Section 263 revision fails where enquiry was made into IBNR and IBNER claims and a permissible view was adopted.

Revision under section 263 was held unsustainable because the assessment record showed enquiry by the Assessing Officer into the IBNR and IBNER provisions, supported by schedule details and auditor-certified material. The provisions were stated to be made in line with the insurance regulatory framework and actuarial principles. As the issue was debatable and the Assessing Officer had adopted one of the permissible views, the order could not be treated as erroneous merely because the revisional authority preferred another view. The statutory conditions for invoking revision were therefore not met.

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Issues: Whether revision under section 263 was justified on the ground that the assessment order allowed provision for IBNR and IBNER without proper enquiry and whether such provision was inadmissible as an unascertained liability.

Analysis: The assessment records showed that the Assessing Officer had sought details of the IBNR and IBNER claims and the assessee had furnished the relevant schedule and auditor-certified material. The provisions were stated to be made in accordance with the regulatory framework applicable to insurance companies and on actuarial principles. The issue was also found to be debatable because different Tribunal views existed on the allowability of such claims. In such a situation, where the Assessing Officer had taken one of the permissible views, the order could not be treated as erroneous merely because the revisional authority preferred a different view. The statutory requirements for exercise of revisional power under section 263 were, therefore, not satisfied.

Conclusion: The revision under section 263 was not sustainable and the assessee succeeded.

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