Assessment Based On DVO's Valuation Cannot Be Revised U/S 263 Of Income Tax Act In Absence Of Concrete Material: Kerala High Court

The Kerala High Court has ruled that an income tax assessment based on a Departmental Valuation Officer's (DVO) valuation cannot be revised under Section 263 of the Income Tax Act, 1961, unless there is concrete new material indicating the original assessment was erroneous and prejudicial to revenue interests. The court emphasized that the Commissioner's power under Section 263 to revise orders cannot be invoked merely because an alternative view is possible. It highlighted that the Assessing Officer's role is not solely adjudicatory but also investigatory, implying they must not overlook taxpayer claims without proper inquiry. In related pronouncements, the court clarified that an order under Section 263 constitutes an open remand, not a closed one, thus a separate challenge to the Section 263 order itself may not be strictly necessary if the revised assessment is contested on its merits. This ruling reinforces that Section 263 serves to rectify revenue-prejudicial errors only when supported by substantial evidence beyond a change of opinion or re-evaluation.