Section 263 revision upheld where limited scrutiny assessment ignored taxability of a non-relative property gift under section 56(2)(x)(b).

A revision under section 263 was sustained because the assessment order was passed in limited scrutiny without proper inquiry into the taxability of an immovable property gift received from a non-relative. The Tribunal noted that the assessee did not provide effective compliance or material to rebut the revisional findings, while the registered gift deed and stamp duty value indicated that the conditions of section 56(2)(x)(b) were attracted. The failure of the Assessing Officer to examine the specific scrutiny issue and apply mind to the statutory provision rendered the assessment erroneous and prejudicial to the interests of the revenue, so the revisional order was upheld.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 on the ground that the Assessing Officer failed to examine the applicability of section 56(2)(x)(b) to the gift of immovable property received by the assessee from a non-relative without consideration.

Analysis: The assessment was completed in a limited scrutiny matter after notices under sections 143(2) and 142(1) of the Income-tax Act, 1961, but the assessee did not provide effective compliance and no material was placed before the Tribunal to rebut the revisional findings. The record showed that the assessee had received non-agricultural land as a gift from a non-relative, the gift deed was registered, and the stamp duty indicated a value far above the amount reflected in the assessment. On these facts, the statutory conditions for bringing the receipt to tax under section 56(2)(x)(b) were attracted. The assessment order was passed without proper inquiry and without application of mind to the specific issue flagged for scrutiny, making the order both erroneous and prejudicial to the interests of the revenue.

Conclusion: The invocation of section 263 was valid and the revisional order did not call for interference; the assessee's challenge failed.

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