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

Lord Vishnu Construction Pvt Ltd, Patna vs. Pr. CIT-1, Patna

In the result, appeal of the assessee is partly allowed

ITA 23/PAT/2022[2017-18]Status: DisposedITAT Patna22 May 2024AY 2017-18

Bench: Shri Sonjoy Sarma, Hon’Blei.T.A. No. 23/Pat/2022 Assessment Year: 2017-18 Lord Vishnu Constructions Principal Commissioner Of Income Tax-1, Private Limited Vs Patna 101, Lotus Apartment New Patliputra Colony Patna - 800013 [Pan: Aabcc5141M] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Nishant Maitin, C.A. Revenue By : Shri Sushil Kumar Mishra, Jcit D/R सुनवाई क" तारीख/Date Of Hearing : 07/03/2024 घोषणा क" तारीख /Date Of Pronouncement: 22/05/2024 आदेश/O R D E R Per, Dr. Manish Borad: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The Learned Principal Commissioner Of Income Tax, Patna -1 (Hereinafter The “Ld. Pr. Cit”) Dt. 18/10/2022, Passed U/S 263 Of The Income Tax Act, 1961 (“The Act”) For The Assessment Year 2017-18. 2. Through Various Grounds Of Appeal, The Assessee Has Assailed The Order Of The Ld. Pr. Cit Framed U/S 263 Of The Act. Facts In Brief Are That The Assessee Is A Private Limited Company Engaged In Construction Business. The Regular Return Of Income Furnished Was Selected For Scrutiny Through Cass On Account Of Two Reasons, Namely, “Abnormal Increase In Cash Deposit During

For Appellant: Shri Nishant Maitin, C.AFor Respondent: Shri Sushil Kumar Mishra, JCIT D/R
Section 263Section 40A(3)Section 69A

Inductotherm (India) Pvt. Ltd., Ahmedabad vs. The Pr. CIT - 1, Ahmedabad

In the result, the appeal of the assessee is dismissed

ITA 369/AHD/2023[2018-19]Status: DisposedITAT Ahmedabad21 May 2024AY 2018-19

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar, Accountnat Member Assessment Year : 2018-19 Inductotherm (India) Pvt.Ltd. The Principal Commissioner Of Sm-6, Road No.11, Sanand Ii Vs Income Tax-1, Industrial Estate, Bol Village, Ahmedabad Sanand, Ahmedabad – 382 170 (Gujarat) Pan: Aaaci 3672 B अपीलाथ" अपीलाथ"/ (Appellant) अपीलाथ" अपीलाथ" "" "" यथ" "" "" यथ" यथ"/ (Respondent) यथ" Assessee By : Shri Mehul K. Patel, Advocate Revenue By : Shri Sudhendu Das, Cit-Dr सुनवाई क" तारीख/Date Of Hearing : 22/04/2024 घोषणा क" तारीख /Date Of Pronouncement: 21/05/2024 आदेश/O R D E R आदेश आदेश आदेश Per Makarand V. Mahadeokar: The Present Appeal Has Been Filed By The Assessee Against Order Passed By The Ld. Pr.Cit, Ahmedabad-1, [Hereinafter Referred To As “Ld. Pcit”] Dated 30/03/2023 In Exercise Of His Revisionary Jurisdiction Under Section 263 Of The Income-Tax Act, 1961 [Hereinafter Referred To As "The Act" For Short], Challenging The Initiation Of Proceedings Under Section 263 Of The Act For The Assessment Year (Ay) 2018-19. 2. The Assessee Has Challenged Order Raising The Following Grounds Before Us: 1. That On Facts & In Law, The Learned Pcit Has Grievously Erred In Exercising Jurisdiction U/S 263 Of The Act. 2. That The Learned Pcit Has Grievously Erred In Law & On Facts, In Holding That The Ao Has Not Properly Examined The Issue Of Deduction Of Claim Of Excess Provision Of Inductotherm (India) Pvt.Ltd. Vs. Pr.Cit-1 Asst.Year: 2-18-19

For Appellant: Shri Mehul K. Patel, AdvocateFor Respondent: Shri Sudhendu Das, CIT-DR
Section 143(3)Section 263

Ahlcon Parenterals (India) Ltd., New Delhi vs. Pr, . CIT - 3, New Delhi

The appeal of the assessee is allowed

ITA 769/DEL/2021[2015-16]Status: DisposedITAT Delhi21 May 2024AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2015-16 Ahlcon Parenterals (India) Ltd., Vs Pr. Cit-3, Plot No.30/30-E, Shivaji Marg, New Delhi. 2Nd Floor, Najafgarh Road, New Delhi – 110 015. Pan: Aaaca1112C (Appellant) (Respondent) Assessee By : Shri Ketan Vaid, Ca Revenue By : Shri Zafarul Haque Tanweer, Cit-Dr Date Of Hearing : 26.02.2024 Date Of Pronouncement : 21.05.2024 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Assessee Against The Order Dated 25.03.2021 Passed By The Pr. Commissioner Of Income Tax (Central), Delhi-3 (Hereinafter Referred As The Ld. Pcit) In Revision No.Pcit (Central), Delhi-3/Revision- 263/100000193785/2021 Arising Out Of The Appeal Before It Against The Order Passed U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred As ‘The Act’), By The Dcit, Central Circle-31, New Delhi (Hereinafter Referred To As The Ld. Ao). 2. Heard & Perused The Record. At The Outset, The Ld.Ar Has Pointed Out That There Was A Delay In Filing The Appeal. The Ld. Ar Has Submitted That The Period Of Delay Stands Covered By The Hon’Ble Supreme Court Directions In Writ Petition (Civil) No.3 Of 2020 Wherein Due To Covid-19 Pandemic, The Date Of Filing Of The Appeal Was Extended. The Ld. Dr Could Not Dispute This. Accordingly, The Application Is Allowed.

For Appellant: Shri Ketan Vaid, CAFor Respondent: Shri Zafarul Haque Tanweer, CIT-DR
Section 143(3)Section 263Section 263(1)Section 32