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

Sameer Khan`, Visakhapatnam vs. The Assistant Commissioner of Income Tax, Circle-1(1), Visakhapatnam

In the result, appeal of the assessee is dismissed

ITA 128/VIZ/2021[2015-16]Status: DisposedITAT Visakhapatnam07 Apr 2022AY 2015-16

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अऩीऱ सं./ I.T.A. No.128/Viz/2021 (ननधधारण वषा / Assessment Year :2015-16) Sameer Khan, Vs. Acit, Visakhapatnam-1. Circle-1(1), Visakhapatnam Pan: Auhps 9016 R (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Appellant By : None प्रत्यधथी की ओर से / Respondent : Sri Murthy Naik, Cit-Dr By सुनवधई की तधरीख / Date Of : 09/03/2022 Hearing घोषणध की तधरीख/Date Of : 07/04/2022 Pronouncement O R D E R Per S. Balakrishnan: This Appeal Filed By The Assessee Against The Order Of The Ld. Pr. Cit, Visakhapatnam-1 Vide Din & Letter No.Itba/Com/F/17/2020/1032080706(1), Dated 31/3/2021 For The Ay 2015-16. 2 2. Brief Facts Of The Case Are That The Assessee Is Engaged In The Wholesale Trading Of Iron & Iron Scrap. The Assessee Filed His Return Of Income For The Ay 2015-16 Declaring Total Income Of Rs. 28,29,930/- On 28/09/2015. Subsequently, The Case Was Selected For Scrutiny Under Cass & Statutory Notices U/S. 143(2) & 142(1) Were Served On The Assessee. In Response To The Notices The Asessee’S Representative Appeared & Filed The Details Required By The Ld. Ao. The Ld. Ao After Examination Of The Books Of Accounts & Other Details Called For, Completed The Assessment By Adding Rs. 1,14,000/- As Interest Income From The Unsecured Loans Not Declared By The Assessee.

For Appellant: NoneFor Respondent: Sri Murthy Naik, CIT-DR by
Section 143(2)Section 143(3)Section 263

Anand Vithal, Mumbai vs. Pr. CIT-27, Navi Mumbai

ITA 1139/MUM/2021[2010-11]Status: DisposedITAT Mumbai07 Apr 2022AY 2010-11

Bench: Shri Pramod Kumar, Vp & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.1139/Mum/2021 (ननधधारण वर्ा / Assessment Years: 2010-11) Anand Vithal बनधम/ Pcit-27 Room No.401, 4Th Floor, 215, F Wing Orchid Vs. Apartment, Behind Jain Tower No.6, Vashi Temple Road, Govandi East, Railway Station Mumbai-400088. Commercial Complex, Vashi, Navi Mumbai- 400703. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Adjpv4940Q (प्रत्यथी / Respondent) (अपीलाथी /Appellant) .. Assessee By: Shri Ajay Singh Revenue By: Shri O.P. Singh (Dr) सुनवाई की तारीख / Date Of Hearing: 15/03/2022 घोषणा की तारीख /Date Of Pronouncement: 07/04/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 15.03.2021 Passed By The Principal Commissioner Of Income Tax-27, Mumbai [Hereinafter Referred To As The “Pcit”] Relevant To The A.Y.2010-11 In Which The Principal Commissioner Of Income Tax-27 Has Invoked The Revisional Power U/S 263 Of The I.T. Act, 1961. The Assessee Has Raised The Following Grounds Of Appeal: - 2. “1. On The Facts & Circumstances Of The Case, Hon'Ble Pr. Commissioner Of Income Tax — 27 (Hereinafter Referred As Pcit) Has Erred In Invoking Provisions Of Section 263 Of The Income Tax Act, 1961 By Issuing The Notice In Spite Of The Fact That Scrutiny Assessment U/S 144 R.W S. 147 Of Income Tax Act, 1961 Has Been Completed By The Income Tax Officer Ward 27 (1) (1), Mumbai (Hereinafter Referred As Income Tax Officer) After Duly Examining & Applying Mind On Facts While Framing The Assessment Order U/E 144 R.Ws. 147 Of Income Tax

For Appellant: Shri Ajay SinghFor Respondent: Shri O.P. Singh (DR)
Section 144Section 147Section 263

M/S Shree Saibalaji Securities Pvt Ltd, Salem vs. ACIT Circle 2, Salem

ITA 3172/CHNY/2019[2013-14]Status: DisposedITAT Chennai06 Apr 2022AY 2013-14

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No.1586/Chny/2018 (िनधा"रणवष" / Assessment Year: 2013-14) M/S. Shree Saibalaji Securities Pvt. Ltd. Pr. Cit बनाम No. 241-F, 1St Floor, 4Th Cross Salem. / Vs. Brindavan Road, Fairlands, Salem – 636 016. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aakcs-2804-F (अपीलाथ"/Appellant) : (""थ" / Respondent) & आयकरअपीलसं./ Ita No.3172/Chny/2019 (िनधा"रणवष" / Assessment Year: 2013-14) M/S. Shree Saibalaji Securities Pvt. Ltd. Acit बनाम No. 241-F, 1St Floor, 4Th Cross Circle -2, / Vs. Brindavan Road, Fairlands, Salem – 636 016. Salem. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aakcs-2804-F (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri. T. Vasudevan (Advocate) –Ld. Ar ""थ"कीओरसे/Respondent By : Shri. M. Rajan (Cit) & Shri. P. Sajit Kumar (Jcit) – Ld. Drs सुनवाईकीतारीख/ : 06-04-2022 Date Of Hearing घोषणाकीतारीख / : 06-04-2022 Date Of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeals By Assessee For Assessment Year (Ay) 2013-14 Arises Out Of Separate Orders. In Ita No.1586/Chny/2018, The Assessee

For Appellant: Shri. T. Vasudevan (Advocate) –Ld. ARFor Respondent: Shri. M. Rajan (CIT) &
Section 115Section 143(3)Section 2(22)(a)Section 2(22)(b)Section 263