Revision under section 263 requires actual error and prejudice to revenue, not suspicion or fishing enquiries.

Section 263 revision was held unsustainable where the assessment had been completed after scrutiny, notices under section 143(2) were issued, and the record showed application of mind to a private family trust with specified beneficiaries. The Tribunal held that revision requires an actual error of fact or law causing prejudice to revenue, not suspicion, conjecture, or a desire for further fishing enquiries. It further held that the absence of extensive notes, tick-marks, or additional enquiries by itself does not establish lack of enquiry where the material on record reasonably supports the assessment. The Commissioner's revision was set aside and the assessment order restored.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessment was erroneous and prejudicial to the interests of revenue for want of proper enquiry.

Analysis: The assessment records showed that notices under section 143(2) had been issued, the case was discussed, and the returned income was accepted after scrutiny in the context of a private family trust with specified beneficiaries. The Commissioner's view rested largely on suspicion, absence of detailed notes, and an expectation of further fishing enquiries. The Tribunal held that section 263 requires an actual error of fact or law causing prejudice to revenue, not a conclusion based on possibilities or guesswork. It further held that the mere absence of extensive comments, tick-marks, or additional enquiries did not by itself establish lack of application of mind where the material already on record reasonably supported the assessment. The trust deed and surrounding facts did not justify the inference that the trust was invalid, fictitious, or hit by the rule against perpetuity.

Conclusion: The revision under section 263 was not sustainable and the order of the Commissioner was liable to be cancelled.

Final Conclusion: The assessment order was restored by setting aside the Commissioner's revision, and the assessee succeeded in the appeal.

Ratio Decidendi: Section 263 cannot be invoked on mere suspicion, conjecture, or a desire for further fishing enquiries; revision lies only where the assessment order is shown to be actually erroneous and prejudicial to the interests of revenue.

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