Section 263 of Income-Tax Act, 1961

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Section 263 of Income-Tax Act, 1961 deals with Revision of orders prejudicial to revenue

From the Act

(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

[Explanation.—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,—

(a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include—

(i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A;

(ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120;

(b) “record” [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the Commissioner;

(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the Commissioner under this sub-section shall extend [and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal.]

[(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.]

(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal,] the High Court or the Supreme Court.

Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.

Recent / Related Cases

  • December 2011: [2011] 16 LNIN 277 (Mumbai - Trib.): In order to invoke provisions of section 263, what is to be seen is legal position prevailing as on point of time when revision order is passed
  • June 2011: Patna:Where Commissioner noticed vital flaws in order of assessment entirely attributable to extremely dishonest and defiant approach of assessee, he was justified in setting aside assessment order by invoking powers under section 263 - [2011] 11-237
  • June 2011: Delhi: Where there was no proper consideration by Assessing Officer to huge cash found during search at assessee's residence, most of which was surrendered by giving statement at time of search, it was a fit case for exercising jurisdiction under section 263 - 11-208
  • May 2011: Delhi: Tribunal is supposed to adjudge validity of an order passed by CIT exercising his revisionary power under section 263 and not to go into merits of the issue
    • When it was found that the AO had not examined the issue at all and therefore, question of there being a plausible view did not arise, the Tribunal was not justified in setting aside the orders of the CIT passed under section 263 on the purported ground that the view taken by the Assessing Office in the scrutiny assessment was a plausible view - [2011] 11-98

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