Revision order U/S 263 has to be passed and not necessarily served within the period of 2 years: Supreme Court.

An interesting issue has been settled by the supreme court in the case of Mohammed Meeran Shahul Hameed (CIVIL APPEAL NO.6204 OF 2021) wherein it is held that Revision order U/S 263 has to be passed and not necessarily served within the period of 2 years.

It may be recalled that Sub­section (2) of Section 263 of the Income Tax Act provides that no order shall be

‘made’ under sub­section (1) of Section 263 after the expiry of two years from the end of the concerned financial year.

The brief Facts of the case was as under:

1. The AO passed the Assessment Order on 30/12/2010. The Commissioner of Income Tax initiated revision proceeding under Section 263 of the Act to revise the Assessment Order passed by the AO and issued a notice to the assessee ­ respondent herein on 01/02/2012.

2. The Commissioner passed an order under Section 263 of the Act on 26/03/2012 holding that the Assessing Officer had failed to make relevant and necessary enquiries and to make correct assessment of income after due application of mind and thus the order was held to be erroneous and prejudicial to the interest of the revenue.

3. However the order was served on the assessee only on 29/12/2012.

4. The moot question was whether Commissioner, under section 263 dated 26.3.2012 revising the assessment order dated 31.12.2010 is barred by limitation provided under section 263(2) by assuming that the last date for passing the assessment order is 31.3.2012 and on the ground that the order was served on 29.11.2012?

The Hon SC held as below:

1. Under Sec 263(2), the word used is “made” and not the order “received” by the assessee. Even the word “dispatch” is not mentioned in Section 263 (2). Therefore, once it is established that the order under Section 263 was made/passed within the period of two years from the end of the financial year in which the order sought to be revised was passed, such an order cannot be said to be beyond the period of limitation prescribed under Section 263 (2) of the Act.

2. So the order passed by the learned Commissioner under Section 263 of the Income Tax Act was within the period of limitation prescribed under sub­section (2) of Section 263 of the Act.