Section 263 revision upheld for lack of enquiry into impounded material and survey disclosure in assessment proceedings.

Section 263 revision was upheld where the assessment under section 143(3) followed a survey under section 133A but the Assessing Officer had not properly examined the impounded diary or verified the cash receipts and survey disclosure reflected in the seized material. The Tribunal treated the lack of enquiry into relevant impounded documents, including the difference between the amount disclosed and the amount appearing from the seized material, as sufficient to make the assessment order erroneous and prejudicial to the interests of the Revenue. It also noted that the assessee's own working on the impounded document was prepared only before the Tribunal, supporting the inference that necessary verification had not been done at assessment stage.

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Issues: Whether the Principal Commissioner was justified in invoking revisional jurisdiction under section 263 on the ground that the assessment order was passed without proper enquiry into the impounded material and the survey disclosure, rendering the order erroneous and prejudicial to the interests of the Revenue.

Analysis: The assessment was framed under section 143(3) after a survey under section 133A in which additional income had been disclosed. The revisional authority found that the Assessing Officer had not examined the impounded diary and had not verified the cash receipts reflected therein, including the difference between the amount disclosed and the amount appearing from the seized material. The Tribunal noted that the assessee's paper book itself showed that the working based on the impounded document was prepared for the first time before the Tribunal, supporting the inference that the Assessing Officer had not undertaken the necessary verification. It accepted that failure to conduct proper enquiry, especially where relevant seized material exists, attracts section 263 and satisfies the statutory requirement of an order being erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision under section 263 was valid and the assessee's challenge failed.

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