Section 263 revision cannot rely on a DVO report received after assessment and outside the assessment record.

Revision under section 263 of the Income-tax Act cannot rest on material not forming part of the assessment record. The ITAT Ahmedabad held that where the alleged defect in the assessment was based on a DVO valuation report received only after completion of the assessment, the Commissioner could not treat the assessment as erroneous and prejudicial to the interests of revenue on that basis. Since the report was unavailable to the Assessing Officer when the assessment was made, it could not found revisionary jurisdiction. The revisionary order was therefore unsustainable and was quashed.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 could be sustained when the alleged infirmity in the assessment was founded on a DVO valuation report received after completion of the assessment and not forming part of the assessment records.

Analysis: The power under section 263 can be exercised only on examination of the assessment records and on finding that the assessment order is both erroneous and prejudicial to the interests of revenue. A document not available to the Assessing Officer at the time of assessment and not forming part of the record cannot be the foundation for invoking revisionary jurisdiction. Since the DVO report was received after the assessment order and was not part of the material before the Assessing Officer, the Commissioner could not rely on it to hold the assessment erroneous. The assessment was, therefore, not shown to be unsustainable on the basis of the record actually available at the time of completion of assessment.

Conclusion: The revision under section 263 was held unsustainable and was quashed.

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