Revision by Commissioner — Section 263

What this section is

Section 263 allows the Principal Commissioner / Commissioner to call for and examine the record of an assessment and, if it is considered erroneous and prejudicial to the interests of revenue, to revise the order. Both 'erroneous' AND 'prejudicial' must be satisfied — Malabar Industrial Co. (SC).

When it is issued

Within two years from the end of the financial year in which the order sought to be revised was passed.

What you should do

1. 1Examine whether the AO had made any inquiry on the issue at all. A 263 cannot be invoked merely because the Commissioner has a different view.
2. 2Map every query and reply during the original assessment to demonstrate that the AO took a view after due application of mind.
3. 3Raise jurisdictional objections: limitation, scope (only the items in the SCN can be revised), and the twin condition test.
4. 4If a 263 order is passed, file an appeal before the ITAT within 60 days.

Documents typically needed

• Original assessment order and order sheet
• All notices and replies during original assessment
• 263 show-cause notice with the alleged errors

Common mistakes

• Treating it like a normal scrutiny. The standard of review is fundamentally different.
• Not insisting on the AO's record being placed on file.