Revision under section 263 fails where the Assessing Officer made enquiries and the order was not passed without enquiry.

Section 263 revision was invalid because the Assessing Officer had conducted enquiry into sundry creditors, called for details under section 142(1), issued selected notices under section 133(6), and received supporting replies. On these facts, the assessment could not be treated as an order passed without enquiry; at most, the Commissioner viewed the enquiry as inadequate, which is not enough for revision unless the order is demonstrably erroneous and prejudicial to the Revenue. The proposed section 40A(3) point also fell outside the show-cause notice, further undermining the revisionary action. The assessee therefore succeeded.

---

---

Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was valid when the Assessing Officer had made enquiries regarding sundry creditors, called for details under section 142(1), issued notices under section 133(6) in selected cases, and the show-cause notice did not refer to alleged violation of section 40A(3).

Analysis: The record showed that the Assessing Officer had sought details of creditors and other relevant particulars during assessment proceedings, and the assessee had furnished supporting material. Notices under section 133(6) had also been issued to certain creditors and replies were received. On these facts, the assessment could not be characterised as one passed without enquiry. The distinction between absence of enquiry and inadequate enquiry was material: section 263 could be invoked only where there was no enquiry at all or the order was demonstrably erroneous and prejudicial to the Revenue, not merely because the Commissioner considered the enquiry insufficient. The proposed issue relating to section 40A(3) was also outside the scope of the show-cause notice, which further weakened the revisionary action.

Conclusion: The revision under section 263 was invalid. The order of the Assessing Officer could not be set aside on the basis of alleged inadequate enquiry, and the assessee succeeded.

Ratio Decidendi: Section 263 cannot be used to substitute the Commissioner's view for that of the Assessing Officer where some enquiry has been made; only a case of complete absence of enquiry or a demonstrably erroneous and prejudicial order justifies revision.

---