Perquisite taxation under section 17(2) failed without employer-employee nexus, and revision under section 263 was unjustified.

Section 263 revision could not be sustained where the reassessment order was not shown to be erroneous or prejudicial merely because a different tax view was possible. Jewellery purchase expenditure found during search was treated as having been incurred by the company from unaccounted cash generated through bogus billing, and the record did not establish any employer-employee relationship necessary to tax the amount as a perquisite under section 17(2). On those facts, addition in the assessee's hands under section 17(2) was unjustified and revision was not warranted.

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Issues: Whether the Principal Commissioner was justified in revising the reassessment order under section 263 by treating the jewellery purchase expenditure as a taxable perquisite in the assessee's hands under section 17(2).

Analysis: The jewellery bills were found during search from the assessee's premises, but the expenditure was found to have been incurred by the company out of unaccounted cash generated through bogus billing. The record did not establish any employer-employee relationship between the assessee and the company, which was necessary for bringing the amount within the scope of perquisite taxation under section 17(2). On these facts, the reassessment order could not be characterised as erroneous and prejudicial to the interests of the Revenue merely because the Principal Commissioner viewed a different tax treatment as possible.

Conclusion: The revision under section 263 was not warranted and the addition under section 17(2) in the assessee's hands was unjustified.

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