263

Any order passed by the Assessing Officer which is erroneous and prejudicial to the interests of the revenue

With effect from 1-6-2015 Explanation 2 is added to provide that

An order passed by the Assessing Officer shall be deemed to be erroneous and prejudicial to the interest of revenue if in the opinion of the Commissioner or Principal Commissioner:

1. the order is passed without making inquiries or verification which should have been made;
2. the order is passed allowing any relief without inquiring into the claim;
3. the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or
4. 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 assessee or any other person.

CIT or principal CIT

2 years from the end of the financial year in which order sought to be revised was passed [For exception, refer sub-section (3)].

1. ssessee to get opportunity to be heard before an order u/s. 263 is passed.
2. CIT has the power to call for and examine the record of any proceeding under the Act.
3. ITAT has power to grant stay against A.O. passing an order giving effect to directions contained in order passed u/s. 263 of the Act.

264

Any order passed by the Assessing Officer Exceptions:

1. Applies to an order other than an order to which S. 263 applies.

2. Where appeal lies to CIT(A)/ITAT and the time limit for filing the appeal has not expired.

3. The order is subjected to an appeal before the CIT(A)/ITAT.

CIT or principal CIT

1. If CIT revises on his own motion — 1 year.
2. If assessee makes an application — 1 year from date of communication/knowledge of the order (CIT has powers to condone delay), order to be passed within one year from the end of the F.Y. in which application is made (w.e.f. 1-10-1998).

1. Application by assessee to be accompanied by a fee of ₹ 500.
2. An order cannot be said to have been made subject to an appeal if the appeal has been disposed of by the CIT(A) or ITAT without passing an order on merits.