Revisionary jurisdiction fails when the alleged tax issue relates to a different assessment year than the one under review.

Revision under section 263 of the Income-tax Act could not be sustained where the alleged error and prejudice were founded on a property transaction relating to a different assessment year. The record showed that the residential flat purchase took place on 03.08.2021 in financial year 2021-22, relevant to assessment year 2022-23, while the assessment sought to be revised pertained to assessment year 2021-22. On that factual basis, the revisional jurisdiction was held to be without jurisdiction, the revisionary order was set aside, and the original assessment order was restored.

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Issues: Whether the Principal Commissioner was justified in exercising revisionary jurisdiction under section 263 of the Income-tax Act, 1961 to revise the assessment order for the assessment year 2021-22 on the basis of a property transaction that pertained to assessment year 2022-23.

Analysis: The impugned revision was founded on the assumption that the assessee's purchase of a residential flat and the alleged applicability of sections 56(2)(x)(b)(B) and 50C of the Income-tax Act, 1961 related to the year under consideration. The record showed that the property was purchased on 03.08.2021, falling in financial year 2021-22 relevant to assessment year 2022-23, whereas the revised assessment concerned assessment year 2021-22. On that factual matrix, the conditions for invoking section 263 were not satisfied, since the basis of revision rested on an incorrect appreciation of the relevant assessment year.

Conclusion: The revisionary order was held to be without jurisdiction and was set aside; the original assessment order was restored. The decision is in favour of the assessee.

Ratio Decidendi: Revision under section 263 of the Income-tax Act, 1961 cannot be sustained where the very foundation of error and prejudice is built on a transaction belonging to a different assessment year.

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