Revision under section 263 cannot rest on a mere desire for deeper enquiry when the assessment was made after due investigation.

Revision under section 263 was held unjustified because the assessment record showed that the Assessing Officer had made enquiry, issued questionnaires, examined seized papers, recorded statements and sought directions under section 144A. The Commissioner did not show that the assessment view was unsustainable in law or that relevant material had been ignored; the revision merely sought a further enquiry into loose papers and alleged illegal gratification. The distinction between no enquiry and inadequate enquiry was treated as material, and where a plausible view has been taken after enquiry, section 263 cannot be used to substitute another view or conduct a roving exercise. The assessment order was therefore not shown to be both erroneous and prejudicial to revenue.

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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified on the ground that the Assessing Officer had not made adequate enquiry into the seized loose papers and alleged illegal gratification, and whether the assessment order could be treated as erroneous and prejudicial to the interests of the revenue.

Analysis: The assessment records showed that the Assessing Officer had issued a detailed questionnaire, called for explanations and bank details, examined the seized material, recorded statements, and sought guidance under section 144A of the Income-tax Act, 1961. The seized papers were treated by the Assessing Officer as insufficient by themselves to establish any addition in the absence of corroborative material. In revision, the Commissioner did not establish that the assessment view was unsustainable in law or that relevant material had been ignored; instead, the direction was essentially for a fresh enquiry. The distinction between lack of enquiry and inadequate enquiry is material: where enquiry has in fact been made and a plausible view is taken, section 263 cannot be invoked merely because another view is possible. The Tribunal also noted that the same loose papers had already been considered in connected proceedings and that the revision amounted to a roving or fishing exercise.

Conclusion: Revision under section 263 was not sustainable; the assessment order was not shown to be both erroneous and prejudicial to the interests of the revenue.

Final Conclusion: The assessee succeeded because the original assessment was found to be the product of due enquiry and a permissible view, and the Commissioner's attempt to substitute a further enquiry could not justify revision.

Ratio Decidendi: Section 263 can be exercised only where the assessment order is both erroneous and prejudicial to the interests of the revenue, and where enquiry has been made, the Commissioner cannot invoke revision merely to direct a fresh or deeper enquiry unless he first establishes that the view taken by the Assessing Officer is unsustainable in law.

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