Section 263 revision fails where inadequate inquiry is only suspected and no independent finding of error and prejudice is recorded.

Section 263 revision requires the Principal Commissioner to independently verify and record how the assessment order is both erroneous and prejudicial to revenue. Mere suspicion that the Assessing Officer made an inadequate or casual inquiry is insufficient, especially where the assessee had already furnished relevant material during assessment and revision proceedings. Because no clear independent findings were recorded and no demonstrable error or prejudice was established, the revisional order could not be sustained and the assessment revision was quashed.

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Issues: Whether the Principal Commissioner validly invoked revisionary jurisdiction under section 263 by holding the assessment order to be erroneous and prejudicial to the interest of revenue on the ground of alleged lack of inquiry.

Analysis: The assessee had placed the relevant details before the Assessing Officer during the original assessment and again during the revision proceedings. The Principal Commissioner, while noticing alleged discrepancies and other issues, did not undertake independent verification of the material already furnished and did not record clear findings showing how the assessment order was erroneous and prejudicial to the revenue. The order proceeded on suspicion that the inquiry was casual or merely a semblance of inquiry, but suspicion by itself was insufficient to sustain revision. Revision under section 263 requires a demonstrable error and prejudice, supported by independent examination, and cannot rest on a mere view that deeper inquiry ought to have been made.

Conclusion: The invocation of section 263 was unjustified and the revisional order could not be sustained.

Final Conclusion: The assessment revision was quashed and the assessee's challenge succeeded.

Ratio Decidendi: A revision under section 263 cannot be sustained unless the revisional authority itself identifies and records, on independent verification, that the assessment order is both erroneous and prejudicial to the interest of revenue; a mere allegation of inadequate inquiry or suspicion is insufficient.

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