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

Blueview Agencies Pvt. Ltd., Odisha vs. I.T.O., Ward - 5(3), Kolkata

The appeal of the assessee is allowed for statistical purposes

ITA 2510/KOL/2024[2009-2010]Status: DisposedITAT Kolkata27 Feb 2025AY 2009-2010

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishrai.T.A. No.2510/Kol/2024 Assessment Year: 2009-10 Blueview Agencies Pvt. Ltd. .……………………………………..….……….Appellant Lamtibahal, Brajrajnagar, Jharsuguda – 768216, Odisha. [Pan: Aadcb6386Q] Vs. Ito, Ward-5(1), Kolkata….……..............................……........……...…..…..Respondent Appearances By: None Appeared On Behalf Of The Assessee. Shri Madanappa Raghuvir, Cit- Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : February 26, 2025 Date Of Pronouncing The Order : February 27, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 04.10.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Filed Its Return For The Assessment Year 2009-10 By Declaring Total Income Of Rs.1,890/-. The Return Of The Assessee Was Processed U/S 143(1) Of The Act. The Assessee Derives Its Income From Share Dealing & Investments. The Assessing Officer On Examination Of The Balance Sheet & Profit & Loss Account Of The Assessee Found That Certain Expenses Which Were Disallowable Has Not Been Disallowed & Certain Income Did Not Disclose In Its Return. Therefore, The Assessing Officer Issued Notice U/S 148 & Subsequently, An Order U/S 147/143(3) Of The Act Was Passed By Determining Total Income Of Rs.27,650/-. Later On, The Ld. Cit, Kolkata-Ii Found That Requisite & Proper Enquiries Were Not Concluded Regarding The Identity

Section 142(1)Section 143(1)Section 147Section 148Section 14ASection 250Section 250(6)Section 263

Mukesh K. Mulchandani, Ahmedabad vs. The Income Tax Officer, Ward-4(2)(3), Ahmedabad

In the result, the appeal filed by the assessee is hereby allowed for statistical purposes

ITA 707/AHD/2023[2014-15]Status: DisposedITAT Ahmedabad25 Feb 2025AY 2014-15

Bench: Dr. Brr Kumar & Shri T.R.Senthil Kumarआयकर अपील सं./Ita No.707/Ahd/2023 (िनधा"रण वष"/Assessment Year : 2014-15) बनाम/ Mukesh Kevalram The Income Tax Mulchandani Officer Vs. A-137,Sarboday Nagar Soc. Ward-4(2)(3) (No.2) Ahmedabad–380 015 Sola Road,Ghatlodia Ahmedabad – 380 001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aewpm 4974 R (अपीलाथ"/Appellant) (""थ" / Respondent) .. अपीलाथ" ओर से/ Assessee By : Shri Parin Shah, Ar ""थ" की ओर से/Revenue By : Shri Rignesh Das, Sr.Dr सुनवाई की तारीख/ Date Of Hearing 22/01/2025 घोषणा की तारीख /Date Of Pronouncement 25 /02/2025 आदेश / O R D E R Per T.R. Senthil Kumar: This Appeal Is Filed By The Assessee As Against The Appellate Order Dated 14/08/2023 Passed By The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As “The Cit(A)”] Arising Out Of The Assessment Order Passed U/S.143(3) R.W.S. 263 Of The Income Tax Act, 1961 (Hereinafter Referred To As “The Act”) Relating To The Assessment Year (Ay) 2014-15. 2. Brief Facts Of The Case Are That The Assessee Is An Individual Filed His Return Of Income For Ay 2014-15 On 18/10/2014 Mukesh K. Mulchandani Vs. Ito Asst.Year - 2014-15 Declaring Total Income Of Rs.8,64,710/-. The Assessee Is A Civil Contractor & Doing Business In The Name Of Proprietary- Concern, M/S.M.K. Builders. Regular Assessment U/S.143(3) Of The Act Was Completed On 24/11/2016 Assessing Total Income At Rs.8,69,220/-. The Assessment Was Revised U/S.263 Of The Act To Make Addition Of Rs.80 Lakhs On Account Of Unexplained Credit In The Books Of The Assessee As ‘Advance’ Received. Another Addition Of Rs.24,03,750/- Was Made By The Ao On Account Of Unexplained Credit As Per Form 26-As.

For Appellant: Shri Parin Shah, ARFor Respondent: Shri Rignesh Das, Sr.DR
Section 143(3)Section 234ASection 263Section 271(1)(c)