Log In

| Recover password


Section 263 empower commissioner of income tax to order for fresh assessment or revision of previous assessment framed provided such order passed by the ITO is erroneous and prejudicial to the interests of the revenue. At the same time the taxpayer is entitled to file appeal before Tribunal against such order of Commissioner.

The revised assessment often would precede the disposal of appeal by the tribunal for reason of pendencies and further for the reason that an order of fresh assessment in pursuance of an order u/s263 must be completed within 12 months from the end of the financial year in which the order under section 263 is passed by the Commissioner.

In the situation therefore to press for demand  by fresh assessments until order of tribunal deciding on the fate of power exercise by Commissioner is considered as nugatory.

In order to protect the interest of the appellant taxpayer the  High Court of Madras in [2023] 452 ITR 306 (Mad) held that the assessing authority could proceed with the revised assessment proceedings but cannot proceed further to press for payment of demand unless the appeal was decided by Tribunal one way or the other, permitting the Assessing Officer to proceed pursuant to the order passed under section 263.

The High Court raised an important subject in this case by mentioning that the issue raised in this writ petition is not a new one for this court as number of such cases had already come where, indulgence has been shown by this court.

Taking note of this it may be advisable for the CBDT to issue an instruction to the Assessing Authorities or Assessment Units (AUs) not to press for demands in section 263 bound fresh assessment until the Tribunal upholds exercise of power u/s 263 as correct and proper under the law.

Leave a Reply

Your email address will not be published.

error: Do not copy the content of this website.