CIT cannot resort to provisions of S.263 in a case where view taken by AO is found to be plausible and is not erroneous:

The assessee had obtained a loan from GIIC and since the assessee defaulted in repayment of such principal sum with interest, it opted for OTS (One time settlement) framed by GIIC whereby 43% of the outstanding amount was waived. Assessee offered 43% of outstanding interest for tax u/s 41(1). AO worked out different proportion on pro-rata basis and made certain addition u/s 41(1). CIT passed an order u/s 263 since he considered that AO committed an error in passing the Asst. Order and his order was prejudicial to the interest of the revenue.The Hon’ble High Court observed that there was no clarity on the part of GIIC w.r.t. the portion in which amount paid by assessee under GIIC was to be appropriated. It was held that in such a scenario, the view taken by AO was plausible and cannot be said to be erroneous for which CIT could have taken recourse to S.263.

[B DEVCHAND & SONS SHIPPING PVT. LTD. – TAX APPEAL NO.1505 of 2011 - GHC]