Revisionary jurisdiction for lack of inquiry upheld where land transfer and capital gains taxability were not properly examined.

Revision under section 263 is sustainable where the assessment order reflects a lack of inquiry into a material land transaction and its capital gains implications. The Assessing Officer had sought details of the developer arrangement, but the assessee did not furnish the particulars and no meaningful examination was made on whether the transaction constituted a transfer under section 2(47) or created taxable capital gains in the relevant year. Such non-application of mind and failure to investigate a significant issue renders the assessment order erroneous and prejudicial to the interests of the Revenue, so the revisional jurisdiction was properly invoked.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 on the ground that the assessment order had been passed without proper inquiry into the assessee's land transaction and the applicability of capital gains provisions.

Analysis: The record showed that the Assessing Officer had asked for a detailed note on the transaction with the developer, but the assessee did not furnish the required particulars, and no meaningful inquiry was made on whether the transaction amounted to a transfer within section 2(47) or gave rise to taxable capital gains in the relevant year. The order was therefore not a case of a merely inadequate inquiry or of the Assessing Officer adopting one of two possible views; it was a case of lack of inquiry. An order passed without applying mind to material facts and without examining the taxability of a significant transaction can be treated as erroneous and prejudicial to the interests of the revenue, and the revisional power under section 263 can be validly exercised in such a situation.

Conclusion: The revision under section 263 was valid and the challenge to the revisional order failed, in favour of the Revenue.

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