Section 263 revision sustained where inadequate enquiry left agricultural income claims and lease documents unverified.

An assessment may be revised under section 263 where a material claim is not properly verified and the record shows absence of adequate enquiry. Here, the agricultural income claim was supported by unregistered, self-serving lease documents, with no independent Revenue record showing ownership or leasehold rights, and enquiries with commission agents did not cure the failure to verify the source and genuineness of the income. The presence of some discussion on unrelated matters did not affect the core finding that the assessment was made without proper enquiry. The revisionary order directing fresh examination was therefore sustained.

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Issues: Whether the Principal Commissioner was justified in revising the assessment under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had made no adequate enquiry into the assessee's agricultural income claim and related supporting documents.

Analysis: The assessment record showed that the scrutiny assessment had been framed in a limited scrutiny concerning larger agricultural income, but the assessee's claimed leasehold rights in agricultural land had not been independently verified. The lease documents were self-serving and unregistered, and there was no Revenue record showing the assessee as the owner or leaseholder of the lands. In these circumstances, the alleged enquiries with commission agents did not cure the fundamental failure to verify the source and genuineness of the agricultural income. The presence of some discussion in the revision order about Chapter VIA did not vitiate the revision, because the core finding remained that the assessment order had been passed without adequate enquiry. The reliance on the requirement of the Commissioner to conduct further enquiry did not assist the assessee where the record itself disclosed a case of no enquiry on a material issue.

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

Final Conclusion: The assessment was held to be erroneous and prejudicial to the interests of the Revenue, and the revisionary order directing fresh examination was sustained.

Ratio Decidendi: An assessment order is amenable to revision under section 263 where a material issue is left unverified and the record shows absence of proper enquiry, since such non-enquiry renders the order erroneous and prejudicial to the interests of the Revenue.

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