Revision jurisdiction under section 263: PCIT cannot substitute AO's reasonable view; appeal allowed restoring AO order.

Revision jurisdiction under section 263 requires an erroneous order based on incorrect assumption of fact or law; where such incorrectness exists the order may be prejudicial to the interest of revenue, and revision is permissible, but mere loss of revenue or disagreement with a permissible view of the Assessing Officer does not suffice. If the AO adopts one of two or more legally permissible views the revisional authority cannot substitute its own view unless the AO's view is totally unsustainable in law; applying these principles the revisional order was found not erroneous and the assessee's appeal was allowed.

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Issues: Whether the revisional order passed by the Principal Commissioner under section 263 of the Income-tax Act, 1961, holding that the assessing officer's order was erroneous and prejudicial to the interests of revenue for not treating transactions totaling Rs.1,44,35,000 as unexplained investments under section 69 and taxable under section 115BBE, is sustainable.

Analysis: Consideration is given to the statutory requirement under section 263 that two concurrent conditions must be satisfied for revision(i) the order of the Assessing Officer is erroneous, and (ii) the order is prejudicial to the interests of the revenue. Explanation 2 to section 263 identifies specific circumstances (including absence of necessary inquiries or verification) that render an order "erroneous". The assessing officer conducted survey-related enquiries (u/s 133A), issued show-cause notices (u/s 142(1)), received explanations and documentary material (ledgers, receipt books, agreements) and made a considered addition as commission income rather than treating the entire transaction amounts as unexplained investments. Where the assessing officer has applied his mind and adopted a plausible view based on the evidence, the revisional jurisdiction under section 263 is not available merely because the Commissioner prefers a different view. The facts show no failure of inquiry or verification as envisaged by Explanation 2; the tribunal applied precedents and the legal test that revisional power cannot substitute a permissible view taken by the Assessing Officer.

Conclusion: The revisional order under section 263 is not sustainable and is quashed; the appeal is allowed in favour of the assessee.

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