Answer

1. F

   Facts

   No. The order must be both erroneous and prejudicial to the interests of revenue. If either condition is missing, revision is not valid.

2. P

   Provisions and law

   • Sec 263, Income-tax Act 1961 (now Sec 377, Income-tax Act 2025)The Principal Commissioner or Commissioner can revise an assessment order that is erroneous and prejudicial to revenue, after giving a hearing, within 2 years from the end of the financial year of the order.
3. A

   Analysis

   An order can be wrong in a way that does not reduce tax, for example a wrong head of income with the same tax. That is not prejudicial. And an order that reduces tax but follows a legally possible view is not erroneous. Address both conditions in your reply.

4. C

   Conclusion

   1. 1Identify the exact error alleged.
   2. 2Show whether it actually reduced tax.
   3. 3Show whether the officer's view was legally possible.
   4. 4Address both conditions in the reply.

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