Exercise of revisionary jurisdiction under section 263 of Income Tax Act, 1961

RELEVANT PARAGRAPHS:

6. We have considered the facts of the case and rival submissions. The principles of law emerging from various decisions cited by the rival parties can be summarized as under :

(i) two pre-conditions have been prescribed for invoking jurisdiction under section 263, namely (a) the order passed by the Assessing Officer should be erroneous; and (b) it should be prejudicial to the interests of the revenue;

(ii) where proper enquiries have been conducted by the Assessing Officer and he has followed the principles of natural justice, the order passed by him cannot be said to be erroneous and prejudicial to the interests of revenue simply because the ld. Commissioner does not agree with him and he is of the view that addition of a higher amount should have been made;

(iii) when two opinions are possible in a particular matter and the Assessing Officer follows one view, the order cannot be said to be erroneous and prejudicial to the interests of revenue provided that he follows a possible view;

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