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

Aadhar Rice Mill Pvt. Ltd., Ranchi vs. ITO, Ward-1(1), Ranchi

In the result, both appeals of the assessee are allowed

ITA 294/RAN/2018[2013-14]Status: DisposedITAT Ranchi24 May 2019AY 2013-14

Bench: Shri Chandra Mohan Gargआयकर अऩीऱ सं./Ita No.294/Ran/2018 & आयकर अऩीऱ सं./Ita No.201/Ran/2019 (नििाारण वषा / Assessment Year :2013-2014 & 2014-2015) M/S Aadhar Rice Mills Pvt. Ltd., Vs. Ito, Ward-1(1), Ranchi C/O Sri Vinay Kumar Jalan, M/S O.P.Jalan & Associates Consultants Llp, 48 Cart Sarai Road, Upper Bazaar, Ranchi, Jharkhand, Pin-834001 स्थायी ऱेखा सं./ जीआइआर सं./ Pan/Gir No. : Aahca 6463 B (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. यनधागररती की ओर से /Assessee By : Shri Vinay Kumar Jalan, Advocate राजस्व की ओर से /Revenue By : Shri P.K.Mondal, Acit(Dr) सुनवाई की तारीख / Date Of Hearing : 23/05/2019 घोषणा की तारीख/Date Of Pronouncement 24/05/2019 आदेश / O R D E R The Assessee Has Filed Above Two Appeals Out Of Which Ita No.294/Ran/2018 Has Been Filed Against The Order Of Commissioner Of Income Tax (Appeals), Ranchi, Dated 09.11.2017, Passed In First Appeal No.Cit(A), Ranchi/10058/2016-17 For The Assessment Year 2013-2014, Arising Out Of Order Passed By The Assessing Officer U/S.143(3) Of The Act, Dated 30.03.2016, Whereas Ita No.201/Ran/2019 Has Been Filed By The Assessee For The Assessment Year 2014-2015 Against The Order Passed By The Pr.Cit, Ranchi, Dated 31.03.2019 U/S.263 Of The Act.

For Appellant: Shri Vinay Kumar Jalan, AdvocateFor Respondent: Shri P.K.Mondal, ACIT(DR)
Section 143(2)Section 143(3)Section 263Section 80I

JCIT (OSD)- Circle 12 (1)(1), Mumbai vs. American Spring & Pressing Works Pvt. Ltd., Mumbai

In the result, the appeal Revenue is dismissed and that of the CO of the assessee is allowed for statistical purposes

ITA 2891/MUM/2018[2011-12]Status: DisposedITAT Mumbai21 May 2019AY 2011-12

Bench: Sri Mahavir Singh, Jm & Sri Nk Pradhan, Am Aayakr Apila Sam./ Ita No. 2891/Mum/2018 (Inaqa-Arna Baya- / Assessment Year 2011-12) The Joint Commissioner Of American Spring & Pressing Income Tax, (Osd), Circle 12 Works Pvt. Ltd, Aspee (1)(1), Mumbai House, Adarsh Housing Vs. Society, B.J. Patel Road, Malad (W), Mumbai-400 064 .. (Apilaaqai- / Appellant) (P`%Yaqaai- / Respondent) स्थायी लेखा सं./Pan No. Aaaca8979P प्रत्याक्षेप M./ Co No. 141/Mum/2019 (Arising In Ita No. 2891/Mum/2018 For Ay 2011-12) American Spring & Pressing The Joint Commissioner Of Works Pvt. Ltd, Aspee House, Income Tax, (Osd), Circle Adarsh Housing Society, B.J. 12 (1)(1), Mumbai Vs. Patel Road, Malad (W), Mumbai-400 064 .. (P`%Yaqaai- / Respondent) (Apilaaqai- / Appellant) अपीलाथी की ओर से / Appellant By : Shri Ajay Kumar, Cit Dr प्रत्यथी की ओर से / Respondent By : Shri B.P. Purohit, Ar सुनवाई की तारीख / Date Of Hearing: 14-05-2019 घोषणा की तारीख / Date Of Pronouncement : 21-05-2019

For Appellant: Shri Ajay Kumar, CIT DRFor Respondent: Shri B.P. Purohit, AR
Section 143(3)Section 2(47)(v)Section 263Section 45(2)Section 63

M/S. Sonata Commercial Private Limited, Guwahati vs. ITO, Ward - 4(1), Kolkata

Appeal is allowed for statistical purposes in above terms

ITA 1158/KOL/2018[2008-09]Status: DisposedITAT Kolkata17 May 2019AY 2008-09

Bench: Shri S.S.Godara & Dr. A.L. Sainiassessment Year :2008-09 M/S Sonata Commercial V/S. Income Tax Officer, Pvt. Ltd. Saurabh Agarwal Ward-4(1), Aaykar & Associates, 3Rd Floor, Bhawan, P-7, Shankar Complex, Chowrringhee Square, 8Th Floor, Christian Basti, G.S. Road, Guwahati, Assam- Kolkakta-69 781005 [Pan No.Aamcs 0281 L] .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Chirag Desai On Behalf Of अपीलाथ" क" ओर से/By Appellant Shri Miraj D Shah, Advocate Shri Radhey Shyam Cit-Dr & ""यथ" क" ओर से/By Respondent Shri Shankar Halder, Jcit-Sr-Dr 08-05-2019 सुनवाई क" तार"ख/Date Of Hearing 17-05-2019 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 Commissioner Of Income Tax (Appeals)-7, Kolkata’S Order Dated 28.03.2018 Passed In Case No.529/Cit(A)-7/Kol/Ward-4(1)/16-17, Involving Proceedings U/S 143(3) R.W.S. 263 R.W.S147 Of The Income Tax Act, 1961; In Short ‘The Act’. Heard Both The Parties. Case File Perused. 2. The Assessee’S Sole Substantive Ground Raised In The Instant Appeal Challenges Correctness Of Both The Lower Authorities Action Treating Its Share Capital / Premium Amounting To ₹6.47 Crores As “Income From Undisclosed Sources”. There Is No Dispute That The Cit(A) Has Passed His Lower Appellate Order Ex Parte Against The Assessee After Observing That It Had Failed To Appear During The Course Of Lower

Section 143(3)Section 250(6)Section 263