Revision under section 263 upheld where material receipts were left unexamined and taxability was not consciously decided.

Section 263 revision is attracted where an assessment order leaves a material issue affecting taxability unexamined and no conscious decision is shown on that point. Here, the assessment order did not discuss the receipts described as supply affording charges and electrification charges, and the record showed no specific inquiry by the Assessing Officer or reply by the assessee on those receipts. The order was therefore treated as one passed without proper inquiry and without application of mind to a relevant tax matter, making it erroneous and prejudicial to the interests of the revenue. The Commissioner's revision was upheld.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 where the assessment order had not examined the material receipts and no conscious decision had been taken on their taxability.

Analysis: The assessment order under section 143(3) did not discuss the receipts shown as supply affording charges and electrification charges. The record also did not show any specific query by the Assessing Officer or any reply by the assessee on those receipts. On this basis, the order was treated as one passed without proper inquiry and without application of mind to a material issue affecting taxability. An assessment order that omits examination of a relevant matter can be regarded as erroneous and prejudicial to the interests of the revenue, thereby attracting revision under section 263.

Conclusion: The revision under section 263 was valid and the Commissioner's order was upheld in favour of the Revenue.

Ratio Decidendi: Section 263 can be invoked when a material issue affecting taxability is left unexamined in the assessment order and the Assessing Officer has not taken a conscious decision on it.

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