Revisional jurisdiction requires an erroneous and prejudicial assessment; mere disagreement over enquiry depth cannot justify revision.

Revisionary jurisdiction under section 263 requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer issued questionnaires, examined the materials, considered the assessee's replies and adopted one permissible view, the Principal Commissioner cannot revise the assessment merely because a deeper or more elaborate enquiry was preferred. The record did not show absence of enquiry, identify any legally necessary further enquiry, or demonstrate that the assessment view was unsustainable in law. On that basis, the revision was held unsustainable and was quashed.

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Issues: Whether the Principal Commissioner was justified in revising the assessment under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had made insufficient enquiry into the unsecured loans, cash in hand, project income, satisfaction note under section 153C, and the assessee's declaration under the Income Declaration Scheme.

Analysis: The revisionary power under section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer has called for details, issued a questionnaire, examined the material, and taken one of the permissible views, the order cannot be revised merely because the Principal Commissioner considers that further enquiry ought to have been made or that a more elaborate order should have been passed. The record showed that the Assessing Officer had made enquiries, considered the assessee's replies and documents, and completed the assessment after obtaining the necessary approval. The Principal Commissioner did not establish absence of enquiry, specify what further enquiry was legally necessary, or show that the view adopted by the Assessing Officer was unsustainable in law. The order of revision thus rested on a disagreement with the depth of enquiry rather than on any demonstrable legal error causing prejudice to the Revenue.

Conclusion: The revision under section 263 was not sustainable and was quashed.

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