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

Shri Fateh Chand Chindalia, Kolkata vs. ITO, Ward 40(1), Kolkata

In the result, the appeal of the assessee stands allowed

ITA 185/KOL/2022[2011-12]Status: DisposedITAT Kolkata16 Mar 2023AY 2011-12

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A No.185/Kol/2022 Assessment Year: 2011-12 Shri Fateh Chand Chindalia........................................………...…..…Appellant 4A, Sayed Sally Street, Kolkata-700073. [Pan: Adfpc9919G] Vs. Ito, Ward-40(1), Kolkata......................................................…..…..Respondent Appearances By: Shri Sunil Surana, Ar, Appeared On Behalf Of The Appellant. Shri Subhrajyoti Bhattacharjee, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : January 24, 2023 Date Of Pronouncing The Order : March 16, 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 19.03.2021 Of The Principal Commissioner Of Income Tax -1, Kolkata [Hereinafter Referred To As The ‘Pcit’] Exercising His Revision Jurisdiction U/S 263 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Has Taken The Following Grounds Of Appeal: “1. For That The Ld. Pcit Erred In Invoking The Provisions Of Section 263 When The Assessment Completed U/S 143(3)/147 On 26.12.2018 Was Neither Erroneous Nor Prejudicial To The Interest Of Revenue.

Section 143(3)Section 147Section 148Section 263

DCIT, C.C.-3(4), Kolkata vs. M/S Tanishque Trade Link Pvt. Ltd, Howrah

In the result, appeal of the revenue is dismissed

ITA 17/KOL/2021[2008-09]Status: DisposedITAT Kolkata16 Mar 2023AY 2008-09

Bench: Shri Sanjay Garg, Hon’Ble & Dr. Manish Borad, Hon’Blei.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Deputy Commissioner Of Income Tanishque Tradelink Pvt. Ltd. Tax, Central Circle-3(4), Kolkata Vs Bhabatarini Apartment G.T. Road, Room No. 602 Howrah - 711201 [Pan : Aacct7512R] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri A.K. Tibrewal, Fca Revenue By : Shri Biswanath Das, Cit D/R सुनवाई क" तारीख/Date Of Hearing : 18/01/2023 घोषणा क" तारीख /Date Of Pronouncement: 16/03/2023 आदेश/O R D E R Per Dr. Manish Borad: The Present Appeal Is Directed At The Instance Of The Revenue Against The Order Of The Learned Commissioner Of Income Tax (Appeals)-6, Kolkata (Hereinafter The “Ld. Cit(A)”) Dated 24/09/2020, Passed U/S 250 Of The Income Tax Act, 1961 (‘The Act’), For Assessment Year 2008-09. 2. The Revenue Has Raised The Following Grounds Of Appeal:- “1. That On Facts & In The Circumstances Of The Case, The Ld. Cit(A) Has Erred In Law As Well As In Facts In Allowing The Bogus Share Capital Raised In The Books Of The Assessee Without Appreciating The Fact That The Assessee Failed To Discharge Its Primary Onus To Prove & Establish The Identity & Creditworthiness Of The Investor Companies & Genuineness Of The Transaction. 2. That On The Facts & In The Circumstances Of The Case, The Ld. Cit(A) Has Erred In Law As Well As In Facts In Ignoring That The Identity & Creditworthiness Of The Shareholders & Even The Genuineness Of The Transactions Remained Unexplained. 3. That On Facts & In The Circumstances Of The Case, The Ld. Cit(A) Has Erred In Not Invoking His Powers U/S. 250(4) Of The I.T. Act, 1961 In Directing The Assessing Officer To Make Further Enquiry & Report The Results Of The

For Appellant: Shri A.K. Tibrewal, FCAFor Respondent: Shri Biswanath Das, CIT D/R
Section 133(6)Section 143(3)Section 147Section 148Section 14ASection 250Section 250(4)Section 263Section 68

Prabir Kr. Pal L/S Indira Pal, PCIT, Kolkata vs. PCIT-5, Kolkata

In the result, the appeal of the assessee is dismissed

ITA 210/KOL/2021[2016-17]Status: DisposedITAT Kolkata15 Mar 2023AY 2016-17

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A No.210/Kol/2021 Assessment Year: 2016-17 Prabir Kr. Pal L/R. Indira Pal..............................................................…… …. Appellant C/O S.N. Ghosh & Associates, Advocates, “Seben Brothers”, P.O Buroshibtala, P.S Chinsurah, Dist-Hooghly, W.B - 712105. [Pan: Agqpp1392J] Vs. Pcit, Kolkata-5, Kolkata...................…....................................................….. Respondent Appearances By: None Appeared On Behalf Of The Appellant. Shri Sudipta Guha, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : January 18, 2023 Date Of Pronouncing The Order : March 15, 2023 आदेश / Order मनीष बोरड, लेखा सद"य "वारा / Per Manish Borad: This Appeal Filed By The Assessee Pertaining To The Assessment Year (In Short “Ay”) 2016-17 Is Directed Against The Revisionary Order Passed U/S 263 Of The Income Tax Act, 1961 (In Short The “Act”) By Principal Commissioner Of Income Tax [In Short Ld. “Pcit”] Dated 04.03.2021. 2. The Registry Has Informed That The Appeal Is Time-Barred By 66 Days. The Assessee Has Not Filed Any Application For Condonation Of Delay. On Perusal Of The Impugned Order, We Find That The Same Is Dated 04.03.21. At That Point Of Time, The Country Was Facing Through

Section 143(3)Section 194LSection 263

Star Health Investments Private Limited, Chennai vs. ITO, Corporate Ward-6(3), Chennai

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

ITA 357/CHNY/2022[2015-16]Status: DisposedITAT Chennai15 Mar 2023AY 2015-16

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T.A. No.357/Chny/2022 िनधा"रण वष"/Assessment Year: 2015-16 Star Health Investments Vs. The Principal Commissioner Of Private Limited (Dissolved), Income Tax-3, Room No. 410, Main No. 10 & 11, 4Th Floor, Chennai Citi Building, Ivth Floor, 121, Mahatma Centre, Dr. Radhakrishnan Salai, Gandhi Road, Nungambakkam, Mylapore, Chennai 600 004, Chennai. Tamil Nadu. [Pan:Aajcs6207K] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Venkata Raman, Ca & Shri V. Padmanabhan, Ca ""थ" की ओर से/Respondent By : Shri P. Mohan Reddy, Cit सुनवाई की तारीख/ Date Of Hearing : 09.02.2023 घोषणा की तारीख /Date Of Pronouncement : 15.03.2023 आदेश /O R D E R Per V. Durga Rao: This Appeal Filed By The Assessee Is Directed Against The Order Of The Ld. Principal Commissioner Of Income Tax, Chennai – 3, Chennai Dated 31.03.2021 Relevant To The Assessment Year 2015-16 Passed Under Section 263 Of The Income Tax Act, 1961 [“Act” In Short].

For Appellant: Shri R. Venkata Raman, CA &For Respondent: Shri P. Mohan Reddy, CIT
Section 142(1)Section 143(2)Section 143(3)Section 263Section 56(2)(viib)