Section 263 revision cannot reopen a valid presumptive assessment under section 44AD when jurisdictional limits are not met.

Where an assessee had returned income under the presumptive scheme in section 44AD, revision under section 263 was held to be unavailable to reopen factual inquiries intrinsic to that statutory regime. The Tribunal noted that section 44AD dispenses with maintenance of books for the relevant year and that revisional power must remain within the limits of lawful jurisdiction. Since the Principal Commissioner sought to substitute a different view despite the assessee's valid reliance on section 44AD, the revisional order was held to be without requisite jurisdiction and was quashed in favour of the assessee.

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Issues: (i) Whether the Principal Commissioner of Income Tax had jurisdiction to invoke section 263 of the Income-tax Act, 1961 to revise an assessment where the assessee had filed return of income under section 44AD of the Income-tax Act, 1961.

Analysis: Section 44AD of the Income-tax Act, 1961 prescribes a presumptive basis of taxation for eligible taxpayers and does not require maintenance of books of account under its statutory scheme for the relevant assessment year. Section 263 of the Income-tax Act, 1961 empowers revision where an assessment order is erroneous and prejudicial to the interest of the revenue, but such revision must be exercised within the limits of jurisdiction conferred by law. Where a taxpayer has returned income under section 44AD and availed the statutory presumptive regime applicable to the assessment year, the scope for revisional action under section 263 that effectively reopens factual inquiries intrinsic to the presumptive scheme is restricted. Prior decisions of the Tribunal on identical facts have held that revisional jurisdiction under section 263 cannot be exercised to substitute the higher authority's view for the assessment proceedings conducted under section 44AD when the statutory conditions for the presumptive regime are fulfilled.

Conclusion: The revisional order passed under section 263 was without requisite jurisdiction and is quashed; relief is in favour of the assessee.

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