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

Sreema Associates Pvt. Ltd., North Twenty Four Parganas vs. National Faceless Assessment Centre (NFAC), New Delhi

In the result, the appeal of the assessee is allowed

ITA 2567/KOL/2025[2020-2021]Status: DisposedITAT Kolkata21 Jan 2026AY 2020-2021

Bench: Shri Rajesh Kumar & Shri Pradip Kumar Choubeyassessment Year: 2020-21 Sreema Associates Pvt. Ltd……..…..……….………….……….……….……Appellant Df-94, Shop No.2, Ground Floor, Premises No.58-324, Stree 324, Rajarhat, New Town,, W.B- 700156.. [Pan: Aascs1199K] Vs. Nfac, New Delhi……….……………………………..…….....……...…..…..Respondent Appearances By: Shri Giridhar Dhelia, Ar, Appeared On Behalf Of The Appellant. Shri S B Chakraborthy, Addl. Cit, Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : January 12, 2026 Date Of Pronouncing The Order : January 21, 2026 Order Per Pradip Kumar Choubey: This Appeal Filed By The Assessee Is Directed Against The Order Dated 28.08.2025 Of The Nfac, Delhi (Hereinafter Referred To As The “Cit(A)”) Passed U/S 250 Of The Income-Tax Act, 1961 (Hereinafter Referred To As “The Act”) For The Assessment Year 2020–21 Which Is Arisen From The Order Of The Assessing Officer Dated 20.09.2022 Passed U/S 144 R.W.S. 144B Of The Act. 2. The Appeal Has Been Filed By The Assessee With A Delay Of 6 Days & The Assessee Has Filed A Petition For Condonation Of The Delay. After Going Over The Said Petition, We Find Sufficient Reasons Behind The Delay & Consequently, The Delay In Filing The Appeal Is Hereby Condoned & We Proceed To Dispose Of The Appeal On Merits.

Section 144Section 250Section 263Section 271A

M/S. Truthful Vintrade Private Limited, Kolkata vs. ITO, Ward 12(2), Kolkata

In the result, the appeal of the assessee is dismissed

ITA 1718/KOL/2025[2012-2013]Status: DisposedITAT Kolkata21 Jan 2026AY 2012-2013

Bench: Shri Rajesh Kumar & Shri Pradip Kumar Choubeyassessment Year: 2012-13 M/S Truthful Vintrade Pvt. Ltd.…..……….………….……….……….……Appellant 248, Russa Road, Kol - 700033.. [Pan: Aadct7083N] Vs. Ito, Ward-12(2), Kolkata……………………………..…….....……...…..…..Respondent Appearances By: Shri Abhishek Bansal, Fca, Appeared On Behalf Of The Appellant. Shri V. Vidyadhar, Cit, Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : January 13, 2026 Date Of Pronouncing The Order : January 21, 2026 Order Per Pradip Kumar Choubey: This Appeal Filed By The Assessee Is Directed Against The Order Dated 30.06.2025 Of The Cit(A)-21, Kolkata (Hereinafter Referred To As The “Cit(A)”) Passed U/S 250 Of The Income-Tax Act, 1961 (Hereinafter Referred To As “The Act”) For The Assessment Year 2012–13. 2. At The Outset, The Ld. Ar Drew Our Attention To The Order Passed U/S 263 Of The Act Dated 13.06.2016, Whereby The Ld. Pcit-4, Kolkata Has Directed The Assessing Officer To Examine The Credits Appearing In The Books Of Assessee As Share Capital Including Premium & Nature Of Transactions, Identity Of Investor & Its Genuineness After Providing Sufficient Opportunity Of Being Heard To The Assessee. The Ld. Ar Therefore Submits That The Present Appeal Becomes Infructuous In View Of The Order Passed U/S 263 By The Ld. Pcit Dated 13.06.2016. M/S Truthful Vintrade Pvt. Ltd 3. We Have Perused The Materials On Record & Find That The Ld. Pcit-4, Kolkata Has Passed An Order U/S 263 Of The Act Dated 13.06.2016 Directing The Assessing Officer To Reexamine The Matter Afresh. We, After Considering The Submission Of The Ld. Ar, Dismiss The Present Appeal As Become Infructuous

Section 250Section 263

Dy. Commissioner of Income Tax-VI, Lucknow vs. U.P Rajya Vidyut Utpadan Nigam Limited, Lucknow

In the result, the appeal of the assessee in ITA

ITA 209/LKW/2019[2012-13]Status: DisposedITAT Lucknow20 Jan 2026AY 2012-13

Bench: Shri Kul Bharat & Shri Nikhil Choudharyआयकर अपील सं/ Ita Nos.161/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 & आयकर अपील सं/ Ita Nos.174/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 U.P Rajya Vidyut Utpadan V. Dcit, Range-Vi Nigam Ltd 3Rd Floor, 27/2, Raja Ram 7Th Floor, Shakti Bhawan Mohan Rai Marg, P. K. Extension 14, Ashok Marg, Complex, Lucknow- Lucknow-226001. 226001. Pan: Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) आयकर अपील सं/ Ita No.209/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 Dcit, Range-Vi V. U.P Rajya Vidyut 3Rd Floor, 27/2, Raja Ram Utpadan Nigam Ltd Mohan Rai Marg, P. K. 7Th Floor, Shakti Bhawan Complex, Lucknow-226001. Extension 14, Ashok Marg, Lucknow-226001. Pan:Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant By: Shri Sandeep Jain, C.A प्रत्यर्थी कक और से /Respondent By: Shri R. K. Agarwal, Cit(Dr) सुनवाई कक तारीख / Date Of Hearing: 04 12 2025 घोर्णा कक तारीख/ Date Of 20 01 2026 Pronouncement:

For Appellant: Shri Sandeep Jain, C.AFor Respondent: Shri R. K. Agarwal, CIT(DR)
Section 115JSection 14ASection 263Section 32

U.P Rajya Vidyut Utpadan Nigam Limited, Lucknow vs. Dy. Commissioner of Income Tax-VI, Lucknow

In the result, the appeal of the assessee in ITA

ITA 174/LKW/2019[2012-13]Status: DisposedITAT Lucknow20 Jan 2026AY 2012-13

Bench: Shri Kul Bharat & Shri Nikhil Choudharyआयकर अपील सं/ Ita Nos.161/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 & आयकर अपील सं/ Ita Nos.174/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 U.P Rajya Vidyut Utpadan V. Dcit, Range-Vi Nigam Ltd 3Rd Floor, 27/2, Raja Ram 7Th Floor, Shakti Bhawan Mohan Rai Marg, P. K. Extension 14, Ashok Marg, Complex, Lucknow- Lucknow-226001. 226001. Pan: Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) आयकर अपील सं/ Ita No.209/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 Dcit, Range-Vi V. U.P Rajya Vidyut 3Rd Floor, 27/2, Raja Ram Utpadan Nigam Ltd Mohan Rai Marg, P. K. 7Th Floor, Shakti Bhawan Complex, Lucknow-226001. Extension 14, Ashok Marg, Lucknow-226001. Pan:Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant By: Shri Sandeep Jain, C.A प्रत्यर्थी कक और से /Respondent By: Shri R. K. Agarwal, Cit(Dr) सुनवाई कक तारीख / Date Of Hearing: 04 12 2025 घोर्णा कक तारीख/ Date Of 20 01 2026 Pronouncement:

For Appellant: Shri Sandeep Jain, C.AFor Respondent: Shri R. K. Agarwal, CIT(DR)
Section 115JSection 14ASection 263Section 32

U.P Rajya Vidyut Utpadan Nigam Limited, Lucknow vs. Dy. Commissioner of Income Tax-VI, Lucknow

In the result, the appeal of the assessee in ITA

ITA 161/LKW/2019[2012-13]Status: DisposedITAT Lucknow20 Jan 2026AY 2012-13

Bench: Shri Kul Bharat & Shri Nikhil Choudharyआयकर अपील सं/ Ita Nos.161/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 & आयकर अपील सं/ Ita Nos.174/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 U.P Rajya Vidyut Utpadan V. Dcit, Range-Vi Nigam Ltd 3Rd Floor, 27/2, Raja Ram 7Th Floor, Shakti Bhawan Mohan Rai Marg, P. K. Extension 14, Ashok Marg, Complex, Lucknow- Lucknow-226001. 226001. Pan: Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) आयकर अपील सं/ Ita No.209/Lkw/2019 ननिाारण वर्ा/ Assessment Year: 2012-13 Dcit, Range-Vi V. U.P Rajya Vidyut 3Rd Floor, 27/2, Raja Ram Utpadan Nigam Ltd Mohan Rai Marg, P. K. 7Th Floor, Shakti Bhawan Complex, Lucknow-226001. Extension 14, Ashok Marg, Lucknow-226001. Pan:Aaacu4749D अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant By: Shri Sandeep Jain, C.A प्रत्यर्थी कक और से /Respondent By: Shri R. K. Agarwal, Cit(Dr) सुनवाई कक तारीख / Date Of Hearing: 04 12 2025 घोर्णा कक तारीख/ Date Of 20 01 2026 Pronouncement:

For Appellant: Shri Sandeep Jain, C.AFor Respondent: Shri R. K. Agarwal, CIT(DR)
Section 115JSection 14ASection 263Section 32