Revision cannot indirectly reopen concluded loss assessments where the assessment order follows binding appellate directions.

Section 263 could not be used to treat an assessment order as erroneous merely because the Principal Commissioner disagreed with the brought-forward loss computation, where the Assessing Officer had passed the final order in conformity with DRP directions and had only given effect to year-specific directions. The attempt to indirectly revise the loss already determined for an earlier year was beyond jurisdiction, because that concluded assessment had not been disturbed in its own order. Parallel reassessment proceedings on the same issue, already sub judice, further supported unsustainability of the revision. The revisional order was therefore held unsustainable and the assessment was restored.

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Issues: (i) Whether the assessment order passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 was erroneous and prejudicial to the interests of Revenue on the ground of set-off of brought forward loss. (ii) Whether, while exercising jurisdiction under section 263 for assessment year 2011-12, the Principal Commissioner could in effect revise the loss determined for assessment year 2009-10.

Issue (i): Whether the assessment order passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 was erroneous and prejudicial to the interests of Revenue on the ground of set-off of brought forward loss.

Analysis: The final assessment order was passed in conformity with the directions of the Dispute Resolution Panel. The directions for the relevant year did not require re-determination of the loss already determined for the earlier assessment year. The Assessing Officer implemented the year-specific directions and, after computing income under section 44 read with Rule 2 of the First Schedule, allowed set-off of brought forward loss. On these facts, the order could not be treated as erroneous merely because the Principal Commissioner viewed the earlier loss computation differently.

Conclusion: The assessment order was not erroneous and prejudicial to the interests of Revenue on this ground.

Issue (ii): Whether, while exercising jurisdiction under section 263 for assessment year 2011-12, the Principal Commissioner could in effect revise the loss determined for assessment year 2009-10.

Analysis: The loss determined for assessment year 2009-10 remained undisturbed in its own assessment order. Revision under section 263 for assessment year 2011-12 could not be used to indirectly alter that concluded assessment. The attempt to do indirectly what could not be done directly was beyond jurisdiction. The existence of parallel reassessment proceedings on the same issue, which were already sub judice, also made the revision unsustainable.

Conclusion: The Principal Commissioner had no jurisdiction to revise the earlier year's loss through the impugned revision order.

Final Conclusion: The revisional order was unsustainable in law and the assessment order was restored, leaving the assessee's challenge substantially successful and the appeal partly allowed.

Ratio Decidendi: Section 263 cannot be invoked to revise an assessment when the order under challenge is passed in conformity with binding appellate directions and the real object is to indirectly reopen or alter the concluded assessment of another year.

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