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

Rista Fisheries & Infrastructure Ltd., Kolkata vs. Pr.C.I.T.-4, Kolkata

Appeal is dismissed

ITA 792/KOL/2019[2014-15]Status: DisposedITAT Kolkata22 Nov 2019AY 2014-15

Bench: Shri S. S. Godara, Jm & Dr. A. L. Saini, Am आयकर अपीलसं./I.T.A No.792/Kol/2019 ("नधा"रण वष" / Assessment Year: 2014-15) Rista Fisheries & Infrastructure Vs. Ito, Ward-13(4), Kolkata. Ltd. 282, D.H. Road, West Bengal. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaecr6032J (Appellant) .. (Respondent) Appellant By : Shri K. M. Roy, Fca Respondent By : Dr. A. K. Nayak, Cit-Dr सुनवाईक"तार"ख/ Date Of Hearing : 04/09/2019 घोषणाक"तार"ख/Date Of Pronouncement : 22/11/2019 आदेश / O R D E R Per Shri S. S. Godara: This Assessee’S Appeal For Assessment Year 2014-15 Arises Against The Commissioner Of Income Tax - 4, Kolkata Dated 25.02.2019 Passed Involving Proceedings U/S 263 Of The Income Tax Act, 1961 (In Short ‘The Act’). Heard Both The Parties. Case File Perused. 2. We Advert To The Basic Relevant Facts. This Assessee’S Is A Company Developing Infrastructure As Well As Acting As A Commission Agent. It Filed Its Return On 15.02.2015 Declaring Total Income Of Rs.13,202/-. The Assessing Officer Thereafter Framed Regular Assessment In Issue In Its Case Dated 15.11.2016 Determining Its Taxable Income At Rs.4,62,480/- After Making Various Disallowance/Additions.

For Appellant: Shri K. M. Roy, FCAFor Respondent: Dr. A. K. Nayak, CIT-DR
Section 194ASection 263Section 263(1)

M/S. General Polytex Pvt. Ltd., Surat vs. ITO, Ward - 1(1), Kolkata

Appeal is dismissed

ITA 2211/KOL/2018[2008-09]Status: DisposedITAT Kolkata22 Nov 2019AY 2008-09

Bench: Shri S.S.Godara & Dr. A.L. Sainiassessment Year :2008-09 M/S General Polytex Pvt. V/S. Income Tax Officer, Ltd., A-Wing, 6Th Floor, Ward-1(1), Aayakar International Commerce Bhawan, P-7, Centre (Icc), Near Chowringhee Kadiwala School, Ring Square,Kolkata-69 Road, Surat-395002 [Pan No.Ssvvb 5335 L] .. अपीलाथ" /Appellant ""यथ"/Respondent None अपीलाथ" क" ओर से/By Appellant Shri Radehy Shyam, Cit-Dr ""यथ" क" ओर से/By Respondent 09-09-2019 सुनवाई क" तार"ख/Date Of Hearing 22-11-2019 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per S.S.Godara:- This Assessee’S Appeal For Assessment Year 2008-09 Arises Against The Principal Commissioner Of Income Tax (Appeals)-1, Kolkata’S Order Dated 28.03.2018 Passed In Case M.No.Pr.Cit-1/Kol/Revision U/S263/2017- 18/14797-14800, Involving Proceedings U/S 263 Of The Income Tax Act, 1961; In Short ‘The Act’. Case Called Twice. None Appears At Assessee’S Behest. The Registry Has Already Issued Rpad Notice Dated 20.08.2019 For Today’S (09.09.2019) Hearing. We Therefore Proceed Ex Parte Against The Assessee To Decide The Instant Appeal On Merits. 2. Case File Suggests That The Assessing Officer Had Framed Assessment / Re-Assessment In Assessee’S Case In Issue Dated 28.01.2016 Invoking Sec.

Section 133(6)Section 143Section 263