Section 263 revision upheld where notice defect was procedural and inquiry on agricultural income was not made in limited scrutiny.

Revision proceedings were not invalid merely because the section 263 notice was issued in the name of a deceased assessee, since the legal representative was aware of the proceedings, participated in them, and no prejudice was shown; the defect was treated as procedural rather than jurisdictional. A revision under section 263 was also justified where a limited-scrutiny assessment failed to examine a material claim of agricultural income linked to cash deposits, because lack of inquiry on an essential issue permits revisional interference, including under Explanation 2 to section 263(1). The revisional order was therefore upheld and the assessment was set aside for fresh consideration.

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Issues: (i) Whether revision proceedings under section 263 were invalid because the notice was issued in the name of a deceased assessee instead of the legal representative; (ii) Whether revision under section 263 could be sustained where the original assessment, selected for limited scrutiny, had failed to examine the assessee's claim of agricultural income.

Issue (i): Whether revision proceedings under section 263 were invalid because the notice was issued in the name of a deceased assessee instead of the legal representative.

Analysis: The defect in the notice did not go to jurisdiction. The legal representative had been informed of the proceedings and participated in them, and the statutory scheme treated the legal representative as the assessee for purposes of continuation of proceedings. The absence of a fresh notice in the legal representative's name was treated as a procedural defect, not a nullity, and the provisions dealing with defects in name and procedure cured the irregularity where no prejudice was shown.

Conclusion: The revision proceedings were not invalid on this ground and the objection failed.

Issue (ii): Whether revision under section 263 could be sustained where the original assessment, selected for limited scrutiny, had failed to examine the assessee's claim of agricultural income.

Analysis: The claim of agricultural income was relevant to the scrutiny selection because it formed part of the source of cash deposits, and the Assessing Officer had failed to make the necessary inquiry or verification. Lack of inquiry is a recognised ground for revision under section 263, and the revisional authority could direct de novo examination of the issue. The matter was therefore properly covered by the revisional power, including the conditions in Explanation 2 to section 263(1).

Conclusion: The revision order was valid on this ground and the objection failed.

Final Conclusion: The revisional order was upheld in full and the assessee's challenge to the setting aside of the assessment for fresh consideration was rejected.

Ratio Decidendi: A notice issued in the name of a deceased assessee does not invalidate revision proceedings where the legal representative participates and no prejudice is shown, and failure of inquiry on a material issue in a limited scrutiny assessment can justify revision under section 263.

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