#Section 263

Under Section 263 ITA, the Supreme Court held that the CIT’s revisional jurisdiction requires an order to be both erroneous and prejudicial to revenue, and that circulars cannot override the statute, thus limiting authority and protecting assessees.

The Gauhati High Court nullified a tender cancellation because the authority failed to give reasons as mandated by Section 26(3) of the Assam Procurement Act, 2017, and ordered the contract awarded to the petitioner, the lowest evaluated bidder. The ruling underscores the duty to communicate cancellation reasons, protecting bidders in future procurements.

The ITAT Delhi holds that the two-year limitation under Section 263 begins from the date of the original assessment order, not the subsequent reassessment, when the revision challenges errors inherent in the initial assessment. This clarifies a critical procedural trap for tax authorities and protects assessees from delayed revisionary attacks on stale assessments, directly impacting how revenue departments strategize revisionary proceedings.

The ITAT Kolkata has ruled that invoking Section 263 to revise a previously scrutinized assessment is impermissible unless the revenue demonstrates actual prejudice, not just a technical error. This clarifies that scrutiny under Section 143(3) does not waive the twin-condition test, protecting taxpayers from arbitrary revisionary orders and reinforcing procedural fairness in income tax administration.

ITAT Bangalore has ruled that goodwill acquired in a slump sale qualifies for depreciation under Section 32, even if it arises from excess consideration over net assets, rejecting the revenue's argument that it is a self-generated asset. This clarifies that business acquisitions via slump sale are distinct from amalgamations and affirms the tax treatment of intangible assets in corporate restructuring, impacting M&A valuations and audit practices nationwide.

ITAT Mumbai rules that Section 115BBDA's restriction on set-off of losses applies only to dividends from Indian companies, not foreign subsidiaries. This clarifies that unabsorbed depreciation can be lawfully adjusted against foreign dividend income, significantly benefiting multinational corporations with overseas earnings and reshaping tax planning strategies for Indian parent entities.

ITAT Nagpur sets aside a revision order under Section 263, ruling that the Principal Commissioner must verify the adequacy of the Assessing Officer’s enquiries into alleged bogus expenditures and accommodation entries before branding an assessment order as erroneous. The decision reinforces that revisional jurisdiction cannot be exercised mechanically without scrutinizing the AO’s record of evidence and approvals.

ITAT Bangalore ruled that a revisionary order under Section 263 of the Income Tax Act is invalid if the Principal Commissioner fails to verify the existence of an expenditure claim before setting aside an assessment. The tribunal emphasized that such orders violate principles of natural justice and cannot be sustained without establishing a nexus between the assessee and alleged payees. This ruling reinforces the need for thorough inquiry before invoking revisionary jurisdiction.

The Bombay High Court revoked probate granted to an executor who deliberately omitted the deceased’s biological son from disclosure, ruling that concealment of a known heir vitiates the probate process. Birth certificates and personal correspondence from the deceased are sufficient to establish prima facie heirship, reinforcing that probate is not a tool for excluding rightful successors.

The ITAT Delhi has ruled that the Commissioner of Income Tax cannot invoke Section 263 to reopen tax issues not raised or considered during reassessment proceedings under Section 147. This clarifies that survey material or unrelated findings cannot serve as a basis for revisional orders, reinforcing procedural boundaries in direct tax administration and protecting assessees from arbitrary expansion of powers.

The Bombay High Court has ruled that the Commissioner of Income Tax cannot invoke Section 263 to revise an assessment order merely because he disagrees with the Assessing Officer's plausible interpretation of income utilization. The revisionary power is only valid if the original order suffers from a legal error, failure to inquire, or non-application of mind - not because the view was suboptimal or inconvenient to the revenue.

ITAT Ahmedabad sets aside a revision order under Section 263, ruling that mere disagreement with the Assessing Officer’s findings does not justify revision if the AO conducted thorough inquiries. The decision reinforces that revisional powers cannot be exercised on a change of opinion alone, safeguarding assessees from arbitrary reassessments.

ITAT Bangalore clarifies that reassessment under Section 263 of the Income Tax Act does not necessitate a fresh notice under Section 143(2), as the proceedings are a continuation of the original assessment. This ruling streamlines procedural compliance for tax authorities and assessees, avoiding redundant notices in set-aside cases.

ITAT Ahmedabad rules that Corporate Social Responsibility (CSR) expenses cannot be added back to 'book profit' for Minimum Alternate Tax (MAT) calculations under Section 115JB. The tribunal also clarifies that Section 14A disallowance for exempt income does not apply when tax liability is computed under MAT, offering relief to taxpayers facing revisionary proceedings.

Bombay High Court holds that probate may be revoked under Section 263 of the Indian Succession Act if a Class II legal heir was not cited, even without proof of fraud.