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

M/S Expert Jewellers Pvt. Ltd., Kolkata vs. ITO, WD-5(3), Kolkata

In the result, assessee’s appeal stands allowed for statistical purpose

ITA 937/KOL/2016[2008-09]Status: DisposedITAT Kolkata17 Nov 2017AY 2008-09

Bench: Shri Waseem Ahmed & Shri S.S.Viswanethra Raviassessment Year:2008-09 M/S Expert Jewellers Pvt. Income Tax Officer, बनाम / Ltd., 9/12, Lal Bzar Street, Ward-5(3) V/S. Block-A, Kolkata-001 Aayakar Bhawan, [Pan No.Aabce 9275 H] P-7, Chowringhee Square,Kolkata-69 .. अपीलाथ" /Appellant ""यथ" /Respondent None अपीलाथ" क" ओर से/By Appellant Shri G. Hangshing, Cit-Dr ""यथ" क" ओर से/By Respondent 26-10-2017 सुनवाई क" तार"ख/Date Of Hearing 17-11-2017 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Assessee Is Against The Order Of Commissioner Of Income Tax (Appeals)-6, Kolkata Dated 02.03.2016. Assessment Was Framed By Ito Ward- 5(3), Kolkata U/S 143(3)/263/147 Of The Income Tax Act, 1961Vide His Order Dated 26.09.20 For Assessment Year 2008-09. 2. At The Time Of Hearing, We Find That Neither Anybody Appeared On Behalf Of Assessee Nor Any Application For Adjournment Was Filed. However, We Noticed That The Ld. Cit(A) Has Passed The Ex-Parte Order. Therefore, We Decided To Dispose Of The Appeal After Considering The Material Available On Records & In The Absence Of Assessee/ His Authorized Representative. 3. At The Outset, It Was Observed That The Case Was Fixed For Hearing On Several Dates Before The Ld. Cit(A) But None Appeared On Behalf Of Assessee. Therefore, The

Section 143(3)

Jealous Vincom Pvt. Ltd., Mumbai vs. The ITO, Ward-6(2), Kolkata

In the result, assessee’s appeal stands dismissed

ITA 2068/KOL/2016[2008-09]Status: DisposedITAT Kolkata15 Nov 2017AY 2008-09

Bench: Shri Waseem Ahmed & Shri S.S.Viswanethra Raviassessment Year:2008-09 Jealous Vincom Pvt. Ltd. Income Tax Officer, बनाम A-503, Ram Tower, Office Ward-6(2), P-7, / Road, Near Yogi Nagar, Chowringhee Square, V/S. Borivali West, Kolakta-69 Mumbai-40091 [Pan No. Aabcj 8274 H] .. अपीलाथ" /Appellant ""यथ" /Respondent Shri A.K. Tibrewal, Fca अपीलाथ" क" ओर से/By Appellant Shri A.K. Tiwari, Cit-Dr ""यथ" क" ओर से/By Respondent 02-11-2017 सुनवाई क" तार"ख/Date Of Hearing 15-11-2017 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-6, Kolkata Dated 22.07.2016. Assessment Was Framed By Ito Ward-6(2), Kolkata U/S 144/263 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 19.03.2014 For Assessment Year 2008-09. Shri A.K. Tibrewal, Ld Authorized Representative Appeared On Behalf Of Assessee & Shri A.K. Tiwari, Ld. Departmental Representative Appeared On Behalf Of Revenue. 2. At The Outset The Ld Ar For The Assessee Brought To Our Notice That The Original Assessment Was Framed U/S 147/ 143(3) Of The Act By The Ao Vide Order Dated 30-12- 2009 After Making An Addition Of Undisclosed Income Of Rs. 80,750.00 Only.

Section 143(3)Section 144Section 147Section 263Section 263(2)

Jyoti Ranjan Roy, Kolkata vs. PCIT-17, Kolkata

In the result, appeal filed by assessee stands dismissed

ITA 1015/KOL/2017[2006-07]Status: DisposedITAT Kolkata10 Nov 2017AY 2006-07

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2006-07 Jyoti Ranjan Roy V/S. Pr. Cit-17, Bd-2, Sectdor-1, Salt Uttarapan Building, Ds4, 2Nd Floor, Lake Ciity,Kolkata-64 [Pan No.Adlpr 2179 P] Ultadanga, Kolkata-54 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri T.K. Chakrborty, Advocate अपीलाथ" क" ओर से/By Appellant Shri . Mallikarjuna, Cit-Dr ""यथ" क" ओर से/By Respondent 06-09-2017 सुनवाई क" तार"ख/Date Of Hearing 10-11-2017 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Is An Appeal By The Assessee Against The Order Of Commissioner Of Income Tax-17-Kolkata Passed U/S 263 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Dated 21.03.2017 For Assessment Year 2006-07. Shri T.K. Chakraborty, Ld. Advocate Appeared On Behalf Of Assessee & Shri G.Mallikarjuna, Ld. Departmental Representative Appeared On Behalf Of Revenue. 2. Ground No. 1 To 4 Are Inter-Related & Therefore Being Taken Up Together. Solitary Inter-Connected Issue Raised By Assessee In This Appeal Is That Ld. Pr.Cit Erred In Holding The Assessment Order As Erroneous In So Far As Prejudicial To The Interest Of Revenue. 3. Briefly Stated Facts As Culled Out From The Order Of Authorities Below Are That Assessee In The Present Case Is An Individual & Engaged In The

Section 143(3)Section 144Section 25Section 250Section 251Section 263Section 271(1)(c)