Section 263 revision fails where assessment reflects enquiry and cash deposits were treated as business turnover.

Revision under section 263 of the Income-tax Act could not be sustained where the assessments had already treated the assessee's cash deposits as business turnover from livestock trading and taxed them on that basis. On those facts, the orders could not be characterised as passed without enquiry, and the jurisdictional requirement that the assessment be both erroneous and prejudicial to the Revenue was not met. The revisionary directions were therefore set aside and the assessee's appeals succeeded.

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Issues: (i) Whether revision under section 263 of the Income-tax Act, 1961 could be sustained on the ground of alleged lack of enquiry into the assessee's cash deposits.

Analysis: The assessments had already treated the assessee as engaged in livestock trading business and had characterised the cash deposits as business turnover, taxing them at a uniform rate of 8% for both assessment years. On those facts, the assessments could not be described as orders passed without enquiry. The precondition for exercise of revisionary jurisdiction under section 263, namely that the assessment order be erroneous and prejudicial to the interests of the Revenue, was therefore not satisfied.

Conclusion: The revisionary directions were unsustainable and were set aside in favour of the assessee.

Final Conclusion: The twin appeals succeeded and the section 263 revisions were reversed.

Ratio Decidendi: Revision under section 263 of the Income-tax Act, 1961 cannot be invoked where the assessment reflects due application of mind and the alleged grievance is only a different view on the treatment of the receipts, not a lack of enquiry making the order erroneous and prejudicial to the Revenue.

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