Section 263 revisional power extends to external material, so the Commissioner may rely on customs information for revision.

Section 263 confers wide revisional power on the Commissioner of Income-tax to examine the record of any proceeding and revise an order that is erroneous and prejudicial to the revenue. The term "record" is not confined to the assessment file before the Assessing Officer; it may include material that comes to the Commissioner's notice during enquiry, including information obtained from customs authorities or other proceedings. On that construction, the Commissioner could validly rely on such external material to invoke revisional jurisdiction, and the Tribunal's narrow reading of section 263 was rejected.

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Issues: Whether the Commissioner of Income-tax could validly invoke revisional jurisdiction under section 263 of the Income-tax Act, 1961 on the basis of material obtained from customs authorities, even though such material was not part of the assessment record before the Assessing Officer.

Analysis: Section 263 confers wide revisional power on the Commissioner to call for and examine the record of any proceeding under the Act and, if an order is found to be erroneous and prejudicial to the interests of the revenue, to modify, cancel or direct fresh assessment. The expression "record" is not confined to the assessment record of the very assessee alone, and the Commissioner may take into account material that comes to notice during enquiry, including material emerging from other proceedings or authorities. The binding effect of the Supreme Court ruling on the scope of section 263, read with the legislative explanation, leaves no room to limit the power in the narrow manner accepted by the Tribunal.

Conclusion: The Commissioner had jurisdiction to invoke section 263, and the Tribunal was not right in holding otherwise. The reference was answered in favour of the Revenue.

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