Section 263 revision requires an erroneous and prejudicial order; assessment after due enquiry cannot be revised for deeper investigation.

Revision under section 263 of the Income-tax Act was held unjustified where the Assessing Officer had called for details, examined supporting material, and accepted share application money after enquiry. The revisional power applies only if the assessment order is both erroneous and prejudicial to the interests of the Revenue, and it cannot be used merely because the Commissioner prefers deeper enquiry or a different view. The revisional order was set aside and the assessment order restored.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 to set aside the assessment order on the ground of inadequate enquiry into share application money.

Analysis: The assessment records showed that the Assessing Officer had called for details, examined the supporting material, and made enquiries before accepting the share application money as genuine. The prerequisite for revision under section 263 is that the assessment order must be both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer has applied his mind and taken a view after enquiry, the order cannot be revised merely because the Commissioner considers further enquiry desirable or seeks a different conclusion.

Conclusion: The invocation of section 263 was unjustified and the revisional order was set aside.

Final Conclusion: The assessment order was restored and the appeals were allowed.

Ratio Decidendi: Revision under section 263 is permissible only when the assessment order is simultaneously erroneous and prejudicial to the interests of the Revenue, and an order passed after due enquiry and application of mind cannot be revised merely for want of deeper or additional investigation.

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