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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was validly invoked on the ground that the Assessing Officer had not made proper enquiry into the assessee's claim of loss from sale of the three scrips.
Analysis: The revisional jurisdiction under section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. An order may be treated as erroneous where it is passed without enquiry or without application of mind, but where the Assessing Officer has raised specific queries, called for supporting documents, and examined the claim before accepting it, the case is not one of no-enquiry. The record showed that the Assessing Officer issued notices, sought detailed particulars of purchase, sale, quantity, rates, contract notes, demat records and bank statements, and thereafter accepted the loss claim. In these circumstances, the assessee's claim could not be branded as accepted without enquiry merely because the Principal Commissioner held a different view. The Principal Commissioner also did not bring cogent material to establish that the shares were penny stocks so as to demonstrate that the Assessing Officer's view was unsustainable in law.
Conclusion: The invocation of section 263 was invalid, as the precondition of a demonstrably erroneous and prejudicial assessment order was not satisfied. The revisional order was therefore without jurisdiction and could not stand.
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