Section 263 revision fails where closing stock valuation is a factual issue and no revenue prejudice is found.

Revisionary action under section 263 was not justified because the Tribunal found that the assessment order was neither erroneous nor prejudicial to the interests of the Revenue. The dispute on the extent of discount to be allowed in valuing closing stock was treated as a question of fact, and there was no finding that the assessee's valuation method caused any loss of revenue. In the absence of the statutory conditions for revision, interference under section 263 could not be sustained, and the issue was decided in favour of the assessee.

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Issues: Whether revisionary action under section 263 of the Income-tax Act, 1961 was justified in the absence of a finding that the assessment order was erroneous and prejudicial to the interests of the Revenue.

Analysis: The controversy turned on the extent of discount to be allowed in valuing closing stock, which was treated as a question of fact. The Tribunal had found that the assessment order was neither erroneous nor prejudicial to the interests of the Revenue. In the absence of any finding that the valuation adopted by the assessee caused loss of revenue, interference under section 263 was not warranted.

Conclusion: The revisionary order was not justified and the issue was answered in favour of the assessee.

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