Section 263 revision fails where reassessment already examined F&O and share transactions and no specific error or prejudice was shown.

Revision under section 263 of the Income-tax Act is sustainable only if the assessment order is both erroneous and prejudicial to the Revenue. Here, the reassessment had already examined the assessee's F&O and share transaction details, including ledger accounts, contract notes and profit statements, and the assessee had disclosed F&O profits without claiming the alleged bogus capital loss set-off. Because the revisional authority did not address these explanations or identify any specific surviving error or required enquiry, the assumption of revisionary jurisdiction was not justified and the assessment could not be revised.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was sustainable when the Assessing Officer had examined the F&O and share transaction issue during reassessment and no specific error or prejudice was demonstrated.

Analysis: Revision under section 263 can be invoked only where the order of the Assessing Officer is both erroneous and prejudicial to the interests of the Revenue. The record showed that the reassessment was initiated on the very same information regarding alleged penny stock and derivative transactions, and the assessee had furnished details, ledger accounts, contract notes and profit statements before the Assessing Officer. The material also showed that the assessee had disclosed profits from F&O transactions and had not claimed any set off of bogus capital loss as alleged. The Principal Commissioner did not deal with these explanations or record any specific finding showing what error remained in the assessment order or what further enquiry was necessary.

Conclusion: The revisionary assumption of jurisdiction was not justified, and the order under section 263 was liable to be set aside in favour of the assessee.

Final Conclusion: The assessment order could not be revised for want of a demonstrated error and prejudice, and the assessee's appeal succeeded.

Ratio Decidendi: An order cannot be revised under section 263 unless the revisional authority identifies a specific error in the assessment order and shows resulting prejudice to the Revenue; mere reiteration of reopening reasons or absence of further enquiry, without dealing with the assessee's explanation, is insufficient.

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