Revision under Section 263: AO's failure to verify Section 80AC eligibility led to Section 80P deduction being set aside.

Challenge concerns whether revisional powers under Section 263 were rightly invoked after an assessment under reopening provisions allowed a Chapter VIA deduction without verifying filing-time eligibility introduced by Section 80AC and a binding CBDT circular. The legal principle applied is that revision is available where an assessing officer allows a claim without necessary verification, rendering the order erroneous and prejudicial to revenue. On that basis the revisional authority set aside the assessment granting the Section 80P deduction and the appeal against revision was dismissed in favour of revenue.

---

---

Issues: Whether the Principal Commissioner of Income-tax was justified in invoking revision under Section 263 of the Income-tax Act, 1961 to set aside the assessment completed under Section 147 read with Section 144B for A.Y. 2018-19 on the ground that the Assessing Officer erroneously allowed deduction under Section 80P(2)(a)(i) despite the assessee being a non-filer and thus ineligible under Section 80AC and CBDT Circular No.8/2018 dated 26.12.2018.

Analysis: Applicable legal framework includes Section 263 (revision of orders), the reopening provisions under Section 147 read with Section 144B, filing requirement under Section 139(1), the eligibility condition for Chapter VIA deductions introduced by Section 80AC effective from 01.04.2018, and the binding CBDT Circular No.8/2018 dated 26.12.2018. The factual matrix shows the assessee did not file the original return within the time prescribed by Section 139(1) but filed a belated return after issuance of notice under Section 148 and claimed deduction under Section 80P. The allowance of the deduction in the assessment order occurred without any query or verification of eligibility in light of the filing-time condition in Section 80AC. Precedents establish that revisional jurisdiction under Section 263 is exercisable where an assessing order is both erroneous and prejudicial to the interests of revenue and where a claim has been allowed without due examination; mere existence of debatable views does not absolve the Assessing Officer from performing requisite verification. The Assessing Officer's failure to examine applicability of Section 80AC and the binding CBDT circular before allowing the Section 80P deduction rendered the assessment order susceptible to revision under Section 263.

Conclusion: Revision under Section 263 was justified and the order under Section 147 read with Section 144B granting deduction under Section 80P is set aside; the appeal challenging the revision is dismissed, which is against the assessee and in favour of Revenue.

Ratio Decidendi: Where an assessing officer allows a deduction without conducting necessary verification of eligibility conditions (including statutory filing-time conditions introduced by Section 80AC and related binding circulars), the order is erroneous and prejudicial to revenue and amenable to revision under Section 263 of the Income-tax Act, 1961.

---