Scope of powers of revision by commissioner

Revision by CIT held unsustainable in law, in absence of any direct incriminating material against taxpayer

- JIGAR MUKESH PATEL

While a taxpayer enjoys the right to challenge an order passed in his case by the Assessing Officer (AO) by preferring an appeal against the same under Section 246A of the Income-tax Act, Section 263 empowers the Commissioner of Income-tax (CIT) to revise any order passed by an AO, if he considers that such order is erroneous, in so far as it is prejudicial to the interests of the Revenue.

After calling for and examining the records, the CIT can serve a show cause notice to the taxpayer disclosing the grounds on which he desires to revise the order passed by the AO and offer him an opportunity of being heard. Under his revisionary powers, the CIT can pass a final order directing the AO to pass such order as the circumstances of the case justify, including an order enhancing or modifying the assessment or canceling the same and directing a fresh assessment. Such an order is required to be passed within the expiry of two years from the end of the financial year in which the order sought to be revised was passed.