Revision under section 263 fails where the Assessing Officer already examined the bad-debt claim and made proper enquiries.

The Principal Commissioner cannot invoke revision under section 263 where the Assessing Officer has already examined the limited-scrutiny issue and made enquiries on the assessee's money-lending activity and bad-debt claim. The assessment record showed that the Assessing Officer considered the bad-debt claim, summoned debtors, recorded statements, and obtained written confirmations from those unable to appear, demonstrating application of mind and proper enquiry on the very matter later sought to be revised. As the revision rested on material already examined in assessment, the Tribunal held that the assessment could not be treated as erroneous and prejudicial to the interests of the Revenue on that ground, and the revision order was quashed.

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Issues: Whether the Principal Commissioner could invoke revisionary jurisdiction under section 263 when the Assessing Officer had already examined the limited-scrutiny issue and made enquiries on the assessee's money-lending activity and bad-debt claim.

Analysis: The assessment was selected for limited scrutiny to verify large business loss set off against other heads of income. The assessment order itself recorded that the Assessing Officer examined the claim of bad debts, summoned debtors, recorded statements, and obtained confirmations in writing from those who could not appear. On these facts, the Tribunal held that the Assessing Officer had applied his mind and made the requisite enquiry on the very issue later reopened in revision. Since the revision was based on the same material already examined in assessment, the jurisdiction under section 263 could not be validly exercised on the ground that the assessment was erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision order was unsustainable and was quashed, with the appeal allowed in favour of the assessee.

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