Limited scrutiny limits section 263 revision; extraneous allowance issues cannot justify revisional interference without error and prejudice.

In a limited scrutiny assessment confined to the source of cash deposits, revision under section 263 cannot be used to reopen an issue outside the permitted scope unless the assessment is otherwise erroneous and prejudicial. The assessment could not be treated as erroneous merely because the Assessing Officer did not examine an extraneous matter. The conveyance allowance and additional conveyance allowance were described as reimbursed expenses exempt under section 10(14), and the amount was below the threshold relevant to widening scrutiny. On these facts, the statutory conditions for revision were not met, and the revisionary order was unsustainable.

---

---

Issues: Whether the Commissioner could invoke revisional jurisdiction under section 263 in respect of an assessment completed in limited scrutiny, and whether the conveyance allowance and additional conveyance allowance were outside the scope of revision as reimbursed expenses exempt under section 10(14).

Analysis: The assessment was selected for limited scrutiny only for examining the source of cash deposits in the savings account. In such a case, the Assessing Officer's examination is confined to the specific issue for which scrutiny was selected, and wider scrutiny requires the prescribed administrative approval where the potential escapement exceeds the threshold. The revisionary order sought to reopen an issue that was not part of the limited scrutiny selection. The allowance claimed by the assessee was treated as reimbursement by the employer, and the amount involved was below the threshold noted for widening scrutiny. In these circumstances, the assessment order could not be characterised as erroneous for not examining an extraneous issue, and the statutory conditions for section 263 were not satisfied.

Conclusion: The invocation of section 263 was unsustainable and the revisionary order was set aside in favour of the assessee.

Ratio Decidendi: In a limited scrutiny assessment, revision under section 263 cannot be used to disturb an assessment on issues outside the permitted scope unless the assessment order is otherwise shown to be erroneous and prejudicial in law.

---