Revision under section 263 on alleged accommodation loan found based on incorrect factual premise; revisional order set aside and appeal allowed.

Revision under section 263 challenged an assessment reopened as alleged accommodation loan; the revisional order rested on an incorrect factual presumption that the assessee had taken an accommodation entry. The assessing officer had examined the loan issue during reassessment, accepted the assessee's contention that no such loan was received and recorded repayment of an earlier loan, leading to no addition. Because the 263 order proceeded from a wrong factual premise and there was no erroneous view taken by the assessing officer prejudicial to revenue, the revisional order was set aside and the appeal allowed.

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Issues: Whether the order passed under Section 263 of the Income-tax Act, 1961 treating the original assessment as erroneous and prejudicial to the interests of revenue, in respect of alleged accommodation-entry loan of Rs. 52,02,531/-, is justified.

Analysis: The factual record shows no material placed on file by the Department establishing that the assessee received a loan of Rs. 52,02,531/- from the alleged entry-provider. During reassessment proceedings under Section 147, the assessing officer examined the transaction and the assessee produced bank statements, confirmations and a repayment certificate evidencing that an earlier loan of Rs. 35,00,000/- was repaid with interest in the year under consideration. The revision under Section 263 was initiated on the premise that the assessee benefited from an accommodation-entry transaction of Rs. 52,02,531/-, but that premise is not supported by evidence on record. The issue had been specifically inquired into in the reassessment proceedings and no addition was made by the assessing officer; there is therefore no demonstration of an incorrect view or lack of enquiry that would render the assessment order erroneous and prejudicial to revenue.

Conclusion: The order under Section 263 is set aside. The revisional action is not justified as the assessment order is not shown to be erroneous or prejudicial to the interests of revenue; decision is in favour of the assessee.

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