Section 263 revision fails where adequate inquiry was made into loan creditors and the Assessing Officer took a plausible view.

Section 263 revision is not warranted where the Assessing Officer has made adequate inquiry, examined loan creditors' identity, creditworthiness and genuineness, and taken a plausible view on the material furnished by the assessee. The record showed complete supporting documents, including confirmations, bank statements, financial statements and returns, and the revisional authority identified no specific defect or omission in that inquiry. On those facts, the attempt to characterise the case as one of inadequate inquiry failed, and the revisional order was quashed as unsustainable.

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Issues: Whether the revisional order under section 263 of the Income-tax Act, 1961 was validly invoked on the ground that the Assessing Officer had not made proper inquiry into the loans taken by the assessee and the creditworthiness and genuineness of the lenders.

Analysis: The assessee had furnished complete details of the loan creditors, including addresses, confirmations, bank statements, financial statements, ITRs and other supporting material in response to notices under section 142(1) of the Income-tax Act, 1961. The Assessing Officer examined the material, called for specific details in respect of each lender, and accepted the transactions after considering identity, creditworthiness and genuineness. The revisional authority did not point out any defect in the material already on record or any specific omission in the inquiry conducted by the Assessing Officer. In such circumstances, the distinction between lack of inquiry and inadequate inquiry became material, and the record showed that inquiry had in fact been made. A revision order cannot be sustained merely to direct a fresh inquiry where the assessment record already contains the relevant material and the Assessing Officer has taken a possible view.

Conclusion: The invocation of section 263 was held to be unsustainable and the revisional order was quashed.

Final Conclusion: The assessment revision was set aside, and the assessee succeeded on the principal ground challenging the revisional jurisdiction.

Ratio Decidendi: Section 263 cannot be invoked unless the revisional authority identifies a specific error in the assessment order that is both unsustainable on the record and prejudicial to the Revenue; where the Assessing Officer has made adequate inquiry and taken a plausible view on the material furnished, revision is not warranted.

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