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

Miho Kikuchi, Thiruvannamalai vs. PCIT, Chennai

In the result, the appeal filed by the assessee is dismissed subject to above direction and modification in the order

ITA 1318/CHNY/2024[2015-16]Status: DisposedITAT Chennai26 Jul 2024AY 2015-16

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.: 1318/Chny/2024 िनधा"रण वष"/Assessment Year: 2015-16 Smt. Miho Kikuchi, The Principal Commissioner No.25, Chengam Road, Vs. Of Income Tax-8, Fourth Street, Chennai. Thiruvannamalai – 606 601. Pan: Bdepm 5316B (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri Quadir Hoseyn, Advocate & Dr. L. Natarajan, Ca ""यथ" क" ओर से/Respondent By : Shri Nilay, Baran Som, Cit सुनवाई क" तारीख/Date Of Hearing : 24.07.2024 घोषणा क" तारीख/Date Of Pronouncement : 26.07.2024 आदेश /O R D E R Per Mahavir Singh: This Appeal By The Assessee Is Arising Out Of The Revision Order Passed By The Principal Commissioner Of Income Tax, Chennai -8 In Order No.Itba/Rev/F/Rev5/2023-24/1063189420 (1) Dated 22.03.2024. The Assessment Was Framed By The Addl./Joint/Deputy/Asst. Commissioner Of Income Tax/Income Tax Officer, National Faceless Assessment Centre, Delhi For The Assessment Year 2015-16 U/S.147 R.W.S 144B Of The Income Tax Act, 1961 (Hereinafter The ‘Act’) Vide Order Dated 27.03.2022. 2. The Only Issue In This Appeal Of Assessee Is Against The Revision Order Passed By Pcit U/S.263 Of The Act Revising The Assessment Framed By Ao Of National Faceless Assessment Centre Vide Order Dated 27.03.2022 U/S.147 R.W.S 144B Of The Act. For This Assessee Has Raised Various Grounds Which Are Factual, Argumentative & Exhaustive & Hence, Need Not Be Reproduced.

For Appellant: Shri Quadir Hoseyn, Advocate &For Respondent: Shri Nilay, Baran Som, CIT
Section 147Section 148Section 263Section 50CSection 50C(1)

Vandana Daga, Chennai vs. Pr. CIT, Chennai

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

ITA 1056/CHNY/2024[2015-16]Status: DisposedITAT Chennai26 Jul 2024AY 2015-16

Bench: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunathaआयकर अपील सं./I.T.A. No.1056/Chny/2024 िनधा"रण वष"/Assessment Year: 2015-16 Vandana Daga, Vs. The Income Tax Officer, 19-C, Nungambakkam High Road, Non Corporate Ward 3(5), Nungambakkam, Chennai 600 034. Chennai. [Pan:Aclpv1469P] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Karunakaran, Advocate ""थ" की ओर से/Respondent By : Shri R. Clement Ramesh Kumar, Cit सुनवाई की तारीख/ Date Of Hearing : 24.07.2024 घोषणा की तारीख /Date Of Pronouncement : 26.07.2024 आदेश /O R D E R Per S.S. Viswanethra Ravi: This Appeal Filed By The Assessee Is Directed Against The Order Dated 27.03.2024 Passed By The Ld. Principal Commissioner Of Income Tax, Chennai 4, Chennai Under Section 263 Of The Income Tax Act, 1961 [“Act” In Short] For The Assessment Year 2015-16. 2. Ground No. 13 Raised In The Appeal Of The Assessee Is Not Pressed & Accordingly Dismissed As Not Pressed. 3. Ground Nos. 1 To 12 Raised By The Assessee Concerning Only Issue Questioning The Validity Of Jurisdiction Assumed By The Ld. Pcit Under Section 263 Of The Act.

For Appellant: Shri M. Karunakaran, AdvocateFor Respondent: Shri R. Clement Ramesh Kumar, CIT
Section 142(1)Section 143(3)Section 147Section 148Section 263

Dee Are Texfab Pvt. Ltd., Ahmedabad vs. The PCIT, Ahmedabad-1, Ahmedabad

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

ITA 743/AHD/2024[2014-15]Status: DisposedITAT Ahmedabad25 Jul 2024AY 2014-15

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.743/Ahd/2024 "नधा"रण वष" /Assessment Year : 2014-15 Dee Are Texfab Pvt.Ltd. The Pcit 149, New Cloth Market बनाम/ Ahmedabad-1 O/S. Raipur Gate Raipur V/S. Ahmedabad – 380 002 (Gujarat) "थायी लेखा सं./Pan: Aaecd 5136 H (अपीलाथ"/ Appellant) …. ("" यथ"/ Respondent) Assessee By : Shri Chetan Agarwal, Ar Revenue By : Shri Kamlesh Makwana, Cit-Dr सुनवाई क" तार"ख/Date Of Hearing : 22/07/2024 घोषणा क" तार"ख /Date Of Pronouncement: 25/07/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am: This Appeal Is Filed By The Assessee Against The Order Dated 28/03/2024 Passed By The Principal Commissioner Of Income Tax, Ahmedabad [Hereinafter Referred To As “The Pr.Cit(A)” In Short] Arising Out Of The Assessment Order Dated 27/03/20223 Passed By The Assessing Officer (Ao) Under Section 147 Read With Section 144B Of The Income Tax Act, 1961 (Hereinafter Referred To As "The Act") Relevant To The Assessment Year (Ay) 2014-15. Dee Are Texfab Pvt.Ltd. Vs. The Pr.Cit Asst. Year : 2014-15

For Appellant: Shri Chetan Agarwal, ARFor Respondent: Shri Kamlesh Makwana, CIT-DR
Section 132Section 142(1)Section 144BSection 147Section 148Section 263