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

ACIT Ltu-2, Chennai vs. Saint Gobain Glass India Ltd., Kanchipuram

In the result, the appeal filed by the Revenue is allowed for statistical purposes and the Cross Objection filed by the assessee is dismissed

ITA 2394/CHNY/2017[2007-08]Status: DisposedITAT Chennai29 Oct 2018AY 2007-08

Bench: Shri Abraham P. George & Shri Duvvuru Rl Reddyआयकर अपील सं./I T.A. No. 2394/Chny/2017 िनधा"रण वष"/Assessment Year:2007-08 & C.O. No. 188/Chny/2017 [In I.T.A. No. 2394/Chny/2017] The Assistant Commissioner Of M/S. Saint Gobain Glass India Ltd., Income Tax, Vs Plot No. A-1, Sipcot Industrial Park, Large Taxpayer Unit 2, . Sriperumbudur, Kanchipuram 602 105. Chennai 600 034. [Pan:Aabcs4338M] (Appellant) (Respondent/Cross Objector) अपीलाथ" की ओर से / Appellant By Shri R. Clement Ramesh Kumar, : Addl. Cit ""थ" की ओर से/Respondent By Shri R. Vijayaraghavan, Advocate : सुनवाई की तारीख/ Date Of Hearing : 10.09.2018 घोषणा की तारीख /Date Of Pronouncement : 29.10.2018 आदेश /O R D E R Per Duvvuru Rl Reddy: This Appeal Preferred By The Revenue Is Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai Dated 30.06.2017 Relevant To The Assessment Year 2007-08. The Only Effective Ground Raised In The Appeal Of The Revenue Is That The Ld. Cit(A) Has Erred In Deleting The Addition Made Under Section 40(A)(I) Of The Income Tax Act, 1961 [“Act” In Short] & Failed To Observe That As Per The Indo Belgium

Section 115JSection 143(3)Section 263Section 40Section 9(1)(vii)

Bhairab Nandy, Hooghly vs. ITO, Ward - 23(4), Hooghly

In the result, the appeal of the assessee is treated as allowed for statistical purpose

ITA 1348/KOL/2018[2009-10]Status: DisposedITAT Kolkata26 Oct 2018AY 2009-10

Bench: Shri P.M. Jagtap, Hon’Ble Vice -] I.T.A. No. 1348/Kol/2018 Assessment Year : 2009-10 Bhairab Nandy.............................……………………………………………………………........Appellant Bengai, Subhas Nagar, Goghat, Hooghly – 712 611. [Pan : Afipn 4034 J] Ito Ward 23(4) Hooghly...................…………………………………………………........Respondent Grand Trunk Road, Chinsurah, Hooghly – 712 102. Appearances By: Shri I Banerjee, Ar Appearing On Behalf Of The Assessee. Shri Kapil Mondal, Jcit Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : September 20, 2018 Date Of Pronouncing The Order : October 26, 2018 Order This Appeal Filed By The Assessee Is Directed Against The Order Of Ld. Cit (Appeals) – 6, Kolkata Dated 18.09.2017. 2. The Assessee In The Present Case Is An Individual Who Is Engaged In The Business Of Trading Of Paddy & Vegetable. The Return Of Income For The Year Under Consideration Was Filed By Him On 19.08.2009 Declaring A Total Income Of Rs. 1,13,410/-. During The Year Under Consideration, The Assessee Had Deposited A Total Amount Of Rs. 7,34,950/- In His Bank Account. Since No Satisfactory Explanation In Respect Of The Source Of The Said Deposits Could Be Offered By The Assessee, The Assessing Officer Treated The Same As Unaccounted Sales Of The Assessee & Made An Addition Of Rs. 88,195/- To The Total Income Of The Assessee Being Profit Estimated @ 12% On The Alleged Unaccounted Sales In The Assessment Originally Completed U/S 143(3). On Examination Of The Record Of The Said Assessment, The Concerned

Section 143(3)Section 263