Section 263 revision barred where the Assessing Officer made enquiries and considered replies; inadequate enquiry alone is insufficient.

Revision under section 263 is not sustainable where the assessment records show that the Assessing Officer raised specific queries, examined the relevant issues and considered the assessee's replies with supporting material. The distinction between absence of enquiry and inadequate enquiry was applied: a Commissioner cannot revise merely because he considers the enquiry insufficient or prefers a different view. The record also showed enquiry into investments in concerns, NSCs, vehicles and house properties, and no material established that the presumptive rate under section 44AE was wrongly applied to vehicles falling within the higher category. In these circumstances, the assessment was not shown to be both erroneous and prejudicial to the Revenue.

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Issues: (i) Whether the revisionary order under section 263 was sustainable when the assessment records showed that the Assessing Officer had raised queries and the assessee had furnished replies and supporting material; (ii) whether the Commissioner could revise the assessment on the footing that the income under section 44AE was computed at a lower rate and that investments in concerns, NSCs and immovable properties were not properly examined.

Issue (i): Whether the revisionary order under section 263 was sustainable when the assessment records showed that the Assessing Officer had raised queries and the assessee had furnished replies and supporting material.

Analysis: The statutory condition for revision under section 263 is that the assessment order must be both erroneous and prejudicial to the interests of the Revenue. The distinction between absence of enquiry and inadequate enquiry was applied. Where queries are raised in the assessment proceedings and replies with evidence are furnished, the order cannot be revised merely because the Commissioner considers the enquiry to be insufficient or holds a different view. The record showed that the Assessing Officer had made specific enquiries on the very issues later relied upon for revision, and the assessee had filed detailed explanations before completion of assessment.

Conclusion: The revision on this ground was not justified and was liable to be quashed.

Issue (ii): Whether the Commissioner could revise the assessment on the footing that the income under section 44AE was computed at a lower rate and that investments in concerns, NSCs and immovable properties were not properly examined.

Analysis: The assessment records showed that the Assessing Officer had called for details regarding investments in concerns, NSCs, vehicles and house properties, and the assessee had responded with supporting material. On the rate applicable under section 44AE, the higher presumptive rate was relevant only to heavy goods vehicles, and no material was shown to establish that the vehicles in question fell in that category. In the absence of any demonstrated lack of enquiry or any material showing an incorrect assumption of facts or law, the assessment could not be said to be erroneous and prejudicial to the Revenue.

Conclusion: The revision on these grounds also failed.

Final Conclusion: The common revisional order was unsustainable in law because the assessment order was based on enquiries made during assessment proceedings, and the conditions for invoking section 263 were not met.

Ratio Decidendi: Revision under section 263 is impermissible where the Assessing Officer has made enquiries on the relevant issues and adopted a view after consideration of the assessee's replies, because inadequate enquiry alone does not render the assessment order erroneous and prejudicial to the interests of the Revenue.

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