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Issues: Whether the revision under section 263 of the Income-tax Act, 1961 was valid where the reassessment order had accepted the assessee's explanation regarding the disputed transaction and the Principal Commissioner held the order to be erroneous and prejudicial to the interests of the Revenue.
Analysis: The assessee had furnished the relevant bills, ledger extracts, bank records, tax deduction material and the annual report of the counterparty to show that the impugned amount was not an unsecured loan but a business payment for loading and supervision charges. The reassessment record showed that the Assessing Officer had called for details and accepted the explanation, while the Principal Commissioner proceeded on a different premise and treated the matter as one of unexplained loan or inadequate verification. The exercise of revision was found unsustainable because the assessee had discharged the initial burden on the transaction, the reassessment had not resulted in any addition on the very basis on which reopening was made, and a revisionary order cannot be founded on a shift to a different issue or on mere inadequacy of inquiry.
Conclusion: The invocation of section 263 was held to be invalid and the revision order was quashed.
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