Section 263 revision fails where the Assessing Officer made enquiries and accepted the assessee's evidence on capital gains and land sale.

Revision under section 263 is permissible only where the assessment order is both erroneous and prejudicial to the interests of the Revenue. The assessee had produced books of account, balance sheets, property and sale documents, possession records, bank statements and other supporting material, and the Assessing Officer made enquiries before accepting the claims relating to capital gains, agricultural land and cash credit. The Commissioner merely substituted a different view without showing lack of enquiry or a factual error in the assessments. The revisionary orders were quashed and the revision was held unsustainable.

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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified where the Assessing Officer had examined the relevant material and accepted the assessee's claim relating to capital gains and sale of agricultural land.

Analysis: Revision under section 263 is permissible only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. The record showed that the assessee had produced the relevant books of account, balance sheets, property papers, sale documents, possession documents, bank records and other supporting material during the assessment proceedings. The Assessing Officer had made enquiries and completed the assessments after examining those materials. On the facts, the Commissioner substituted a different view on the treatment of the property, capital gains and alleged cash credit, but did not demonstrate that the assessments were passed without enquiry or on an incorrect factual premise warranting revision.

Conclusion: The invocation of section 263 was not sustainable. The Commissioner lacked jurisdiction to revise the assessments, and the revisionary orders were quashed in favour of the assessee.

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