Section 263 revision requires record-based error and prejudice; later investigation material cannot justify reopening a completed assessment.

Section 263 revision was held unavailable where the Assessing Officer had made enquiries into the genuineness of the jewellery sale, examined supporting documents, and taken a possible view on the material before him. The order was not shown to be erroneous or prejudicial to the Revenue merely because the Commissioner wanted a deeper enquiry. The Tribunal also held that post-assessment material gathered independently through the Investigation Wing could not be treated as part of the assessment record for assuming revisional jurisdiction. Section 263 requires objective material from the concluded assessment record itself, not a roving or self-created basis for revision.

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Issues: (i) Whether the assessment order could be revised under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had not made proper enquiry into the genuineness of the sale of jewellery and had adopted a view prejudicial to the interests of the Revenue. (ii) Whether the Commissioner could treat post-assessment inquiry material obtained through the Investigation Wing as part of the record for assuming jurisdiction under section 263 of the Income-tax Act, 1961.

Issue (i): Whether the assessment order could be revised under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had not made proper enquiry into the genuineness of the sale of jewellery and had adopted a view prejudicial to the interests of the Revenue.

Analysis: The assessment record showed that the Assessing Officer had issued requisitions, sought details of the VDIS jewellery and the sale transaction, and examined the supporting materials furnished by the assessee. The transaction was shown to have been routed through banking channels, the purchaser had tax and sales-tax identifiers, and no incriminating material was found in the search to discredit the claim. The Tribunal also noted that the same line of transaction had already been accepted in another matter and that the Department had not challenged that decision further. On these facts, the Assessing Officer had taken a possible view after due enquiry, and the revisional power could not be exercised merely because a different or more elaborate enquiry was considered desirable.

Conclusion: The assessment order was not shown to be erroneous or prejudicial to the interests of the Revenue on this ground, and revision under section 263 was not justified.

Issue (ii): Whether the Commissioner could treat post-assessment inquiry material obtained through the Investigation Wing as part of the record for assuming jurisdiction under section 263 of the Income-tax Act, 1961.

Analysis: The Tribunal held that the Commissioner had initiated and built the revisional action on information gathered after the assessment was completed, through an independent inquiry addressed to the Investigation Wing. Such material was not part of the record of the concluded assessment proceeding sought to be revised. The Tribunal distinguished between an inquiry and a proceeding, holding that a preliminary inquiry made before valid assumption of revisional jurisdiction could not itself become the record for section 263. It also emphasised that section 263 requires objective material from the record of the assessment proceeding itself and does not permit a roving, fishing, or self-created basis for revision.

Conclusion: The post-assessment material could not validly be treated as record for section 263, and the assumption of revisional jurisdiction was invalid.

Final Conclusion: The revisional order was unsustainable in law because the assessment had been completed after enquiry and the Commissioner lacked a valid section 263 foundation to disturb the concluded assessment.

Ratio Decidendi: Section 263 can be invoked only on the basis of material forming part of the record of the concluded assessment proceeding and only where the assessment order is shown to be both erroneous and prejudicial to the interests of the Revenue; a possible view taken after due enquiry cannot be revised on the basis of a later self-generated inquiry.

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