Revisional jurisdiction barred where the Assessing Officer made enquiries and adopted a possible view on the deduction claim.

Revisional jurisdiction under section 263 cannot be used where the Assessing Officer has made enquiries, examined the deduction claim, and adopted one of the possible views. A mere allegation of inadequate inquiry is insufficient; only a complete absence of inquiry can justify revision when the assessment is both erroneous and prejudicial to the interests of the Revenue. On the facts, the assessee had furnished supporting documents and the assessment was made after examination of the section 54 claim, so the revisional order amounted to a re-appraisal of the same material. The revision was therefore held unsustainable and the assessment was restored.

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Issues: Whether the Principal Commissioner was justified in invoking revisional jurisdiction under section 263 of the Income-tax Act, 1961, on the ground that the Assessing Officer had not properly examined the assessee's claim for deduction under section 54.

Analysis: The revisional 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 made enquiries, called for documents, examined the claim, and adopted one of the possible views, the order cannot be revised merely because the Principal Commissioner considers the enquiry to be insufficient or wants a fuller investigation. The distinction between lack of inquiry and inadequate inquiry is material; only a complete absence of inquiry can justify revision on this ground. On the facts, the assessee had furnished supporting documents and the Assessing Officer had examined the claim before making the assessment, so the revisional order proceeded on a re-appraisal of the same material.

Conclusion: The invocation of section 263 was not sustainable, as the assessment order was not shown to be erroneous in the requisite sense or prejudicial to the interests of the Revenue.

Final Conclusion: The revisional order was set aside and the assessment framed by the Assessing Officer was restored, leaving the assessee's claim undisturbed.

Ratio Decidendi: Revision under section 263 is impermissible where the Assessing Officer has made enquiries and adopted a possible view, because inadequate inquiry does not amount to an erroneous order unless the twin statutory conditions are satisfied.

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