Presumptive taxation and surrendered income treatment justified revision where the assessment order was erroneous and revenue-prejudicial.

Where an assessment failed to apply the presumptive taxation scheme for eligible professional income under section 44ADA and did not tax surrendered income under section 115BBE, the Punjab and Haryana HC treated the order as erroneous and prejudicial to the interests of the revenue. On that basis, the jurisdictional conditions for revision under section 263 were satisfied, and the revisional intervention was upheld. The stated principle is that non-compliance with the mandatory tax treatment of presumptive professional receipts and surrendered income can justify revision where the assessment order is both erroneous and revenue-prejudicial.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 to revise the assessment on the ground that the Assessing Officer had not correctly applied the presumptive taxation regime under section 44ADA and had not taxed the surrendered income under section 115BBE.

Analysis: The assessment of professional receipts was required to be made in accordance with section 44ADA of the Income-tax Act, 1961, which contemplates taxation of eligible professional income on a presumptive basis. The surrendered income arising from search-related disclosures was required to be brought to tax under section 115BBE of the Income-tax Act, 1961. In that view, the Assessing Officer's order was treated as erroneous and prejudicial to the interests of the revenue, satisfying the jurisdictional requirements for revision under section 263.

Conclusion: The invocation of section 263 was upheld and the challenge to the revisional order failed.

Ratio Decidendi: An assessment order that does not correctly apply the mandatory tax treatment of presumptive professional income and surrendered income can be revised under section 263 when it is both erroneous and prejudicial to the interests of the revenue.

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