Revision under Section 263 fails where the assessment is not both erroneous and prejudicial, and mere change of opinion is insufficient.

Revision under Section 263 of the Income-tax Act, 1961 is permissible only when the assessment order is both erroneous and prejudicial to the interests of revenue. The HC held that the Principal Commissioner could not sustain revision on a mere change of opinion, particularly where the Tribunal had found the issue covered by the assessee's own case and the Assessing Officer had followed an earlier departmental view. The Revenue's reliance on a Supreme Court decision was found distinguishable on facts because that case involved a demonstrably erroneous and prejudicial assessment. No substantial question of law arose, and the Tribunal's order quashing the revision was left undisturbed.

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Issues: Whether the Principal Commissioner could invoke revisionary jurisdiction under Section 263 of the Income-tax Act, 1961 in respect of the assessment order, and whether the appeal disclosed any substantial question of law warranting interference with the Tribunal's order.

Analysis: The dispute turned on the settled requirement that an order can be revised under Section 263 only if it is both erroneous and prejudicial to the interests of revenue. The Court noted that the Tribunal had found the issue to be covered by the assessee's own case and that the Assessing Officer had followed an earlier view accepted by the department itself. The Court treated the Principal Commissioner's objection as no more than a difference of opinion and held that a mere change of opinion does not satisfy the conditions for revision. The Court further found that the facts relied upon by the Revenue were distinguishable from the cited Supreme Court decision, where the assessment order was demonstrably erroneous and prejudicial.

Conclusion: The invocation of Section 263 was not justified on the facts, and no substantial question of law arose for consideration. The challenge failed and the assessee succeeded.

Final Conclusion: The Tribunal's order quashing the revision was left undisturbed, and the Revenue's appeal did not survive.

Ratio Decidendi: Revision under Section 263 of the Income-tax Act, 1961 is permissible only where the order is simultaneously erroneous and prejudicial to the interests of revenue, and it cannot be sustained on a mere change of opinion or where the issue is already covered by a consistent earlier view.

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