Section 263 limitation runs from the original assessment when revision covers issues outside reassessment.

Revision under section 263 was barred by limitation because the issues taken up in revision were not the subject matter of the reassessment. The reassessment concerned accommodation entries, while the revisionary order addressed different matters, including section 50C valuation and bank deposits. In such a situation, limitation under section 263(2) runs from the original assessment order, not the reassessment order. As the revision was passed beyond two years from the end of the financial year in which the original assessment order was made, it was time-barred and quashed.

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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was barred by limitation where the issues examined in revision were not the subject matter of the reassessment proceedings.

Analysis: The reassessment had been initiated on the ground of accommodation entries and culminated in an order under section 147 read with section 143(3). The revisionary order, however, proceeded on different issues, namely the alleged non-consideration of section 50C valuation and bank deposits. Where the issues examined in revision are distinct from the matters covered in reassessment, the period of limitation under section 263(2) runs from the original assessment order and not from the reassessment order. As the revision was passed beyond two years from the end of the financial year in which the original assessment order was made, it was time-barred.

Conclusion: The revision under section 263 was held to be barred by limitation and was quashed.

Ratio Decidendi: When the Commissioner revises matters not covered by reassessment, limitation under section 263(2) is computed from the original assessment order, not from the reassessment order.

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