Section 263 of the Income Tax Act

Income-tax Act, 2025: s.377

Section 263 of the Income-tax Act, 1961 corresponds to section 377 (Revision of orders prejudicial to revenue) of the Income-tax Act, 2025.

Read section 377 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 263 is Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), cited in 2,943 of the 13,616 judgments on BharatTax that turn on this section.

Leading authorities on Section 263

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.

Totgars Co-operative Sale Society Ltd. v. ITO
322 ITR 283 · 2010 · Supreme Court
1,283
citing judgments

The interest income earned by a cooperative society from investing its surplus funds in fixed deposits with banks is not "derived from" its eligible business activities and is taxable as "income from other sources" under Section 56, thus not qualifying for deduction under Section 80P.

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.

State Bank Of India v. CIT
389 ITR 578 · 2016 · High Court
817
citing judgments

Income arising from a cooperative society's surplus funds invested in short-term deposits and securities is not attributable to the society's core activities and, therefore, is not eligible for exemption under Section 80P(2)(a)(i) of the Income-tax Act.

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.

Madras Industrial Investment Corporation Ltd. v. CIT
225 ITR 802 · 1997 · Supreme Court
568
citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

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.

Subramanian and Anr. v. Siemens India Ltd. and Anr.
156 ITR 11 · 1985 · High Court
541
citing judgments

When there is a conflict between the decisions of non-jurisdictional High Courts, the view that favors the assessee should be preferred.

Judgments on Section 263

Delta Dealers Private Limited, Kolkata vs. Income Tax Officer Ward 6(3), Kolkata

ITA 650/KOL/2024[2009-10]Status: DisposedITAT Kolkata30 Jun 2025AY 2009-10

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarmai.T.A. No.650/Kol/2024 Assessment Year: 2009-10 Delta Dealers Pvt. Ltd…………………………………………...….……….Appellant Baltikuri, Kalitala, P.O. Dasnagar, Howrah-711113. [Pan: Aaccd9633P] Vs. Ito, Ward-6(3), Kolkata.………….......................……........……...…..…..Respondent Appearances By: Shri Akshay Ringasia, C.A & Taraknath Jaiswal, Advocate, Appeared On Behalf Of The Assessee. Shri Raja Sengupta, Cit, Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : May 14, 2025 Date Of Pronouncing The Order : June 30, 2025 Order Per Sonjoy Sarma: This Appeal Of The Assessee Is Directed Against The Order Dated 27.09.2023 Passed By The National Faceless Appeal Centre [Hereinafter Referred To As ‘The ‘Ld. Cit(A)’] For The Assessment Year 2009-10. 2. Brief Facts Of The Case Are That The Assessee Filed Its Return Of Income For The Assessment Year 2009-10 Under The Name Of Orange Merchants Pvt. Ltd. Being Its Pan No.Aabco0792P. The Return Of The Assessee Initially Processed U/S 143(1) Of The Act. Subsequently, The Case Of The Assessee Was Reopened U/S 147 Of The Act & The Assessee Complied To The Notices & Assessment Order Was Framed By Determining Total Income Of Rs.45,500/-. Immediately, Thereafter The Said Assessment Order Was Set Aside By The Ld. Pcit, Kolkata-2 By Exercising His Revisionary Jurisdiction U/S 263 Of The Act. In Consequence To That, Notice U/S 142(1) Of The Act Was Issued To The Assessee Directing The Assessee To Submit Detailed Information Regarding The Shareholders Along With Supported Evidences In Respect Of Share Capital & Share

Section 131Section 142(1)Section 143(1)Section 147Section 263Section 68

Deputy Commissioner of Income Tax, Noida vs. Sampark Management Consultancy LLP, Noida

In the result, the appeal of the Revenue is dismissed

ITA 6158/DEL/2024[2017-18]Status: DisposedITAT Delhi30 Jun 2025AY 2017-18

Bench: Shri Anubhav Sharma & Shri Manish Agarwaldeputy Commissioner Of Sampark Management Income Tax, Consultancy Llp, Ayakar Bhawan, A-2D, Vs. Fh-07, Near Jaypee Sector, Noida Hospital, Sector-131, U.P.-201301. Gautam Buddha Nagar, Uttar Pradesh-201301. Pan:Acsfs9969E (Appellant) (Respondent) Assessee By Shri Amit Geol, Ca & Shri Pranav Yadav, Adv. Department By Shri Narpat Singh, Sr. Dr Date Of Hearing 25.06.2025 Date Of Pronouncement 25.06.2025 O R D E R Per Manish Agarwal, Am: This Appeal Is Filed By The Revenue Against The Order Of Learned Commissioner Of Income Tax (Appeals), (‘The Cit(A) In Short), National Faceless Appeal Centre Dated 14.10.2024 In Appeal No. Nfac/2016- 17/10246564 For Assessment Year 2017-18. 2. At The Outset, It Is Seen That This Appeal Is Preferred By The Revenue Against The Order Passed By Ld. Cit(A) Wherein The Ld. Cit(A) Has Deleted The Additions Made In The Order Passed U/S 143(3) R.W.S. 263 Of The Act Dated 30.03.2023. The Ld. Cit(A) Has Decided The Appeal In Favour Of The Assessee On The Ground That The Order Of Ld. Pcit U/S 263 For Impugned Year Was Quashed By The Co-Ordinate Bench Of The Itat Vide Its Order Dated 23.03.2024 In Ita No.1879/Del/2023. Against This Order, The Revenue Has Preferred Appeal Before The Hon’Ble Allahabad High Court Wherein The Hon’Ble High Court In Ita No. 78/2024 Vide Order Dated 27.11.2024 Dismissed The Appeal

Section 143(3)Section 263Section 68