Section 263 revisional power requires an erroneous and prejudicial assessment; a plausible view after inquiry cannot be substituted.

Revisional jurisdiction under section 263 cannot be sustained unless the assessment order is both erroneous and prejudicial to the interests of the Revenue. A revisional notice based on alleged failure to initiate penalty proceedings under section 271D was untenable because, at the time of assessment, the penalty power vested in the Joint Commissioner, not the Assessing Officer. A further challenge based on DVO valuation and search material also failed, as the assessment was made after considering the seized memorandum, sale deed, surrounding circumstances, sworn statement and DVO report; section 263 cannot be used to replace a plausible view with the Commissioner's preferred view.

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Issues: (i) Whether the revisional notices under section 263 could be sustained on the ground that the Assessing Officer ought to have initiated penalty proceedings under section 271D for an alleged contravention of section 269SS. (ii) Whether the revisional notices could be sustained on the ground that the Assessing Officer had wrongly adopted the DVO valuation and ignored the material found during search, making the assessment order erroneous and prejudicial to the interests of the Revenue.

Issue (i): Whether the revisional notices under section 263 could be sustained on the ground that the Assessing Officer ought to have initiated penalty proceedings under section 271D for an alleged contravention of section 269SS.

Analysis: The revisional foundation on this point was unsustainable because, on the date of the assessment order, the power to impose penalty under section 271D had not yet vested in the Assessing Officer. The statutory scheme then in force required the penalty to be imposed by the Joint Commissioner, and therefore the assessment order could not be branded erroneous for not initiating such proceedings. The notice proceeded on a misconception of jurisdiction.

Conclusion: The challenge succeeded on this issue and the revision could not be sustained against the assessee.

Issue (ii): Whether the revisional notices could be sustained on the ground that the Assessing Officer had wrongly adopted the DVO valuation and ignored the material found during search, making the assessment order erroneous and prejudicial to the interests of the Revenue.

Analysis: The assessment record showed that the Assessing Officer had considered the seized memorandum, the actual sale deed, the surrounding circumstances, the sworn statement and the DVO's report before arriving at a valuation and making an addition. The view taken in assessment was a considered and plausible view on the materials before the officer. Section 263 cannot be used to substitute the Commissioner's opinion for a possible view already taken after inquiry, nor to improve or rewrite an assessment merely because another approach appears preferable.

Conclusion: The revisional notices were not justified on this ground and the assessee succeeded.

Final Conclusion: The impugned revisional notices were quashed because neither ground established a valid exercise of jurisdiction under section 263, the assessment having been made on a reasoned and plausible appraisal of the record.

Ratio Decidendi: Revisional power under section 263 can be invoked only where the assessment order is both erroneous and prejudicial to the interests of the Revenue, and it cannot be used to substitute the Commissioner's view for a plausible assessment view taken on due inquiry.

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