Section 263 revision fails when the Assessing Officer has examined the issue and adopted a legally sustainable view.

Revision under section 263 of the Income-tax Act was not justified where the Assessing Officer had already examined prior-year expenses, set-off of brought forward losses and the disputed claim, and had taken a view after verification. The Commissioner's notice overlapped with matters already considered in assessment, and section 263 could be invoked only if the order was both erroneous and prejudicial to the Revenue. A different opinion or lack of elaborate reasoning was insufficient, and a mere possible loss of revenue did not meet the statutory test. The revisionary order was therefore unsustainable.

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Issues: Whether the revisionary jurisdiction under section 263 of the Income-tax Act, 1961 was validly invoked when the Assessing Officer had examined the relevant issues during assessment and the order was not shown to be both erroneous and prejudicial to the interests of the Revenue.

Analysis: The assessment record showed that the Assessing Officer had raised queries on prior-year expenses, set-off of brought forward losses, and the impugned claim, and had taken a view after verification. The Commissioner's notice substantially overlapped with issues already examined in assessment. The statutory precondition for section 263 requires both error and prejudice; an order cannot be revised merely because the Commissioner prefers a different view or because the reasoning is not elaborate. The presumption of regular performance of official acts also supported the view that the assessment was made with due application of mind. A mere possible loss of revenue is insufficient unless the view adopted by the Assessing Officer is unsustainable in law.

Conclusion: The invocation of section 263 was not justified, and the revisionary order was unsustainable.

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