Section 377
Section 377: revision of orders prejudicial to revenue
Section 377 gives the "Competent Authority" - the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner - power to call for and examine any proceeding's record, and revise an order of the Assessing Officer or Transfer Pricing Officer that is erroneous and prejudicial to the interests of the revenue, after giving the assessee a hearing. It also deems certain kinds of orders (such as those passed without proper inquiry) to be automatically prejudicial to revenue, and sets a two-year limitation period.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
The revision power
The Competent Authority may call for and examine the record of any proceeding under the Act, and if it considers an order passed by the Assessing Officer or Transfer Pricing Officer erroneous and prejudicial to the interests of the revenue, it may - after giving the assessee an opportunity of being heard and making such inquiry as it considers necessary - pass such order as the circumstances justify, including:
- An order enhancing or modifying the assessment, or cancelling it and directing a fresh assessment
- An order modifying the order under section 166
- An order cancelling the order under section 166 and directing a fresh order under that section
What counts as an 'order' and 'record'
An order of the Assessing Officer or Transfer Pricing Officer for this purpose includes: an assessment order made on directions issued by a Joint Commissioner under section 272; an order made by a Joint Commissioner exercising the powers or functions of an Assessing Officer/Transfer Pricing Officer conferred by the Board or authorised senior officers under section 241; and an order under section 166.
"Record" includes all records relating to a proceeding available at the time of the Competent Authority's examination.
Where an order has already been the subject of an appeal, the Competent Authority's revision power extends only to matters not considered and decided in that appeal.
When an order is deemed 'erroneous and prejudicial to revenue'
An order is deemed erroneous and prejudicial to revenue, in the Competent Authority's opinion, if it:
- Was passed without making inquiries or verification that should have been made
- Allowed relief without inquiring into the claim
- Was not made in accordance with an order, direction or instruction issued by the Board under section 239
- Was not passed in accordance with a decision prejudicial to the assessee rendered by the jurisdictional High Court or Supreme Court, in the case of that assessee or any other person
Time limit for revision
No order under this section can be made after two years from the end of the financial year in which the order sought to be revised was passed.
This time limit does not apply to a revision order passed to give effect to, or in consequence of, a finding or direction in an order of the Appellate Tribunal, High Court or Supreme Court - such a revision may be passed at any time.
In computing the two-year limitation, the time taken to give the assessee a fresh hearing under section 244(2), and any period a court stay was in force, is excluded. If the remaining time after such exclusion is less than sixty days, it is extended to sixty days.
Frequently asked questions
What is the time limit for the Commissioner to revise an order under Section 377?
Two years from the end of the financial year in which the order sought to be revised was passed - except where the revision gives effect to a finding or direction of the Appellate Tribunal, High Court or Supreme Court, in which case there is no such time limit.
When is an assessment order automatically treated as prejudicial to revenue?
Section 377(3) deems it so if it was passed without necessary inquiries/verification, allowed relief without inquiring into the claim, did not follow a Board instruction under section 239, or did not follow an assessee-prejudicial decision of the jurisdictional High Court or Supreme Court.
Do I get a hearing before my order is revised under Section 377?
Yes - the Competent Authority must give the assessee an opportunity of being heard before passing a revision order under Section 377(1).
Related sections
Want this applied to your actual filing, not just explained?
Get help responding to a revision notice under Section 377Last updated 9 September 2026