The assessee company, had filed its return of income for relevant AY. The assessment was completed u/s 143(3) r.w.s. 144C(13) of the Act. Thereafter, revision proceedings u/s 263 were initiated by the CIT and it was held that the assessment order passed u/s 143(3) was erroneous insofar as it is prejudicial to the interest of the revenue. The CIT directed the AO to examine the issues. Consequent to order u/s 263, the AO issued notice u/s 142(1) calling upon the assessee to file necessary explanation with regard to all six issues discussed by the CIT in his order u/s 263. In response, the assessee filed detailed submissions and argued that the issues discussed by the CIT had already been examined by the AO and also there was no prejudice caused to the revenue. The AO made additions towards excise duty not paid of Rs. 24,67,762 and claim of reversal provision for Rs. 2,78,96,822. But, for remaining four issues questioned by the CIT, AO held that no addition or disallowance was required. Later on the Principal CIT issued a show cause notice u/s 263 and asked as to why the assessment order passed by the AO u/s 143(3) r.w.s. 263 would not be revised for the reasons stated in his notice. The Principal CIT proposed to revise the assessment order on the ground that the AO had failed to examine certain issues as per the findings of internal audit party which made the order passed by the AO erroneous. The Principal CIT again questioned six issues.The PCIT further observed that the AO ought to have carried out required enquiries, but failed to examine the issues. The PCIT, directed the AO to redo the assessment.

Tribunal held that,

++ PCIT revised assessment order passed u/s 143(3) r.w.s. 263 basically on six issues. It was found that all these issues were subject matter of 263 proceedings by the then CIT-1, Mumbai. The provisions of section 263 envisage revision of assessment order if the twin conditions prescribed under the provisions are satisfied. In order to invoke the jurisdiction u/s 263, the CIT has to satisfy that the order of the AO sought to be revised is erroneous and it is prejudicial to the interest of the revenue. The order sought to be revised must be erroneous insofar as it is prejudicial to the interest of the revenue;

++ u/s 263, an order must be both erroneous and prejudicial to the interest of the revenue. If order is erroneous, but there is no loss of revenue or if order is not erroneous, but there is loss to revenue, then section 263 cannot be invoked. We further notice that when a particular issue has been subject matter of assessment proceedings or appellate or revision proceedings and also the authorities have taken a particular view on examination of facts and submissions of the assessee, then the PCIT cannot invoke jurisdiction u/s 263 on same issues on the ground that there was lack of enquiry or inadequate enquiry in respect of those issues, because once a particular issue is subject matter of verification by the AO and he has taken a particular view on being satisfied with the explanation furnished by the assessee, then there is no scope of whatsoever for the CIT to revise such assessment order passed by the AO on the same issues u/s 263 of the I.T. Act, 1961. Thus the order passed by the AO u/s 143(3) r.w.s. 263 is neither error passed u/s 263 by the Ld. PCIT and restore the assessment order passed by the AO u/s 143(3) r.w.s. 263 dated 29-02-2016. In the result, appeal filed by the assessee is allowed.

(See 2019-TIOL-337-ITAT-MUM)