Relief to Malabar Institute of Medical Sciences: Kerala HC Rules Order U/s 263 as Open Remand Not Needing Independent Challenge [Read Order]
Kerala HC ruled in favor of Malabar Institute, holding that a Section 263 order under the Income Tax Act, 1961 is an open remand and need not be challenged separately.
![Relief to Malabar Institute of Medical Sciences: Kerala HC Rules Order U/s 263 as Open Remand Not Needing Independent Challenge [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/mims.jpg "Relief to Malabar Institute of Medical Sciences: Kerala HC Rules Order U/s 263 as Open Remand Not Needing Independent Challenge [Read Order]")
By overturning the Income Tax Appellate Tribunal (ITAT) decision, the Kerala High Court held that the orders made under section 263 of the Income Tax Act, 1961 can't be construed as a closed remand under any circumstances. The assessment for the Malabar Institute of Medical Sciences (assessee) was already completed for the 2014-15 financial year. However, the Commissioner of Income Tax...
By overturning the Income Tax Appellate Tribunal (ITAT) decision, the Kerala High Court held that the orders made under section 263 of the Income Tax Act, 1961 can't be construed as a closed remand under any circumstances.
The assessment for the Malabar Institute of Medical Sciences (assessee) was already completed for the 2014-15 financial year. However, the Commissioner of Income Tax later exercised suo moto revisional powers under Section 263 of the Act.
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The Commissioner found that the Assessing Officer (AO) had failed to investigate depreciation claims under Section 115JB of the Act. As a result, the commissioner set aside the assessment and directed a fresh assessment.
This led to a revised assessment by the AO, which the assessee contested.
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The assessee appealed against the revised assessment to the Commissioner of Income Tax (Appeals) (CIT(A)) and then to the tribunal. But both appeals were dismissed.
The Tribunal ruled that the assessee should have challenged the Commissioner’s order U/s 263. Since it was not challenged, the assessee could not independently dispute the reassessment proceedings before the Tribunal.
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Aggrieved, the assessee moved before a division bench of the Kerala High Court. The counsel for the assessee, Alexandar Joseph Markos, argued that the Section 263 order was an open remand. Hence, the assessee was not required to challenge it separately. The counsel contended the tribunal erred by requiring a separate challenge, especially after the reassessment appeal was addressed on its merits.
Meanwhile the respondent's counsel, P. G. Jayasankar, supported the tribunal’s view that the assessee could not contest the reassessment without challenging the Section 263 order.
After hearing both sides, the Division Bench of Justice Easwaran S and Justice Jayasankaran Nambiar observed that the Commissioner’s order U/s 263 could not be considered a closed remand.
The court ruled that the Section 263 order was an open remand, meaning the assessee was not required to challenge it separately. As a result, it was held that the tribunal erred in dismissing the appeal on this ground.
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Based on this finding, the court set aside the tribunal's decision and restored the appeal for reconsideration on merits.
To Read the full text of the Order CLICK HERE
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