Section 263 revision cannot rest on material unavailable at assessment; later Explanation was not applied.

Revisional power under section 263 of the Income-tax Act could not be exercised on the basis of material not available to the assessing authority when the assessment was made. The Tribunal's view was upheld that later-discovered material could not justify revision of the 1975-76 assessment on the record then before the officer. The Explanation inserted to section 263(1) was not applied, as it came into force only on 1 June 1988 and therefore did not govern the reference. The answer was returned in favour of the assessees.

---

---

Issues: Whether the Commissioner could invoke revisional power under section 263 of the Income-tax Act, 1961, on the basis of materials that were not before the assessing authority when the assessment was made.

Analysis: The question referred related to the legality of revision of the assessment for 1975-76 on the strength of later-discovered material. The Tribunal had held that the Commissioner was not justified in relying upon materials that were not available to the assessing authority at the time of assessment. The later inserted Explanation to section 263(1) could not govern the reference, as it came into force only on 1 June 1988, long after the assessment and during the pendency of the reference.

Conclusion: The Commissioner was not entitled to rely on materials not available at the time of assessment for exercising revisional power under section 263, and the answer was returned in favour of the assessees.

---