JUDGMENT Adarsh Kumar Goel, C.J. 1. This appeal has been preferred by the Revenue under s. 260A of the IT Act, 1961, against the order dt. 28th Aug., 2007, passed by the Tribunal, Gauhati Bench, Guwahati, in ITA No. 7/Gau/2007 for the asst. yr. 2002-03. The AO, in the course of assessment, allowed benefit to the assessee for long-term capital gain from sale of shares under s. 54F. The shares in question were purchased on 21st April, 2000, for Rs. 19,536 and sold on 2nd May, 2001 for Rs. 6,36,640. The CIT exercised suo motu revisional jurisdiction under s. 263 of the Act, on the ground that while accepting the genuineness of share transactions, the AO failed to make such enquiry as was usually expected in a fact situation where the assessee was neither habitual operator of share market nor the shares in question were shares of any well known company; the prices had jumped from Rs. 6 per share to Rs. 200 per share within a span of 13 months. In such a situation, the AO could make necessary enquiry to ascertain whether commercial activities of the company justified such a jump of prices. He also did not obtain the details of previous holders nor examined the seller and buyers. The AO was, accordingly, directed to make fresh enquiry. 2. On appeal, the Tribunal set aside the said order with the observation that the AO had made detailed enquiry in respect of shares purchased and sold and receipt and payment relating to the transactions and had verified the claim after perusing documents relating to agreement of flat, evidence of payment for the materials purchased in the flat and had also examined the share transactions. On these facts, exercise of jurisdiction under s. 263 was not valid. 3. The appeal was admitted to consider the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the appellant was justified and correct in law in assuming jurisdiction under s. 263 of the Act and in passing the order dt. 8th Nov., 2006, under s. 263 of the Act setting aside the assessment order with the further direction to reframe the same in terms of the said order? 2. 8th Nov., 2006, under s. 263 of the Act setting aside the assessment order with the further direction to reframe the same in terms of the said order? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in cancelling the order passed by the appellant under s. 263 of the Act, 1961? 4. When the appeal came up for hearing, reliance was placed by the Revenue on the judgment of this Court in CIT vs. Daga Entrade (P) Ltd. (2010) 236 CTR (Gau) 296 : (2010) 47 DTR (Gau) 218 : (2010) 327 ITR 467 (Gau) holding that jurisdiction under s. 263 was validly exercised when the order revised was erroneous and prejudicial to the interests of the Revenue. The assessee submitted that revisional jurisdiction could be exercised only for jurisdictional error as held in Rajendra Singh vs. Superintendent of Taxes (1990) 79 STC 10 (Gau). The Bench, hearing the appeal, was of the view that the view taken in Daga Entrade (supra) was in conflict with the earlier judgment of this Court in Rajendra Singh (supra). Accordingly, the matter was directed to be placed before a Larger Bench. The Larger Bench, vide judgment dt. 7th Feb., 2012 [since reported as CIT vs. Jawahar Bhattacharjee (2012) 67 DTR (Gau)(FB) 217 : (2012) 247 CTR (Gau)(FB) 473 Ed.], reiterated the view taken in Daga Entrade (supra) explaining the earlier view to the effect that the expression "jurisdictional error" was not intended to exclude the order which may be erroneous and covered by the scope of revisional jurisdiction under s. 263. An order passed by ignoring the relevant material, on wrong assumption of facts, incorrect application of law or by non-application of mind could certainly be held to be erroneous and suffering from error of jurisdiction, so as to be covered within the scope of revisional jurisdiction under s. 263 of the Act. The matter was directed to be placed before the Division Bench for decision on the merits. 5. We have heard learned counsel for the assessee. Learned counsel for the Revenue is unable to assist the Court as he says that he is not ready. 6. In the present case, the CIT has clearly concluded that the order was erroneous and prejudicial to the interests of the Revenue and called for exercise of revisional jurisdiction. 5. We have heard learned counsel for the assessee. Learned counsel for the Revenue is unable to assist the Court as he says that he is not ready. 6. In the present case, the CIT has clearly concluded that the order was erroneous and prejudicial to the interests of the Revenue and called for exercise of revisional jurisdiction. Valid reasons for exercise of jurisdiction have been given. No doubt, mere different opinion was not enough for an order being termed as "erroneous" but the finding of the CIT shows that the order of the AO suffered from non-application of mind. Distinction in cases where the AO takes a view, after applying mind as per the settled norms and cases where settled norms are ignored and assessment is made is well known. While in former, revisional jurisdiction may not be exercised, in the latter it can certainly be exercised. Present case clearly falls in second category. Whether or not exercise of revisional jurisdiction was called for is a question of law on' a given fact situation. Whether, in the facts of the present case, exercise of jurisdiction was permissible is the substantial question of law for our consideration; before proceeding further, we may refer to the findings of the three authorities. The same are : AO The assessee purchased 320 shares of Goyal Achal Sampatti Vikas and Niyojan Nigam Ltd. from one Janaki Devi through Rajendra Nahata, Member, Gauhati Stock Exchange Ltd. on 21st April, 2000, for Rs. 19,536. The same were sold by the assessee on 2nd May, 2001 through Pannalal Bhansali, Member, Gauhati Stock Exchange Ltd. for Rs. 6,36,640 giving rise to long-term capital gain of Rs. 6,16,142 after indexing benefit. The assessee has claimed exemption for the entire capital gain under s. 54F of the IT Act, 1961, having been invested for the purchase of residential flat within one year before or two years after the date of accrual of long-term capital gain on shares. The assessee has furnished evidence for payment of Rs. 5,95,000 to Legend Apartments on different dates during the permissible time limit. Proof of payment of Rs. 1,56,205 towards payment made for material purchased for furnishing the flat could not be furnished. The assessee does not own any other house on the date of accrual of long-term capital gain. The assessee has furnished evidence for payment of Rs. 5,95,000 to Legend Apartments on different dates during the permissible time limit. Proof of payment of Rs. 1,56,205 towards payment made for material purchased for furnishing the flat could not be furnished. The assessee does not own any other house on the date of accrual of long-term capital gain. The assessee has fulfilled all the conditions for claiming exemption under s. 54F except that he did not utilize the entire consideration from transfer of shares for purchase of flat and as such, the claim is accepted partially in terms of s. 54F." CIT 7. In my view, the AO should have enquired about the existence of the company and should have written letters at the address given in the share certificates for verification of the assessee's claim. He should have obtained the annual accounts of the company as on 31st March, 2000 and 31st March, 2001, to satisfy himself whether the commercial activities of the company justified such a jump in the price of shares. He could have obtained the price quotations of the shares on a few dates during the check-period to examine the reasonableness of the jump. Since the shares were purchased in cash, it was necessary to obtain the details of the immediate previous holder and find out whether she was a genuinely existing person. The date-wise cash flow statement of the assessee in the year of acquisition should also have been scrutinized. It was necessary to examine the books of Shri Rajendra Nahata to verify the cash transactions. In fact, both Smt. Janki Devi and Shri Rajendra Nahata should have been personally examined by the AO. The AO should have also examined Shri Pannalal Bhansali through whom the shares were sold. His books of account, particularly statements of the bank account from which Shri Pannalal Bhansali drew cheques in favour of the assessee, should have been obtained and thoroughly scrutinized. It was also necessary to summon the ultimate purchaser(s) of the shares along with the share certificates and examine him/them to find out if the considerations were paid in cash or by cheque, and whether the sources from which such payments were made were evidenced. Since these necessary checks and balances were not carried out by the AO, the assessment order was rendered erroneous and prejudicial to the interests of the Revenue. Since these necessary checks and balances were not carried out by the AO, the assessment order was rendered erroneous and prejudicial to the interests of the Revenue. The order, therefore, requires to be revised. Tribunal 5. We have given our careful consideration to the rival submissions made before us and various orders of the tax authorities. We have also considered the case law relied upon by the learned counsel for the assessee. From the perusal of the assessment order framed under s. 143(3), we find that the AO had made detailed enquiries in respect of share purchase and sale apart from receipt and payment relating to such share transaction. The AO during the course of assessment proceeding has produced the photocopy of share certificates and bank statement from the assessee along with confirmation from broker regarding such share transaction. The AO has also verified the claim of the assessee in respect of deduction under s. 54F by perusing the documents like copy of agreement for flat, evidence of payment to M/s Legand Apartments, proof of payment for material purchased, etc. It is, therefore, evident that the AO while completing the assessment under s. 143(3) has thoroughly examined the share transactions of the assessee and the claim for deduction under s. 54F which are sought to be revised by the CIT by invoking the provisions of s. 263 which is, in our considered opinion, not permissible under the Act as for invoking such revisionery power there must exist two circumstances, i.e., (1) the order must be erroneous, and (2) because of being an erroneous order the order must have become prejudicial to the interests of the Revenue. We also find that the Hon'ble Gauhati High Court in the case of B & A Plantation & Industries Ltd. & Anr. vs. CIT (2007) 211 CTR (Gau) 415: (2007) 290 ITR 395 (Gau) held that it was not open to the CIT to consider the order passed by the AO as erroneous because in his view certain amount of deduction should have been disallowed, particularly when the impugned order of the CIT does not show how the order passed by the AO can be said to be an order passed without jurisdiction. 7. 7. It is clear from the above, that interference by the CIT was not merely on the ground that a different view could be taken but on the ground that there was failure to follow the established norms and there being non-application of mind. The reasons given by the CIT including the one that there was unusual jump of prices from Rs. 6 per share to Rs. 200 per share within a span of 13 months which could not be held to be explained without examining the sellers and buyers and making further enquiries is not shown to be irrelevant. The Tribunal committed an error of law in ignoring this aspect. In the facts and circumstances of the case, the Tribunal was not justified in holding that the exercise of jurisdiction by the revisional authority was not permissible under s. 263 of the Act. 8. Learned counsel for the assessee submitted that the question of perversity having not being raised, this Court must accept the finding of the Tribunal to be conclusive. He has also relied upon the judgment of the Delhi High Court in CIT vs. Hindustan Marketing & Advertising Co. Ltd. (2010) 46 DTR (Del) 109 : (2011) 196 Taxman 368 (Del) for submitting that revisional jurisdiction could not be exercised on the ground that the AO should have gone deeper into the matter. 9. We are unable to accept this submission. Jurisdiction under s. 263 of the Act in the present ease has not been exercised merely on the ground that the AO should have gone deeper into the matter but by pointing out that the AO had failed to apply his mind in allowing the benefit under s. 54F of the Act by accepting the genuineness of the capital gain. The finding of the Tribunal on the issue whether case for exercise of revisional jurisdiction was made out, cannot, in the circumstances, be held to be a pure finding of fact. Substantial questions of law raised in the appeal do arise and have to be answered in favour of the Revenue. Accordingly, the appeal is allowed.