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

White Waves Capital LLP, Mumbai vs. Pr. CIT - 21, Mumbai

In the result, the appeal of the assessee is hereby ordered to be allowed

ITA 2370/MUM/2019[2014-15]Status: DisposedITAT Mumbai02 Mar 2020AY 2014-15

Bench: Shri Rajesh Kumar, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.2370/Mum/2019 (ननधधारण वर्ा / Assessment Years: 2014-15) बनधम/ White Waves Capital Llp Pr. Cit-21 A-305, Phoneix House, Piramal Chambers, Vs. 462, Senapati Bapat Marg, Lalbaug, Parel, Mumbai- Worli, Mumbai-400013. 400012. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aabfw2593F (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: Ms. Vasanti B. Patel Revenue By: Shri Awungshi Gimson (Dr) सुनवाई की तारीख / Date Of Hearing: 09/12/2019 घोषणा की तारीख /Date Of Pronouncement: 02/03/2020 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 05.03.2019 Passed By The Principal Commissioner Of Income Tax-21, Mumbai [Hereinafter Referred To As The “Pcit”] Relevant To The A.Y.2014-15 In Which The Principal Commissioner Of Income Tax-21 Has Invoked The Provisions U/S 263 Of The I.T. Act, 1961. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “1. The Pr. Comm. Of Income Tax-21, Mumbai Cit Erred In Invoking & Passing An Order Under Section 263 Of The Act For The Said Year. 2. The Cit Erred In Stating In The Said Order That Reply Filed By The Appellant Is Not Acceptable As There Is No Merits Therein Without Passing A Speaking Order. 3. The Cit Erred In Failing To Appreciate That The Issue Of Claim For Bad Debts Of Rs.65,68,044/- On Account Of Default In Payment Of Settlement Dues By Nsel Were Duly Examined By The Ao In Scrutiny Assessment Proceedings By Calling For Relevant Details & Allowed The Same After Due Application Of Mind.”

For Appellant: Ms. Vasanti B. PatelFor Respondent: Shri Awungshi Gimson (DR)
Section 143(3)Section 263Section 27Section 43(5)

Kusumlata Sonthalia, Kolkata vs. Principal CIT, Central - 1, Kolkata

Appeal is allowed

ITA 1112/KOL/2019[2011-12]Status: DisposedITAT Kolkata28 Feb 2020AY 2011-12

Bench: Shri P. M. Jagtap, V.P & Shri S. S. Godara, Jm आयकर अपीलसं/I.T.A No.1112/Kol/2019 ("नधा"रण वष" / Assessment Year: 2011-12) Kusumlata Sonthalia Vs. Pcit, Central-1, Kolkata. 34, Pankaj Mallick Sarani, Jayantika Apartment, 1St Floor, Ballygunge, Kolkata – 700019. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Abbpa8446Q (Appellant) .. (Respondent) Appellant By : Shri Nirav Shesth, Aca Respondent By : Shri Ram Bilash Meena, Cit सुनवाई क" तार"ख/ Date Of Hearing : 13/02/2019 घोषणा क" तार"ख/Date Of Pronouncement : 28/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2011-12 Arises Against The Principal Commissioner Of Income Tax, Central-1, Kolkata’S Order Dated 28.02.2019 Involving Proceedings U/S 153A/143(3) Of The Income Tax Act, 1961 (In Short ‘The Act’). Heard Both The Parties. Case File Perused. 2. Coming To The Basic Relevant Facts, We Notice That The Pcit’S Action Under Challenge Has Assumed Revision Jurisdiction Vested U/S 263 Of The Act To Hold The Regular Assessment In Question Framed In Assessee’S Case On 30.12.2016 As An Erroneous One Causing Prejudice To Interest Of The Revenue On The Ground That The Assessing Officer Had Failed To Carry Out Factual Verification/Necessary Enquires/Investigation Regarding The Tax-Payer’S Long Term Capital Losses Of Rs.156075/- & Gains Of Rs.13010/- As Per Stamp Duty Valuation(S) Of Rs.1465454/-And Rs.1353454/-; Respectively. He Thus Sought To Invoke Section

For Appellant: Shri Nirav Shesth, ACAFor Respondent: Shri Ram Bilash Meena, CIT
Section 14ASection 153ASection 263

Al Champdany Industries Ltd., Kolkata vs. Principal CIT - 1, Kolkata

Appeal is disposed off in above terms

ITA 843/KOL/2018[2013-14]Status: DisposedITAT Kolkata28 Feb 2020AY 2013-14

Bench: Shri S. S. Godara, Jm & Dr. A. L. Saini, Am आयकर अपीलसं/I.T.A No.843/Kol/2018 ("नधा"रण वष" / Assessment Year: 2013-14) Ai Champdany Industries Ltd. Vs. Pcit-1, Kolkata. C/O. Subash Agarwal & Associates, Siddha Gibson, 1, Gibson Lane, Suite- 213, 2Nd Floor, Kol-700069. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aacca4860D (Appellant) .. (Respondent) Appellant By : Shri Subash Agarwal, Advocate Respondent By : Shri Vijay Shankar, Cit सुनवाई क" तार"ख/ Date Of Hearing : 24/02/2020 घोषणा क" तार"ख/Date Of Pronouncement : 28/02/2020 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2013-14 Arises Against The Principal Commissioner Of Income Tax - 1, Kolkata’S Order Dated 21.03.2018 Involving Proceedings U/S 263 Of The Income Tax Act, 1961 (In Short ‘The Act’). Heard Shri Subash Agarawal, Learned Authorized Representing Assessee & Shri Vijay Shankar, Cit-Dr Appearing At The Revenue’S Behest. 2. Relevant Facts Involved In The Instant Lis Is In Narrow Compass. Both The Learned Representatives Are Ad Idem During The Course Of Hearing That This Assessee A Company Manufacturing & Trading In Jute, Jute Blending, Flax Goods, Had Claimed To Have Been Deriving House Property Income From Various Asset(S) For The Past Very Many Assessment Years. They Invited Our Attention To The Assessing

For Appellant: Shri Subash Agarwal, AdvocateFor Respondent: Shri Vijay Shankar, CIT
Section 24Section 263