Section 263(2) — the law in short
What the courts have decided on section 263(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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M/s. Indira Industries v Principal Commissioner of Income Tax
High CourtHelps taxpayer
The Commissioner has issued a section 263 notice raising issues the reassessment never touched. Does the two-year limit run from the reassessment order or from the original assessment, and can I challenge the notice itself?
From the original assessment, and yes. The Madras High Court held that where a section 263 notice raises issues that were not the subject matter of the reassessment, the two years in section 263(2) run from the end of the financial year in which the original assessment was passed, not the reassessment. Here scrutiny assessment was made on 25 February 2015, so time ran from 31 March 2015, and the notice of 16 August 2017 was out of time. Being barred by law, the notice suffered from lack of jurisdiction, and the settled principles allow a show cause notice to be assailed on that ground. The writ appeal was allowed and the notice quashed.
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.