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

Kaushalya Dealers (P) Ltd, Kolkata vs. ITO, Ward-4(4), Kolkata

In the result, the appeal of the assessee is allowed

ITA 419/KOL/2020[2015-16]Status: DisposedITAT Kolkata10 Dec 2021AY 2015-16

Bench: Shri Sanjay Garg & Shri Rajesh Kumarassessment Year: 2015-16 Kaushalya Dealers Pvt. Ito, Ward-4(4), Kolkata Ltd. 498/H/4, Karl Mark Vs. Sarani, Kolkata – 700 023. Pan: Aadck8028Q (Appellant) (Respondent) Present For: Appellant By : Shri S.M. Surana, Advocate Respondent By : Shri Sudipta Guha, Cit (Dr). Date Of Hearing : 08.12.2021 Date Of Pronouncement : 10.12.2021 O R D E R Per Rajesh Kumar: The Present Appeal Has Been Preferred By The Assessee Against The Revisionary Order Passed U/S 263 Of The Act Dated 29.05.2020 Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred To As The Pcit] Relevant To Ay 2015-16. 2. The Assessee Has Challenged The Revisionary Jurisdiction Exercised By Ld. Pcit U/S 263 Of The Act & Also The Consequent Order Passed U/S 263 Of The Act On The Ground That Revisionary Jurisdiction As Well As The Consequent Order Is Invalid & Nullity As Necessary Conditions Envisaged In Section 263 Of The Act Have Not Been Satisfied Before Invoking The Revisionary Jurisdiction. The Fact In Brief Are That The Assessee Filed A Return Of Income On 28.09.2015 Declaring Total Income Of Rs. 69,040/- Which Was Processed U/S 2 Kaushalya Dealers (P) Ltd. 143(1) Of The Act. Thereafter, The Case Of The Assessee Was Selected For Scrutiny Through Cass & Assessment Was Framed Vide Order Dated 05.09.2017 Passed U/S 143(3) Of The Act Assessing The Income At Rs. 69,040/- After Taking Into Account The Various Contentions/Replies Of The Assessee Filed During The Course Of Assessment Proceedings.

For Appellant: Shri S.M. Surana, AdvocateFor Respondent: Shri Sudipta Guha, CIT (DR)
Section 143(3)Section 2Section 263Section 36(1)(iii)Section 50C

Mahanadi Coalfields Limited, Burla vs. Principal Commissioner of Income Tax, Sambalpur

In the result, appeal of the assessee is allowed

ITA 141/CTK/2020[2015-16]Status: DisposedITAT Cuttack09 Dec 2021AY 2015-16

Bench: Shri C.M. Garg, Jm & Shri Manish Borad, Am आयकर अपीऱ सं./Ita No.141/Ctk/2020 (नििाारण वषा / Assessment Year :2015-2016) Mahanadi Coalfields Limited, Vs Pr.Cit, Sambalpur Jagruti Vihar, Burla, Sambalpur-768020 Pan No. : Aabcm 5188 P (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) .. ननधाारिती की ओर से /Assessee By : Shri S.S.Poddar, Ar िाजस्व की ओर से /Revenue By : Shri M.K.Gautam, Citdr सुनवाई की तािीख / Date Of Hearing : 29/10/2021 घोषणा की तािीख/Date Of Pronouncement : 10/12/2021 आदेश / O R D E R Per Bench: This Appeal Is Filed By The Assessee Against The Order Passed By The Pr.Cit, Sambalpur, U/S.263 Of The Act, Dated 21.04.2020 For The Assessment Year 2015-2016, On The Following Grounds :- 1. That The Notice Issued & Order Passed U/S.263 Of The Income Tax Act, 1961 (Act) By The Learned Principal Commissioner Of Income Tax, Sambalpur (Pr. Cit) Is Unjustified, Arbitrary, Excessive, Contrary To Evidences & Bad In Law. 2. That Having Regard To The Facts & Circumstances Of The Case, Pr. Cit Has Erred In Law & In Facts In Assuming Jurisdiction In Issuing The Notice & Passing The Order U/S.263 Of The Act, More So When The Assessment Order Passed U/S.143(3) Of The Act Is Neither Erroneous Nor Prejudicial To The Interest Of The Revenue. 3. That Having Regard To The Facts & Circumstances Of The Case, Pr. Cit Has Further Erred In Law & In Facts In Assuming Jurisdiction In Issuing The Notice & Passing The Order U/S.263 Of The Act, As The Subject Matter Of Proceedings U/S.263 Of The Act Were Duly Considered By The Ld. Assessing Officer During The Course Of Assessment Proceedings & The Assessment Order Was Passed After Making All The Enquiries & Verification & With Due Application Of Mind.

For Appellant: Shri S.S.Poddar, ARFor Respondent: Shri M.K.Gautam, CITDR
Section 143(3)Section 154Section 263

Assistant Commissioner of Income-Tax, Central Circle -2, Nashik vs. M/S. Vijay Construction, Nashik

In the result, the appeal filed by the Revenue stands partly allowed for statistical purposes

ITA 994/PUN/2018[2009-10]Status: DisposedITAT Pune08 Dec 2021AY 2009-10

Bench: Shri Inturi Rama Rao, Am & Shri S. S. Viswanethra Ravi, Jm आयकर अपील सं. / Ita No.994/Pun/2018 िनधा"रण वष" / Assessment Year : 2009-10 Acit, Central Circle-2, .......अपीलाथ" / Appellant Nashik. बनाम / V/S. M/S. Vijay Construction, Flat No.10, Shivasagar Society, Thatte Nagar, Nashik-422005. ……""यथ" / Respondent Pan : Aagfv5234M Revenue By : Shri S. P. Walimbe Assessee By : Shri Pramod S. Shingte सुनवाई क" तारीख / Date Of Hearing : 07.12.2021 घोषणा क" तारीख / Date Of Pronouncement : 08.12.2021 आदेश / Order Per Inturi Rama Rao, Am: This Is An Appeal Filed By The Revenue Directed Against The Order Of Ld. Commissioner Of Income Tax (Appeals)- 12, Pune (‘Cit(A)’ For Short) Dated 28.02.2018 For The Assessment Year 2009-10 Deleting Levy Of Penalty U/S 271D Of The Income Tax Act, 1961 (‘The Act’). 2. The Brief Facts Of The Case Are As Under :- The Appellant Is A Partnership Firm. The Return Of Income For The Assessment Year 2009-10 Was Filed On 29.09.2009 Declaring Total Income Of Rs.5,69,048/-. The Survey Operations U/S 133A Were Conducted In The Business Premises Of The Appellant On 04.10.2010 Consequent To The Search Action U/S 132 In The Case Of M/S. Anant Technocrats Pvt. Ltd..

For Appellant: Shri Pramod S. ShingteFor Respondent: Shri S. P. Walimbe
Section 132Section 133ASection 143(3)Section 263Section 269SSection 271D