Section 263 revision requires both error and revenue prejudice; a permissible view after enquiry cannot be disturbed.

Revisional jurisdiction under section 263 is available only where the assessment order is both erroneous and prejudicial to the interests of the Revenue. An order cannot be revised merely because the Commissioner prefers another view when the Assessing Officer has examined the material, applied his mind and adopted one of the permissible views. Where the disputed deductions and expenses were already covered by earlier appellate and High Court decisions in the assessee's own case, the assessment could not be treated as erroneous. On the facts found, revision over items such as bad debts, Government securities, amortisation, software expenses and interest on NPAs was not sustainable.

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Issues: Whether the Commissioner could revise the assessment under section 263 on the grounds that the Assessing Officer had allowed deductions and expenses without proper enquiry and had thereby passed an order that was erroneous and prejudicial to the interests of the Revenue.

Analysis: Revisional jurisdiction under section 263 can be exercised only when both conditions coexist, namely that the assessment order is erroneous and that it is prejudicial to the interests of the Revenue. An order is not revisable merely because the Commissioner takes a different view, where the Assessing Officer has examined the relevant material, applied his mind and adopted one of the permissible views. Where the issues were covered by earlier appellate and High Court decisions in the assessee's own case, the Assessing Officer's allowance could not be treated as an error. The record also showed that the impugned items, including bad debts, Government securities, amortisation, software expenses and interest on NPAs, did not justify revision on the facts found by the Tribunal.

Conclusion: The revision under section 263 was not sustainable and the assessment order could not be disturbed on the stated grounds.

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