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Issues: (i) Whether the Principal Commissioner of Income Tax validly invoked Explanation 2(a) to section 263 to hold the assessment order erroneous and prejudicial to the interest of the Revenue by alleging inadequate inquiries by the Assessing Officer in relation to unsecured loans.
Analysis: The Assessing Officer issued notices under section 142(1) and sought party-wise details and documents regarding loans; the assessee furnished lender identities, addresses, confirmations, bank statements and financial particulars which were considered by the Assessing Officer who accepted the genuineness and creditworthiness of the lenders. Revision under section 263 requires the revisional authority to identify material on record showing an order is erroneous and prejudicial to revenue; mere possibility of a different view or re-investigation does not justify exercise of revisional power. Where the Assessing Officer has made inquiries and formed a satisfaction based on the material produced, re-examination by the revisional authority without pointing to specific error or additional material amounts to a mere change of opinion rather than a valid revision.
Conclusion: The invocation of Explanation 2(a) to section 263 was not justified as the Assessing Officer had made adequate inquiries and formed a view accepting the genuineness and creditworthiness of the loans; the revision order is quashed and the appeal is allowed in favour of the assessee.
Ratio Decidendi: Revisional power under section 263 cannot be exercised merely to re-open or re-investigate matters where the Assessing Officer has made adequate inquiry and formed a view on the basis of material on record; the revisional authority must identify specific material or error demonstrating that the order is erroneous and prejudicial to the interest of the Revenue.
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