Section 263 revision fails where inquiry was made and third-party data discrepancies were not independently verified.

Section 263 revision could not be sustained where the assessment record showed inquiries under sections 142(1) and 133(6), including notices to parties and replies received. The absence of a detailed discussion in the assessment order did not by itself prove lack of enquiry. Reliance on GST data from the Insight Portal was insufficient because no categorical finding was recorded that the assessee had incurred unexplained expenditure from undisclosed sources, and the ledger accounts and bank statements were not shown to be false or fabricated. A third-party data discrepancy, without reconciliation or independent verification, did not establish that the assessment order was both erroneous and prejudicial to the Revenue.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was valid when the assessment record showed inquiries under sections 142(1) and 133(6), and whether the conditions that the assessment order be both erroneous and prejudicial to the interests of the Revenue were satisfied.

Analysis: The record showed that the Assessing Officer had called for details, issued notices to parties, and received replies from several of them. The absence of an elaborate discussion in the assessment order did not establish absence of inquiry. The revision was founded mainly on GST data reflected in the Insight Portal, but no categorical finding was recorded that the assessee had incurred unexplained expenditure out of undisclosed sources. The materials furnished in revision, including ledger accounts and bank statements, were not shown to be false or fabricated, and discrepancy in third-party data without proper reconciliation or independent verification was insufficient to treat the assessment order as erroneous.

Conclusion: The twin conditions for invoking section 263 were not satisfied. The revisionary order was quashed and the assessee succeeded.

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