Revision jurisdiction found improper where the assessing officer had conducted requisite verification; assessment restored to returned income.

Whether the revisionary order setting aside a completed assessment was justified: the tribunal examined whether the assessing officer conducted requisite enquiries and verification after search-linked notices and completed assessment at returned income. Relying on the explanation to the revision provision, the revenue urged lack of verification; the record, however, shows specific queries, examination of bank and property documents and related-party loan details by the assessing officer, and no identification of an assessment error prejudicial to revenue. Consequently the revision order was quashed and the appeal allowed in favour of the assessee.

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Issues: (i) Whether the order passed by the Principal Commissioner of Income Tax under section 263 of the Income-tax Act, 1961 setting aside the assessment framed under section 143(3) is justified on the ground that the assessment was erroneous and prejudicial to the interest of revenue.

Analysis: Relevant provisions include Section 263 and Explanation 2(a) thereto and Section 143(3) of the Income-tax Act, 1961; proceedings arose after search under Section 132 and notice under Section 153C and inquiries under Section 142(1). The assessing officer had issued specific queries, received and examined the explanations and documents regarding bank accounts, source of investment in immovable property and related party loans, and completed assessment at returned income under Section 143(3). The Principal Commissioner relied on Explanation 2(a) to Section 263 to hold the assessment erroneous on the ground of alleged lack of verification; however, the material on record shows that requisite enquiries and verification were made by the assessing officer and no specific error in the assessment order prejudicial to revenue was identified by the Principal Commissioner.

Conclusion: The order under Section 263 setting aside the assessment is quashed and the appeal is allowed in favour of the assessee.

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