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

United Rail Road Consultants Private Limited (Unique Rail Road Consultants Pvt Ltd Now Merged With United Rail Road Consultants Pvt Ltd, Hyderabad vs. DCIT-1 Central Circle-1(3), Hyderabad

In the result, appeal filed by the assessee is allowed

ITA 745/HYD/2020[2015-16]Status: DisposedITAT Hyderabad30 Jan 2023AY 2015-16

Bench: Shri R.K. Panda & Shri K. Narasimha Charyassessment Year: 2015-16 M/S. United Rail Road Vs. Dy. C.I.T Consultants (P) Ltd., Central Circle 1(3) Secunderabad Hyderabad Pan:Aaacu8136E (Appellant) (Respondent) Assessee By: Shri M.V. Joshi, C.A Appeared For Shri P. Murali Mohan Rao, Ca Revenue By: Shri Jeeval Lal Lavidiya, Dr Date Of Hearing: 12/01/2023 Date Of Pronouncement: 30/01/2023 Order Per R.K. Panda, A.M This Appeal Filed By The Assessee Is Directed Against The Order Dated 19.3.2020 Passed U/S 263 Of The I.T. Act, 1961 By The Learned Pr.Cit (Central)- Hyderabad, Relating To A.Y.2015-16. 2. Facts Of The Case, In Brief, Are That The Assessee Company Was Engaged In The Business Of Providing Consultancy Services. It Filed Its Return Of Income For The A.Y 2015-16 On 29.9.2015 Declaring Total Income Of Rs.2,29,74,860/-. The Case Was Selected For Scrutiny Through Cass In The Limited Scrutiny To Verify “Large Other Expenses Claimed In The Profit & Loss A/C & Mismatch In Sales Turnover Reported In Audit Report &

For Appellant: Shri M.V. Joshi, C.A appeared for Shri P. Murali Mohan Rao, CAFor Respondent: Shri Jeeval Lal Lavidiya, DR
Section 143(2)Section 143(3)Section 199Section 236Section 263

Kendrapara Urban Co-Operative Bank Ltd., Kendrapada vs. Pr.Commissioner of Income Tax, Cuttack

In the result, appeal of the assessee stands allowed

ITA 163/CTK/2020[2015-16]Status: HeardITAT Cuttack30 Jan 2023AY 2015-16

Bench: Shri George Mathan & Shri Arun Khodpiaआयकर अऩीऱ सं/Ita No.163/Ctk/2020 (ननधाारण वषा / Assessment Year :2015-2016) Kendrapara Urban Co-Operative Vs Pr.Cit, Cuttack Bank Ltd., College Square, Tinimuhani, Kendrapara-754211 Pan No. :Aaatk 8347 E (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee By : Shri P.C.Sethi, Advocate राजस्व की ओर से /Revenue By : Shri M.K.Gautam, Cit-Dr सुनवाई की तारीख / Date Of Hearing : 30/01/2023 घोषणा की तारीख/Date Of Pronouncement : 30/01/2023 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld Pr.Cit, Cuttack, Dated 24.03.2020, Passed In Din & Order No.Itba/Com/F/17/2019-20/1026884702(1) For The Assessment Year 2015-2016. 2. The Appeal Of The Assessee Is Barred By 8 Days. The Assessee Through Its Secretary Has Filed An Application Dated 13.07.2020 Stating Therein Sufficient Reasons For Condonation Of Delay, To Which Ld. Cit-Dr Did Not Object. In View Of The Above, Delay Of 8 Days In Filing The Present Appeal Is Condoned & The Appeal Of The Assessee Is Heard Finally. 3. It Was Submitted By The Ld. Ar That The Original Assessment In The Case Of The Assessee Was Completed U/S.143(3) Of The Act On 20.11.2017. It Was The Submission That The Assessment Was A Limited Scrutiny

For Appellant: Shri P.C.Sethi, AdvocateFor Respondent: Shri M.K.Gautam, CIT-DR
Section 143(3)Section 14ASection 263Section 36(1)(viia)Section 40

M/S. M.G. Mohanty, Bhubaneswar vs. Principal CIT-1, Bhubaneswar

In the result, appeal filed by the assessee stands allowed

ITA 187/CTK/2019[2014-15]Status: HeardITAT Cuttack30 Jan 2023AY 2014-15

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year : 2014-15 M/S. M/S. M.G.Mohanty, M.G.Mohanty, 5 5-A, Vs. Pr. Cit-1, Bhubaneswar. 1, Bhubaneswar. Forest Park, Bhubaneswar. Forest Park, Bhubaneswar. Pan/Gir No. Pan/Gir No.Aaffm 2127 H (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : Shri B.K.Mohapatra/A.K.Sambat, Cas B.K.Mohapatra/A.K.Sambat, Cas Revenue By : Shri M.K.Gautam, Cit : Shri M.K.Gautam, Cit Dr Date Of Hearing : 30/1 1/2023 Date Of Pronouncement : 30/1 1/2023 O R D E R Per Bench This Is An Appeal Filed By The Assessee Against The Order Of The Ld This Is An Appeal Filed By The Assessee Against The Order Of The Ld This Is An Appeal Filed By The Assessee Against The Order Of The Ld Pr. 1, Bhubaneswar U/S.263 Of The Act Dated 31St March, 2019 Cit-1, Bhubaneswar U/S.263 Of The Act March, 2019 In Appeal No.Pcit-1/Bbsr/263/05/2018 1/Bbsr/263/05/2018-19 For The Assessment Year For The Assessment Year 2014-15. 2. S/Shri B.K.Mohapatra/A.K.Sabat, Ld Ars Appeared For The Assessee S/Shri B.K.Mohapatra/A.K.Sabat, Ld Ars Appeared For The Assessee S/Shri B.K.Mohapatra/A.K.Sabat, Ld Ars Appeared For The Assessee & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue. & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue. & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue.

For Appellant: Shri B.K.Mohapatra/A.K.Sambat, CASFor Respondent: Shri M.K.Gautam, CIT
Section 263

Bibhuti Bhushan Ray, Rourkela vs. Pr.CIT(Central), Vishakhapatnam

In the result, appeal of the assessee stands dismissed

ITA 109/CTK/2019[2011-12]Status: HeardITAT Cuttack30 Jan 2023AY 2011-12

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year : 2011-12 Bibhuti Bhusan Ray, C/O Bibhuti Bhusan Ray, C/O Vs. Pr. Pr. Cit(Central), Cit(Central), Pratyakshakar Bhavan, 4Th Shanti Shanti Memorial Memorial Hospital, Hospital, Pratyakshakar Bhavan, 4 Udit Nagar, Rourkela/Cl Udit Nagar, Rourkela/Cl-5, Floor, Mpv Colony, Double Floor, Mpv Colony, Double Basanti Colony, Rourkela. Basanti Colony, Rourkela. Road, Visakhapatanam. Road, Visakhapatanam. Pan/Gir No. Pan/Gir No. (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : Shri P.C.Sethi, Ar P.C.Sethi, Ar Revenue By : Shri M.K.Gautam, M.K.Gautam, Cit Dr Date Of Hearing : 30/01 01/2023 Date Of Pronouncement : 30/01 /01/2023 O R D E R Per Bench This Is An Appeal Filed By The Assessee This Is An Appeal Filed By The Assessee Against The Order Passed By Against The Order Passed By The Ld Pr. Cit Cit U/S.263 Of The Act Dated 18.3.2019 18.3.2019 In No.Pr. Cit(C)/Vsp/263/Cc.Sambalpur/2018 Cit(C)/Vsp/263/Cc.Sambalpur/2018-19 For The Assessment Year For The Assessment Year 2011-12. 2. Shri P.C.Sethi, Ld Ar Appeared For The Assessee & Shri Shri P.C.Sethi, Ld Ar Appeared For The Assessee & Shri Shri P.C.Sethi, Ld Ar Appeared For The Assessee & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue. M.K.Gautam, Ld Cit Dr Appeared For The Revenue.

For Appellant: Shri P.C.Sethi, ARFor Respondent: Shri M.K.Gautam
Section 263