Revision under section 263 sustained where reassessment lacked enquiry on the very issue that triggered reopening.

Where reassessment was initiated on the alleged taxability of notional annual letting value on unsold flats, the Assessing Officer was required to conduct a focused enquiry on that specific issue. A reassessment order that merely recites issuance of notices and receipt of replies, without discussion, verification, analysis, or a finding on the escapement point, reflects lack of enquiry rather than inadequate enquiry. In such circumstances, Explanation 2(a) to section 263 treats the order as erroneous and prejudicial to the interests of the Revenue, so the Principal Commissioner may validly invoke revisionary jurisdiction. The revisional order was therefore sustained and the assessee's challenge failed.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 where the reassessment order did not examine the very issue on which reopening had been made.

Analysis: The reopening was specifically founded on the alleged taxability of notional annual letting value on unsold flats, and the Assessing Officer was required to undertake a focused enquiry on that issue. The reassessment order contained only a mechanical narration of notices issued and replies received, but no discussion, verification, analysis, or finding on the escapement issue. Explanation 2(a) to section 263 deems an order erroneous and prejudicial where enquiries or verification that ought to have been made are not undertaken. On these facts, the record did not show conscious application of mind by the Assessing Officer, and the case was one of lack of enquiry rather than mere inadequate enquiry.

Conclusion: The revision under section 263 was validly invoked and the challenge to the revisional order failed.

Final Conclusion: The assessment order was held to be erroneous and prejudicial to the interests of the Revenue for want of proper enquiry into the reopened issue, and the assessee's appeal was rejected.

Ratio Decidendi: An assessment order passed without making the enquiry that the reopened issue demonstrably required is erroneous and prejudicial to the interests of the revenue, warranting revision under section 263.

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