Section 263 revision cannot extend to issues outside reassessment proceedings and unexamined by the assessing officer.

Revisional jurisdiction under Section 263 could not be used to bring in an issue that lay outside the reassessment initiated under Section 147 and had not been examined by the assessing officer. Because the loss or expenditure on the newly undertaken software product development project was not part of the reassessment proceedings, the Commissioner had no basis to revise that matter. The invocation of Section 263 on that issue was therefore not justified, and the substantial question of law was answered against the revenue.

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Issues: Whether the Commissioner could invoke revisional jurisdiction under Section 263 of the Income-tax Act, 1961 in respect of an issue that was not the subject-matter of the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961.

Analysis: The issue relating to loss or expenditure on the newly undertaken software product development project had not been examined by the assessing officer in the reassessment proceedings. Revisional jurisdiction under Section 263 could not be exercised on a matter that was outside the scope of the reassessment and had not formed part of the assessment considered by the assessing officer.

Conclusion: The invocation of Section 263 on the said issue was not justified and the answer to the substantial question of law was against the revenue.

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