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

Dy. Commissioner of Income Tax (Exemption)-2(1), Mumbai vs. The J.K Trust Bombay, Mumbai

In the result, appeal of the assessee is allowed and appeal of the revenue is dismissed

ITA 817/MUM/2023[2012-2013]Status: DisposedITAT Mumbai28 Jun 2023AY 2012-2013

Bench: Shri Aby T. Varkey, Jm & Ms. Padmavathy S, Am आयकर अपील सं/ I.T.A. No.817/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2012-13) Dcit (Exemption)-2(1) बिधम/ The J. K. Trust Bombay Room No. 608, 6Th Floor, Ground Floor, New Hind Vs. Mtnl Building, Cumballa House, Ballard Estate, Hill, Mumbai-400026. Mumbai-400001. आयकर अपील सं/ I.T.A. No.45/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2012-13) The J. K. Trust Bombay बिधम/ Dcit (Exemption)-2(1) Room No. 608, 6Th Floor, Ground Floor, New Hind Vs. House, Ballard Estate, Mtnl Building, Mumbai-400001. Cumballa Hill, Mumbai- 400026. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaatt0611L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Madhur Aggarwal Revenue By: Shri Ankush Kapoor (Dr) सुनवाई की तारीख / Date Of Hearing: 14/06/2023 घोषणा की तारीख /Date Of Pronouncement: 28/06/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeal Preferred By The Revenue As Well As The Assessee Against The Order Of The Commissioner Of Income Tax (Appeals)/Nfac, Dated 17.01.2023 For Assessment Year 2012-13. 2. At The Outset, The Ld. Ar Of The Assessee Shri Madhur Aggarwal Drawing Our Attention To The Grounds Of Appeal Raised By Assessee Submitted That Ld. Cit(A) Erred In Not Deciding The Legal Issue Raised By The Assessee Wherein Assessee Has Brought To The Notice Of The Ld. Cit(A) That The Impugned Order Of Ao Was Pursuant To The Ld. Cit(E)

For Appellant: Shri Madhur AggarwalFor Respondent: Shri Ankush Kapoor (DR)
Section 143(3)Section 250Section 263

Midway Motors \Private Limited, Cuttack vs. Pr.CIT-1, Bhubaneswar

In the result, appeal of the assessee stands allowed

ITA 148/CTK/2023[2017-18]Status: DisposedITAT Cuttack28 Jun 2023AY 2017-18

Bench: Shri George Mathan & Shri Rajesh Kumarआयकर अऩीऱ सं/Ita No.148/Ctk/2023 (ननधाारण वषा / Assessment Year : 2017-2018) Midway Motors Private Limited, Vs Pr.Cit, Bhubaneswar-1 Plot No.554, Nuapada Chaak, Madhupatna, Cuttack-753010 Pan No. :Aajcm 8153 E (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. ननधााररती की ओर से /Assessee By : Shri Sunil Mishra, Advocate राजस्व की ओर से /Revenue By : Shri M.K.Gautam, Pr.Cit(Osd) सुनवाई की तारीख / Date Of Hearing : 28/06/2023 घोषणा की तारीख/Date Of Pronouncement : 28/06/2023 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld. Pr.Cit, Bhubaneswar-1, Dated 11.01.2022, Passed In Itba/Rev/F/Rev5/2021-22/1038622483(1), For The Assessment Year 2017-2018. 2. It Was Submitted By The Ld. Ar That There Is Delay Of 411 Days In Filing The Present Appeal, Which Was Due To Death Of The Accountant Of The Assessee, Who Was Looking After The Tax Matters Of The Assessee. The Affidavit Filed By The Assessee Has Not Been Found To Be False & The Reasons Given Are Found To Be Reasonable. Consequently, The Delay Of 411 Days In Filing The Appeal Is Condoned & Appeal Of The Assessee Is Disposed Off On Merits.

For Appellant: Shri Sunil Mishra, AdvocateFor Respondent: Shri M.K.Gautam, Pr.CIT(OSD)
Section 142(1)Section 143(3)Section 263

Evergreen Agency Private Limited, Kolkata vs. PCIT-2, Kolkata

In the result, the appeal of the assessee stands allowed

ITA 138/KOL/2022[2011-12]Status: DisposedITAT Kolkata27 Jun 2023AY 2011-12

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A No.138/Kol/2022 Assessment Year: 2011-12 Evergreen Agency Pvt. Ltd…………………................................……Appellant Maurya Patna, South Gandhi Maidan, Patna-800001. [Pan: Aaace5390A] Vs. Pcit, Kolkata-2…………………….............……........……...…..…..Respondent Appearances By: Shri Siddharth Agarwal, Advocate, Appeared On Behalf Of The Appellant. Shri Abhijit Kundu, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : May 04, 2023 Date Of Pronouncing The Order : June 27, 2023 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 17.03.2021 Of The Principal Commissioner Of Income Tax (Hereinafter Referred To As The ‘Pcit’) Agitating The Exercise Of His Revision Jurisdiction U/S 263 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. There Is Note By The Registry Of Delay Of 302 Days In Filing Of The Appeal. A Separate Application For Condonation Of Delay Has Been Filed, Wherein, It Has Been Pointed Out That The Delay Period Was Pertaining To Covid-2019 Pandemic Period. In View Of The Directions Of The Hon’Ble

Section 132Section 139(1)Section 143(1)Section 147Section 148Section 14ASection 263Section 68