Section 263 revision fails where the Assessing Officer examined the exemption claim and applied mind to the acquisition records.

Revision under section 263 is not available where the Assessing Officer has examined the exemption claim, called for supporting documents, and applied his mind to the acquisition and compensation record. A Principal Commissioner cannot simply substitute a different view on the applicability of section 10(37) for compulsory acquisition of agricultural land. In the absence of any established lack of enquiry or non-consideration of material, the twin requirements of error and prejudice to revenue are not satisfied, so the revisional order is unsustainable and beyond jurisdiction.

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Issues: Whether the Principal Commissioner could validly invoke revisional jurisdiction under section 263 of the Income-tax Act, 1961 to set aside the assessment on the ground that exemption under section 10(37) had been wrongly allowed in respect of compensation for compulsory acquisition of agricultural land.

Analysis: The assessment record showed that the Assessing Officer had examined the assessee's claim of exemption, called for supporting documents, and applied his mind to the nature of the land, the acquisition proceedings, and the compensation received. The revisional authority sought to substitute its own view on the applicability of the exemption and the underlying land-acquisition regime, but no lack of enquiry or absence of consideration by the Assessing Officer was established. Revision under section 263 requires the twin conditions of error and prejudice to revenue, and mere disagreement with the assessment view or a different perception of the same material does not make the assessment order revisable.

Conclusion: The invocation of section 263 was not justified and was beyond jurisdiction. The revisionary order was unsustainable, and the assessee succeeded.

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