Section 263: Income Tax Revision Process
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Himanshu KhiwalSection 263: Income Tax Revision Process
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Himanshu KhiwalCommon questions
Powered by AIAn order by the Assessing Officer is considered erroneous and prejudicial to the interests of revenue in several situations: if it is passed without making necessary inquiries or verification, if relief is granted without inquiring into the claim, if it does not adhere to Board directives under section 119, or if it contradicts decisions by jurisdictional High Court or Supreme Court .
The amendments made w.e.f. 1-6-1988 clarified that revisions under Section 263 include orders of assessment made by the Assistant or Deputy Commissioners based on directions from the Joint Commissioner, and orders by the Joint Commissioner with powers akin to the Assessing Officer as authorized by higher authorities. This expanded the scope of reviewable orders and reinforced administrative oversight .
The Finance Act, 2021 amended Section 263 by substituting references to 'Principal Commissioner' with 'Principal Chief Commissioner or Chief Commissioner or Principal Commissioner', thereby expanding the scope of individuals authorized to revise orders that are prejudicial to the interests of revenue .
In the context of Section 263 revisions, 'record' includes all documents related to any proceedings under the Act available at the time of examination by the Principal Commissioner or Commissioner. This definition is inclusive and is deemed to include past proceedings .
Section 263 underscores that any order made by the Assessing Officer contrary to Board directives under section 119 can be deemed erroneous and prejudicial to revenue, thereby empowering the Commissioner to revise such orders. This ensures compliance and consistency across assessments by enforcing Board directives' authority .
If an order passed by the Assessing Officer has been appealed, the Commissioner's power to revise under Section 263 extends only to portions of the order that were not considered and decided in the appeal .
Before issuing a revised order under Section 263, the Commissioner must grant the assessee a reasonable opportunity to be heard and conduct necessary inquiries. This procedural safeguard ensures that revisions are made fairly and transparently, considering the assessee's perspective .
An 'order passed by the Assessing Officer' includes assessments made by Assistant or Deputy Commissioners per Joint Commissioner directives, and orders done by the Joint Commissioner acting as an Assessing Officer under Board or higher authority directives. This expansive definition allows for broader review under Section 263 .
Generally, the Commissioner can revise an order within two years from the end of the financial year in which the order was passed. However, if the revision is based on a finding or direction from the Appellate Tribunal, High Court, or Supreme Court, the revision can be made at any time. Additionally, time taken for offering the assessee an opportunity to be reheard and any period when proceedings are stayed by a court are excluded from the limitation period .
The Finance Act, 1989 explicatively amended the concept of 'record' used in Section 263 to 'include' and be 'deemed always to have included' all related documents, thereby clarifying and broadening the scope for reviewing the necessary information for revisions .