Section 263 of Income Tax Act "Revision of orders prejudicial to revenue"
263. (1) The Principal Commissioner or 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 1.-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
Principal Chief Commissioner or Chief Commissioner or
Principal Director General or Director General or Principal
Commissioner 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
Principal 9a[Chief Commissioner or Chief Commissioner or
Principal] Commissioner or 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 Principal Commissioner or
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.
Explanation 2.-For the purposes of this section, it is
hereby declared that an order passed by the Assessing
Officer shall be deemed to be erroneous in so far as it is
prejudicial to the interests of the revenue, if, in the
opinion of the Principal 9a[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner,-
(a) the order is passed without making inquiries or
verification which should have been made;
(b) the order is passed allowing any relief without
inquiring into the claim;
(c) the order has not been made in accordance with any
order, direction or instruction issued by the Board under
section 119; or
(d) the order has not been passed in accordance with any
decision which is prejudicial to the assessee, rendered by
the jurisdictional High Court or Supreme Court in the case
of the assessee or any other person.
(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.
264. (1) In the case of any order other than an order to
which section 263 applies passed by an authority subordinate
to him, the Principal 9b[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner may,
either of his own motion or on an application by the
assessee for revision, call for the record of any proceeding
under this Act in which any such order has been passed and
may make such inquiry or cause such inquiry to be made and,
subject to the provisions of this Act, may pass such order
thereon, not being an order prejudicial to the assessee, as
he thinks fit.
(2) The Principal 9b[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner
shall not of his own motion revise any order under this
section if the order has been made more than one year
previously.
(3) In the case of an application for revision under this
section by the assessee, the application must be made within
one year from the date on which the order in question was
communicated to him or the date on which he otherwise came
to know of it, whichever is earlier :
Provided that the Principal 9b[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner may,
if he is satisfied that the assessee was prevented by
sufficient cause from making the application within that
period, admit an application made after the expiry of that
period.
(4) The Principal 9b[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner
shall not revise any order under this section in the
following cases-
(a) where an appeal against the order lies to the Deputy
Commissioner (Appeals) or to the Commissioner (Appeals) or
to the Appellate Tribunal but has not been made and the time
within which such appeal may be made has not expired, or, in
the case of an appeal to the Commissioner (Appeals) or to
the Appellate Tribunal, the assessee has not waived his
right of appeal; or
(b) where the order is pending on an appeal before the
Deputy Commissioner (Appeals); or
(c) where the order has been made the subject of an appeal
to the Commissioner (Appeals) or to the Appellate Tribunal.
(5) Every application by an assessee for revision under this
section shall be accompanied by a fee of five hundred
rupees.
(6) On every application by an assessee for revision under
this sub-section, made on or after the 1st day of October,
1998, an order shall be passed within one year from the end
of the financial year in which such application is made by
the assessee for revision.
Explanation.-In computing the period of limitation for the
purposes of this sub-section, the time taken in giving an
opportunity to the assessee to be re-heard 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.
(7) Notwithstanding anything contained in sub-section (6),
an order in revision under sub-section (6) may be passed at
any time 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 1.-An order by the Principal 9b[Chief
Commissioner or Chief Commissioner or Principal]
Commissioner or Commissioner declining to interfere shall,
for the purposes of this section, be deemed not to be an
order prejudicial to the assessee.
Explanation 2.-For the purposes of this section, the Deputy
Commissioner (Appeals) shall be deemed to be an authority
subordinate to the Principal 9b[Chief Commissioner or Chief
Commissioner or Principal] Commissioner or Commissioner.