Section 263 revision requires demonstrable assessment error; completed inquiries cannot be replaced by a demand for further verification.

Revision under Section 263 requires an assessment to be both erroneous and prejudicial to Revenue; where the Assessing Officer has made inquiries, considered supporting records and adopted a plausible view, revision cannot be used to require further inquiry or substitute the revisionary view. The notes apply this principle to share capital gains, housing-loan interest, unsecured loans and household expenses. Conversely, failure to examine deemed rental income may render an assessment erroneous and prejudicial. They also state that a revision order issued against a deceased assessee after notice of death, rather than against a legal representative, is void because proceedings against a non-existent person are a nullity.

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Issues: (i) Whether revision under Section 263 in respect of exempt long-term capital gains from sale of shares was sustainable; (ii) Whether revision under Section 263 concerning deduction of housing-loan interest for the J Cliff property was sustainable; (iii) Whether revision under Section 263 concerning deemed rental income from residential properties was sustainable; (iv) Whether revision under Section 263 concerning unsecured loans and household expenses was sustainable; (v) Whether a revision order passed against an assessee after her death, despite prior intimation to the Principal Commissioner, was valid.

Issue (i): Whether revision under Section 263 in respect of exempt long-term capital gains from sale of shares was sustainable.

Analysis: The assessment was selected specifically for verification of share transactions. The assessment record showed inquiries under Section 142(1), production of purchase and sale evidence, demat records, banking-channel payments and receipts, stock-exchange transactions, payment of securities transaction tax, and a holding period of about three years. The purchases had also been accepted in earlier years. The assessment therefore reflected inquiry and adoption of a plausible view; the revisionary authority could not substitute its view merely because it considered further inquiry appropriate.

Conclusion: The revision on the long-term capital-gain issue was unsustainable and was quashed in favour of the assessee.

Issue (ii): Whether revision under Section 263 concerning deduction of housing-loan interest for the J Cliff property was sustainable.

Analysis: The property was disclosed as a booking advance because only an agreement for sale had been executed and the conveyance had not been registered. This explanation and the relevant ledger material had been furnished during assessment and revision proceedings. The assessment record thus demonstrated that the issue had been examined by the Assessing Officer.

Conclusion: The revision concerning the housing-loan-interest claim was unsustainable and was decided in favour of the assessee.

Issue (iii): Whether revision under Section 263 concerning deemed rental income from residential properties was sustainable.

Analysis: The assessee accepted that the Assessing Officer had not examined the issue of deemed rental income from the relevant residential properties. Absence of inquiry on this issue rendered the assessment erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revision concerning deemed rental income was sustained against the assessee.

Issue (iv): Whether revision under Section 263 concerning unsecured loans and household expenses was sustainable.

Analysis: The Assessing Officer had issued a specific inquiry regarding unsecured loans, and the assessee had furnished loan details, ledger accounts and supporting materials. The explanation concerning household expenditure, namely withdrawals made by the assessee's father, was also available on record. The assessment could not consequently be characterised as erroneous and prejudicial for want of inquiry on these matters.

Conclusion: The revision concerning unsecured loans and household expenses was unsustainable and was decided in favour of the assessee.

Issue (v): Whether a revision order passed against an assessee after her death, despite prior intimation to the Principal Commissioner, was valid.

Analysis: The assessee had died before the revision order was made, and the Principal Commissioner had been informed of the death during the revision proceedings. Nevertheless, the revision order was issued in the name of the deceased assessee rather than against the legal representative. Proceedings initiated or concluded against a non-existent person are a nullity.

Conclusion: The revision order passed against the deceased assessee was void and was quashed in favour of the assessee.

Final Conclusion: The revisionary intervention survives only in relation to the unexamined deemed-rental-income issue; the remaining substantive revision grounds, including the order issued against the deceased assessee, fail.

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