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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was valid when the Assessing Officer had examined the assessee's claim for deduction under section 80P(2)(d) of the Income-tax Act, 1961 on interest from savings and fixed deposits with a co-operative bank and had accepted the return.
Analysis: The assessment order showed that the Assessing Officer had called for details, examined the interest income and the deduction claim, and then accepted the returned income. The record therefore disclosed application of mind at the assessment stage. The Tribunal held that the mere fact that the Principal Commissioner preferred another view on allowability of the deduction did not satisfy both jurisdictional conditions under section 263, namely that the order must be both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer had taken a permissible view after inquiry, revision could not be sustained merely because a different view was possible.
Conclusion: The revisionary order under section 263 was not sustainable and was quashed.
Ratio Decidendi: Revision under section 263 cannot be invoked where the Assessing Officer has made inquiries and taken a possible view on a deduction claim, unless the order is shown to be both erroneous and prejudicial to the interests of the Revenue.
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