lucknow17 Oct 2025AY 2012-13

Bench: Shri Kul Bharat & Shri Anadee Nath Misshra

For Appellant: Shri Samrat Chandra, C.AFor Respondent: Shri R. K. Agarwal, CIT(DR)

Section 263

cannot be exercised. b) even otherwise, without revising the order u/s 153D of the Act, and finding them to be erroneous and prejudicial to the interest of the revenue, revisionary powers cannot be invoked for the assessment order framed u/s 153.A/143(3) of the Act after getting approval ... time of the issuance of the Show Cause Notice itself that the AO had not carried out necessary enquiries and the order is erroneous and prejudicial to the interest of the Revenue. Additionally, the Pr.CIT referred to a SEBI order dated 09.07.2017 & 14.06.2017, which was issued to various entities allegedly

Mr. Arpanbhai Virambhai Desai, Gandhinagar vs. The Pr. CIT, Ahmedabad-3, Ahmedabad

In the result, all four appeals filed by the assessee are

ITA 759/AHD/2024[2015-16]Status: DisposedITAT Ahmedabad17 Oct 2025AY 2015-16

For Appellant: Shri D K Parikh, ARFor Respondent: Shri Sher Singh, CIT.DR

Section 12Section 147Section 263

where the assessment order is live. In case the order is void, then the same cannot be held to be erroneous and prejudicial to the interest of revenue.” iii. Krishna Kumar Saraf vs. CIT in ITA No.4562/Del/2011 dated 24.09.2015, wherein it was held as under: “18. However

Mr. Arpanbhai Virambhai Desai, Gandhinagar vs. Pr.CIT, Ahmedabad-3, Ahmedabad

In the result, all four appeals filed by the assessee are allowed in above terms

ITA 758/AHD/2024[2014-15]Status: DisposedITAT Ahmedabad17 Oct 2025AY 2014-15

Bench: SMT. ANNAPURNA GUPTA (Accountant Member), SHRI SIDDHARTHA NAUTIYAL (Judicial Member)

For Appellant: Shri D K Parikh, ARFor Respondent: Shri Sher Singh, CIT.DR

Section 12Section 147Section 263

Mr. Arpanbhai Virambhai Desai, Gandhinagar vs. The ITO, Ward-1, Int.Tax., Ahmedabad

In the result, all four appeals filed by the assessee are allowed in above terms

ITA 339/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad17 Oct 2025AY 2018-19

Bench: SMT. ANNAPURNA GUPTA (Accountant Member), SHRI SIDDHARTHA NAUTIYAL (Judicial Member)

For Appellant: Shri D K Parikh, ARFor Respondent: Shri Sher Singh, CIT.DR

Section 12Section 147Section 263

Mr. Arpanbhai Virambhai Desai, Gandhinagar vs. The ITO, Ward-1, Int.Tax., Ahmedabad

In the result, all four appeals filed by the assessee are allowed in above terms

ITA 338/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad17 Oct 2025AY 2017-18

Bench: SMT. ANNAPURNA GUPTA (Accountant Member), SHRI SIDDHARTHA NAUTIYAL (Judicial Member)

For Appellant: Shri D K Parikh, ARFor Respondent: Shri Sher Singh, CIT.DR

Section 12Section 147Section 263

Slr Infrastructure Private Limited, Hyderabad vs. DCIT., Circle-3(1), Hyderabad

In the result, the appeal filed by the assessee is allowed

ITA 544/HYD/2024[2018-19]Status: DisposedITAT Hyderabad17 Oct 2025AY 2018-19

Section 142(1)Section 143Section 143(3)Section 194CSection 263

show-cause notice issued by the Ld. Pr. CIT, the assessee submitted that the assessment order passed by the A.O. is neither erroneous nor prejudicial to the interest of revenue because, the A.O. has verified the issue of sub-contract payments made to the above two parties by issuing ... invoking his powers of revision under Section 263 of the Act, even though the assessment order passed by the A.O. is neither erroneous nor prejudicial to the interest of the revenue on the issue of sub-contractors' expenses paid to Malreddy Dharma Reddy and Venkat Rami Reddy Nimmanpalli. The learned

Children Toy Foundation, Mumbai vs. CIT (Exemption), Mumbai

In the result, the appeal of the assessee bearing ITA 1345/Mum/2022 is dismissed

ITA 1345/MUM/2022[2017-18]Status: DisposedITAT Mumbai17 Oct 2025AY 2017-18

Bench: Shri Om Prakash Kant & Shri Anikesh Banerjee

For Appellant: NoneFor Respondent: Shri R.A. Dhyani (CIT-DR)

Section 11Section 12ASection 143(3)Section 263

After completion of the assessment proceeding, the Ld.CIT by invoking provisions of section 263 of the Act, treated the assessment order as erroneous and prejudicial to the interest of the revenue on the ground that the Ld.AO had not disallowed the corpus donation amount to Rs.9,46,608/- and addition ... fixed asset, which shows that there is no real utilization. Considering the above findings, the Ld.CIT treated the assessment order as erroneous and prejudicial to the interest of the revenue. 5. The Ld.DR stated that the assessee is a habitual defaulter in making compliance to the notice and willfully commits

Vipul Kamal Prakash Sud, Sidhpur vs. The Pr. CIT-3, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 841/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad16 Oct 2025AY 2021-22

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaassessment Year: 2021-22

Section 143(3)Section 263Section 54

assessment passed u/s.143(3) rws 144B on 14.12.2022 by AO accepting exemption u/s.54 in respect of basement of the house property was erroneous and prejudicial to the interest of the revenue. 2.2 That the in the facts and circumstances of the Id. Pr. CIT ought not to have invoked ... assessment passed u/s 143(3) rws 144B on 14.12.2022 by AO accepting exemption u/s.54 in respect of basement of the house property was erroneous and prejudicial to the interest of the revenue. 2.3 The Pr. CIT has failed to appreciate that the issue relating to the capital gain

Rishabh Instruments Limited, Mumbai vs. PCIT -3, Mumbai

In the result, appeal filed by the assessee is allowed

ITA 3358/MUM/2025[2020-21]Status: DisposedITAT Mumbai16 Oct 2025AY 2020-21

Bench: Hon’Ble Shri Sandeep Gosain & Shri Girish Agrawalrishabh Instruments Ltd Vs. Pcit – 3 F-31, Satpur Midc, Nashik Room No. 612, 6Th Nashik – 422007 Floor, Aayakar Bhavan, Mk Road Pan/Gir No. Aaacr2228Q (Applicant) (Respondent)

Section 135Section 142(1)Section 143(3)Section 250Section 263Section 37Section 80G

u/s.80G, the same is allowable, because both operate separately. Thus, taking a contrary opinion does not mean that order of the Id. AO erroneous and prejudicial to the interest of the Revenue. 12. Claiming a deduction from computation of business income as provided from sections 28 to 44DB is different ... Titus, allowing the claim of deduction u/s. 80G by the Id. AO cannot be held to be unsustainable in law or amounts to erroneous and prejudicial to the interest of the Revenue. Thus order of the Ld. PCIT is reversed on this point." 13. Therefore after having gone through

Arun Kumar Mishra, Buxar vs. Pr.CIT-1, Patna

In the result, the appeals of the assessee are allowed

ITA 21/PAT/2021[2015-16]Status: DisposedITAT Patna15 Oct 2025AY 2015-16

Bench: Shri Rajesh Kumar, Am & Shripradip Kumar Choubey, Jm Shri Kant Mishra Income Tax Officer Maha Laxmi Steel Ward-1(5) Vs. Station Road, Buxar-802101 Buxar, Bihar (Appellant) (Respondent) Pan No. Afipm0714N Brij Kumar Mishra Plot No. 36, Gajadhar Ganj, Ram Ito, Ward-1(5) Bagh, Buxar, Buxar, Bihar, Buxar, Buxar, Bihar Vs. 802101 (Appellant) (Respondent) Pan No.Afipm0712L Ajeet Kumar Mishra Ito, Ward-1(5) Buxar, Bihar, 802101 Buxar, Buxar, Bihar Vs. (Appellant) (Respondent) Pan No. Afipm0713M Arun Kumar Mishra Opp. Mahatma Gandhi Magar, Ito, Ward-1(5) Bazar Samity, Rambagh, Buxar, Buxar, Buxar, Bihar Vs. Buxar, Bihar, 802101 (Appellant) (Respondent) Pan No. Afipm0716Q Assessee By : Shri Sudipta Sannigrahi, Ar Revenue By : Shri Rajat Datta, Dr Date Of Hearing: 29.07.2025 Date Of Pronouncement: 15.10.2025

For Appellant: Shri Sudipta Sannigrahi, ARFor Respondent: Shri Rajat Datta, DR

Section 10(38)Section 143(2)Section 143(3)Section 263

verification in the matter. Accordingly, the assessment framed u/s 143(3) of the Act dated 08-09-2017 was held to be erroneous and prejudicial to the interest of the Revenue. Show cause notice was issued under section 263 of the Act, on 14.01.2021, which was replied by the assessee ... provisions of Section 263 of For A.Y. 2015-16 ITA Nos. 17, 18, 20 & 21/PAT/2021 the Act, but neither the assessment framed is erroneous nor prejudicial to the interest of the revenue. The Learned AR submitted that simultaneous satisfaction of twin conditions is mandatory for invoking the provisions of Section

Ajeet Kumar Mishra, Buxar vs. Pr.CIT-1, Patna

In the result, the appeals of the assessee are allowed

ITA 20/PAT/2021[2015-16]Status: DisposedITAT Patna15 Oct 2025AY 2015-16

For Appellant: Shri Sudipta Sannigrahi, ARFor Respondent: Shri Rajat Datta, DR

Section 10(38)Section 143(2)Section 143(3)Section 263

Brij Kumar Mishra, Buxar vs. ITO, Ward-1(5), Buxar

In the result, the appeals of the assessee are allowed

ITA 18/PAT/2021[2015-16]Status: DisposedITAT Patna15 Oct 2025AY 2015-16

For Appellant: Shri Sudipta Sannigrahi, ARFor Respondent: Shri Rajat Datta, DR

Section 10(38)Section 143(2)Section 143(3)Section 263

Shri Kant Mishra, Buxar vs. ITO, Ward-1(5), Buxar

In the result, the appeals of the assessee are allowed

ITA 17/PAT/2021[2015-16]Status: DisposedITAT Patna15 Oct 2025AY 2015-16

For Appellant: Shri Sudipta Sannigrahi, ARFor Respondent: Shri Rajat Datta, DR

Section 10(38)Section 143(2)Section 143(3)Section 263