Section 263 revision fails when the transfer pricing provision had been omitted before the revisional order was passed.

Revision under section 263 could not be sustained where it rested solely on the Assessing Officer's failure to refer specified domestic transactions for transfer pricing examination. The omission of section 92BA(i) was held material because the provision had already been omitted when the revisionary order was passed, and an omitted provision is treated as if it had never existed. The view that the pre-omission assessment year preserved the revisionary basis was rejected. The revisionary order was quashed and the appeal was allowed in favour of the assessee.

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Issues: Whether the revision under section 263 of the Income-tax Act, 1961 could be sustained on the ground that the Assessing Officer did not refer the specified domestic transactions to the Transfer Pricing Officer for determination of arm's length price, and whether the omission of section 92BA(i) of the Income-tax Act, 1961 affected the validity of such revision.

Analysis: The assessment was revised only because the Assessing Officer had not referred the specified domestic transactions for transfer pricing examination. The omission of section 92BA(i), which governed such transactions, was held to be material because the provision stood omitted when the revisionary order was passed. Applying the principle that omission of a provision is different from repeal and operates as if the omitted provision had never existed, the basis for revision could not survive. The finding that the omission was irrelevant because the assessment year preceded the omission was rejected.

Conclusion: The revisionary order could not be sustained and was quashed. The appeal was allowed in favour of the assessee.

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