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

Rajneesh Agarwal, Kolkata vs. Pr.CIT, Kol-8, Kolkata

In the result, assessee appeal stands dismissed as withdrawn

ITA 1188/KOL/2017[2012-13]Status: DisposedITAT Kolkata01 Mar 2018AY 2012-13

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2012-13 Rajneesh Agarwal V/S. Pr. Commissioner Of Income Tax, 1St Floor, 34A Metcalafe Street Room No.4C, 4Th Floor, 54/1 Rafi Ahmed Kolkata-13 Kidwai Road, Kolkata-16 [Pan No.Aczpa 7405 L] .. अपीलाथ" /Appellant ""यथ"/Respondent None (Withdrawal Letter Filed) अपीलाथ" क" ओर से/By Appellant Shri P.K. Srihari, Cit-Dr ""यथ" क" ओर से/By Respondent 01-03-2018 सुनवाई क" तार"ख/Date Of Hearing 01-03-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Is An Appeal Filed By The Assessee Against The Order Of Pr. Commissioner Of Income Tax-8, Kolkata For The Assessment Year 2011-12 In The Matter Of Order Passed U/S 263 Of The Income Tax Act, 1961. 2. None Appeared On Behalf Of Assessee Though An Application For Withdrawal Of Appeal Filed By Assessee Dated 27.02.2018 & Shri P.K. Srihari, Ld. Departmental Representative Represented On Behalf Of Revenue. 3. At The Outset, We Find That An Application For Withdrawal Of Appeal Filed By Assessee Dated 27.02.2018 To Allow The Withdrawal Of This Appeal Same Is Reproduced Below:- “In This Respect, Most Respectfully & Humbly I Submit That The Aforesaid Appeal Was Filed By Me Against The Order Dated 16.03.2017 Passed By

Section 263

Sonali Roy, Kolkata vs. PCIT-17, Kolkata

In the result, assessee’s appeal stands allowed

ITA 1329/KOL/2017[2012-13]Status: DisposedITAT Kolkata28 Feb 2018AY 2012-13

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2012-13 Sonali Roy V/S. Pr. Commissioner Of V-5, Block-B, Meena Income Tax-17, Residency, Baguihati, Maniktala, Uttarapan Kolkata-59 Complex, Civic Centre, [Pan No.Afppr 4436 P] Kolkata-54 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Manish Tiwari, Ar अपीलाथ" क" ओर से/By Appellant Shri G. Mallikarjuna, Cit-Dr ""यथ" क" ओर से/By Respondent 10-01-2018 सुनवाई क" तार"ख/Date Of Hearing 28-02-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- The Assessee Has Filed This Appeal Dispute The Order Of Pr. Commissioner Of Income Tax-17, Kolkata Passed U/S. 263 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Dated 29.03.2017 Set Aside The Assessment Order Dated 25.03.2015 U/S 143(3) Of The Act For Assessment Year 2012-13 With A Direction To Re-Do The Assessment In Respect Of Issue Therein. The Assessee Has Raised Following Grounds:- “1. That The Findings Of Ld. Pr. Clt Kolkata-17 That Assessing Officer First Recorded His Decision Of Referring The Matter To Ova In The Order Sheet & Then Passing Of Order U/S 143(3) Was Recorded Do Not Support The Languages Used In Section 55A Of It Act, 1961 Which Speaks For Actual Reference To Dvo But Not "Decision" To Make Reference. 2. That The Ld. Pr. Cit, Kolkata-17 Having Admitted That Reference To Dvo & Passing Of Order U/S 143(3) Had Been Done On The Same Day Is Wrong & Unjustified In Drawing Conclusion That The Decision For Referring To Dvo Was Taken Before Passing Order U/S 143(3) Without Any Other Supporting Evidence.

Section 143(3)Section 263Section 55A

M/S. Bla Industries Pvt. Ltd., Mumbai vs. PCIT-1, Kolkata

In the result, assessee’s appeal stands allowed

ITA 779/KOL/2016[2011-2012]Status: DisposedITAT Kolkata28 Feb 2018AY 2011-2012

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2011-12 Bla Industries Pvt.Ltd. V/S. Pr. Cit-1, 84, Maker Chambers Iii, Aayakar Bhawan, Nariman Point, Mumbai- Kolkata 400021 [Pan No.Aabcb 3505 D] .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Robin Maheshwari, Aca अपीलाथ" क" ओर से/By Appellant Shri A.K. Tiwari, Cit-Dt ""यथ" क" ओर से/By Respondent 08-02-2018 सुनवाई क" तार"ख/Date Of Hearing 28-02--2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Is An Appeal Filed By The Assessee Against Order Of Ld. Pr. Commissioner Of Income Tax-1, Kolkata Passed U/S 263 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) In M.No.Pr. Cit-1/15- 16/U/S263/Bla Industries/2011-12/12629-31 Dated 23/28.03.2016 For Assessment Year 2011-12. Shri Robin Maheshwari, Ld. Authorized Representative Appeared On Behalf Of The Assessee & Shri A.K. Tiwari, Ld. Departmental Representative Appeared On Behalf Of The Revenue. 2. In This Assessee’S Appeal The Assessee Has Raised The Following Grounds:- “1) For That The Order Of The Ld. Cit Passed U/S. 263 Is Bad In Law As Well As In Facts Hence Liable To Be Quashed.

Section 143(2)Section 143(3)Section 14ASection 263Section 32Section 32(1)(iia)