Revision under section 263 requires error and prejudice; inadequate enquiry fails where the Assessing Officer made a plausible assessment.

Section 263 revision is permissible only when the assessment order is both erroneous and prejudicial to the interests of revenue; it cannot be invoked merely because the order is brief or another view is possible. Where the Assessing Officer has made enquiries, considered the material, and adopted a plausible view on the assessee's agricultural income claim under sections 2(1A) and 10(1), the revisional authority must still show actual prejudice to revenue. On the facts noted, that prejudice was not established, so the revision was stated to be unsustainable and the assessment restored.

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Issues: Whether the revision under section 263 of the Income-tax Act, 1961 was sustainable when the Assessing Officer had accepted the assessee's claim of agricultural income and exemption under section 10(1) after enquiry.

Analysis: The assessee was engaged in seed production through activities involving cultivation, supervision, processing and sale of seeds, and had claimed that the income was agricultural income falling within section 2(1A) and exempt under section 10(1). The Assessing Officer had allowed the claim, relying on the material placed before him and judicial support. The revisional authority invoked section 263 on the footing that the assessment was erroneous and prejudicial to the interests of revenue because the Assessing Officer had not made adequate enquiry. The record showed that enquiries had in fact been made and that the Assessing Officer had taken a plausible view on the nature of the activity. A revisional order cannot be sustained merely because the assessment order is brief or because a different view is possible. The revisional authority must also establish prejudice to the revenue, which was not demonstrated on the facts.

Conclusion: The revision under section 263 was not justified and the assessment order was restored in favour of the assessee.

Ratio Decidendi: Section 263 can be invoked only when the assessment order is both erroneous and prejudicial to the interests of revenue, and it cannot be revised merely for want of elaborate discussion if the Assessing Officer has made enquiries and adopted a plausible view.

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