Section 263 revision upheld for inadequate inquiry into commodity loss treated as business loss, with speculative trading concerns.

Section 263 revision was upheld where the Assessing Officer accepted commodity exchange loss as business loss without adequate enquiry into the true character of the transactions. The assessee was not a NCDEX member and produced no proof of actual delivery, while the material suggested speculative commodity dealings. On those facts, the assessment order was treated as erroneous and prejudicial to the interests of the Revenue because it reflected inadequate application of mind and required further verification. The principle that revision cannot be based merely on another possible view was held inapplicable where the order itself showed insufficient examination.

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Issues: Whether the Commissioner was justified in exercising revisional jurisdiction under Section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had accepted the assessee's commodity exchange loss as business loss, whereas the transaction was treated as speculative loss requiring separate verification.

Analysis: The assessment records showed that the Assessing Officer had allowed the loss without adequate examination of the nature of the transactions. The assessee was not a member of NCDEX and had not produced proof of actual delivery, while the material before the Commissioner suggested that the loss arose from speculative commodity dealings. On these facts, the assessment order was found to be erroneous and prejudicial to the interests of the Revenue. The principle that revisional power cannot be exercised merely because another possible view exists was held inapplicable, because the issue called for further enquiry and the assessment order reflected inadequate application of mind.

Conclusion: The revision under Section 263 was upheld, and the assessee's challenge failed.

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