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Issues: (i) Whether the revisionary jurisdiction under section 263 could be assumed where the Assessing Officer had made specific enquiries into the cash deposits and accepted the assessee's explanation. (ii) Whether mere inadequacy of enquiry, without a finding of lack of enquiry or demonstrable error in the assessment order, justified interference under section 263.
Issue (i): Whether the revisionary jurisdiction under section 263 could be assumed where the Assessing Officer had made specific enquiries into the cash deposits and accepted the assessee's explanation.
Analysis: The assessment record showed issuance of notices, call for explanations and supporting material, and consideration of the assessee's replies regarding the source of cash deposits. The assessment order was thus passed after enquiry on the very issue on which revision was later sought. Revision under section 263 requires the twin conditions of error and prejudice to the interests of the Revenue. Where the Assessing Officer has applied his mind to the issue and taken a plausible view, the order cannot be revised merely because the Commissioner prefers a different view.
Conclusion: The assumption of jurisdiction under section 263 was not justified on the ground of absence of enquiry.
Issue (ii): Whether mere inadequacy of enquiry, without a finding of lack of enquiry or demonstrable error in the assessment order, justified interference under section 263.
Analysis: The material on record showed that the Assessing Officer had carried out enquiries, and the grievance of the revisionary authority was at best that the enquiry was insufficient. In law, inadequate enquiry is not by itself enough to invoke section 263 unless the order is shown to be erroneous and prejudicial to the interests of the Revenue on a reasoned basis. The revisional authority must itself record clear findings establishing error; it cannot direct a fresh enquiry merely because it considers the assessment incomplete.
Conclusion: Inadequacy of enquiry alone did not warrant revision under section 263.
Final Conclusion: The revisional order was unsustainable and the assessment framed by the Assessing Officer was restored, leaving the assessee successful in the appeal.
Ratio Decidendi: Section 263 cannot be invoked unless the Commissioner records a reasoned finding that the assessment order is both erroneous and prejudicial to the interests of the Revenue; where the Assessing Officer has made enquiries and taken a plausible view, revision is not justified merely because the enquiry is perceived as inadequate.
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