What the courts have decided on section 263(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Shree Manjunathesware Packing Products
Supreme CourtHelps department
The Commissioner has issued a notice under section 263 on the strength of a Departmental Valuation Officer's report that reached the Assessing Officer only after my assessment was over. Can he revise on material that was not on the file when the order was passed?
Yes, on these facts. The Supreme Court held that it was open to the Commissioner to take into consideration all the records available at the time of examination by him, and so to consider a valuation report that the Departmental Valuation Cell submitted after the assessment order had been passed. The Court read clause (b) of the Explanation to section 263(1), which declares that 'record' shall include and shall be deemed always to have included all records relating to any proceeding under the Act available at the time of examination by the Commissioner, and held that the Commissioner may look not only at the record of that proceeding but at the record relating to it. It also held that the narrower reading had never been the settled law, even for orders passed before the 1988 amendment.
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CIT v Electro House
Supreme CourtHelps department
The Commissioner's show cause notice before revising my assessment was defective. Does that knock out his jurisdiction to revise at all?
No. The Supreme Court held that the revision section, unlike the reassessment section, prescribes no notice at all. It requires only that the Commissioner give the assessee an opportunity of being heard before he reaches his decision, not before he begins the enquiry. That requirement belongs to natural justice, not to jurisdiction. A breach of it may make the resulting order illegal, but it does not take away the Commissioner's power to proceed. Since no notice was a condition precedent, the question what the notice should have contained did not arise. The Calcutta High Court's contrary view was set aside.
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CIT v Gabriel India Ltd
High CourtHelps taxpayer
The Commissioner has issued a section 263 notice saying my assessment order does not discuss a deduction the officer allowed. Is a brief order by itself erroneous?
No. The Bombay High Court held that an order is erroneous only if it is not in accordance with law, or was passed without any enquiry in undue haste. Where the officer raised a query, got a written explanation and allowed the claim on it, his order cannot be branded erroneous merely because he did not discuss the matter elaborately or because the Commissioner would have decided differently. And the Commissioner must himself reach a finding that the order is erroneous and prejudicial before he sets it aside; he cannot simply remit the point for the officer to look at again.
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JMS Mining Pvt Ltd v PCIT-2, Kolkata
ITATHelps taxpayer
I added back my company's CSR spend under Explanation 2 to s.37(1) and then claimed 50 per cent of it under s.80G. The Commissioner says s.37 blocks that and has revised the assessment under s.263. Is he right?
No. Explanation 2 to s.37(1) operates only while computing business income under Chapter IV-D; it says nothing about Chapter VI-A, so a CSR contribution that independently satisfies s.80G remains deductible under s.80G. Parliament carved out only two CSR items in s.80G itself — clauses (iiihk) and (iiihl), the Swachh Bharat Kosh and the Clean Ganga Fund — and by expressio unius that exclusion implies every other qualifying donation survives.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
