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Issues: (i) whether revision under section 263 could be sustained when it was initiated on the basis of a field proposal and the assessment was alleged to have been framed without due enquiry; (ii) whether pendency of the assessee's appeal against the assessment barred revision under section 263; (iii) whether the direction to proceed under section 144 caused prejudice to the assessee.
Issue (i): whether revision under section 263 could be sustained when it was initiated on the basis of a field proposal and the assessment was alleged to have been framed without due enquiry.
Analysis: The statutory power under section 263 was treated as available where the assessment order was passed without proper verification and enquiry. The mere fact that the revision proposal originated from field authorities did not, by itself, vitiate the exercise of jurisdiction, since there was no statutory bar against such initiation and the record did not show absence of independent consideration by the Principal Commissioner. On the merits, the assessment was found to have been completed without adequate enquiry into the disputed claims and credits, which brought the case within the deeming fiction of error and prejudice under Explanation 2 to section 263.
Conclusion: The revision on this ground was upheld against the assessee.
Issue (ii): whether pendency of the assessee's appeal against the assessment barred revision under section 263.
Analysis: The bar under Explanation 1(c) to section 263 was held to apply only to matters that had been considered and decided in appeal. Since there was no material to show that the appellate authority had already adjudicated the relevant grievance, the pendency of the appeal did not oust the revisional power.
Conclusion: The revision was not barred by the pending appeal and this contention failed.
Issue (iii): whether the direction to proceed under section 144 caused prejudice to the assessee.
Analysis: The revision order was not found to inflict any actionable prejudice, because the assessment itself had been made on a best-judgment basis after the assessee failed to substantiate the claims and credits with cogent material. The direction was therefore viewed as consistent with the factual matrix already recorded in assessment.
Conclusion: No prejudice was found and this contention also failed.
Final Conclusion: The revisional order was sustained in full and the assessee's challenge was rejected.
Ratio Decidendi: An assessment made without proper enquiry or verification is erroneous and prejudicial to the interests of the Revenue, and revision under section 263 is not barred unless the specific matter has already been considered and decided in appeal.
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