Section 263 revision requires proof of error and revenue prejudice; assessment additions based on estimates were sustained for the assessee.

Section 263 revision was unsustainable because the Commissioner failed to show that the assessment order was both erroneous and prejudicial to the interests of the revenue. The Tribunal accepted that the assessee had adequately explained the retraction of the recorded statement, no material established suppression of receipts for the relevant assessment years, and the Assessing Officer had made additions on an estimated basis after considering the facts and obtaining the necessary approval. As a result, interference with the assessment under section 263 was held unwarranted and the order setting aside the revisional was sustained in favour of the assessee.

---

---

Issues: Whether the Tribunal was justified in setting aside the Commissioner's revisional order under section 263 of the Income-tax Act, 1961 for the assessment years in question.

Analysis: The Tribunal found that the assessee had sufficiently explained the retraction of the statement recorded during the proceedings, that no material was shown to support suppression of receipts for the relevant assessment years, and that the Assessing Officer had made additions on an estimated basis after being aware of the facts and obtaining the necessary approval. The revisional order was held to be unsustainable because the Commissioner did not establish that the assessment order was both erroneous and prejudicial to the interests of the revenue.

Conclusion: The interference with the Assessing Officer's assessment under section 263 was unwarranted, and the Tribunal's order setting aside the revisional order was upheld in favour of the assessee.

---