Section 263 revision requires an erroneous and prejudicial order; a brief assessment alone does not prove lack of enquiry.

Revision under section 263 is not justified unless the assessment order is both erroneous and prejudicial to the interests of the Revenue. Where the deduction claim under section 80P was on record during scrutiny, supported by the return computation and the assessee's reply, and the Assessing Officer examined and accepted it, the order cannot be revised merely because the return form did not separately reflect the claim or the assessment discussion was brief. A short assessment order does not by itself show absence of enquiry for section 263 purposes. On these facts, the revisionary jurisdiction was held unsustainable because the twin statutory conditions were not satisfied.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 by holding that the assessment order allowing deduction under section 80P was erroneous and prejudicial to the interests of the Revenue.

Analysis: The assessment records showed that the claim for deduction under section 80P was before the Assessing Officer during scrutiny, including the computation accompanying the return and the assessee's reply in the assessment proceedings. The order-sheet entry recording selection for scrutiny on the basis that deduction under Chapter VI-A exceeded the monetary limit also supported the fact that the claim was on record. The assessment could not, therefore, be treated as erroneous merely because the return form did not separately reflect the claim. The materials also showed that the Assessing Officer had examined the claim and accepted it after considering the explanation, and a brief assessment order does not by itself establish lack of enquiry for section 263 purposes.

Conclusion: The invocation of section 263 was not sustainable, as the twin requirements of an erroneous order and prejudice to the Revenue were not satisfied.

Ratio Decidendi: Jurisdiction under section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue, and an assessment order cannot be revised merely because its discussion is brief if the relevant claim was actually before the Assessing Officer and was examined.

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