Section 263 revision fails where the Assessing Officer conducted enquiries and applied mind to the material before assessment.

Revision under section 263 was unsustainable because the Assessing Officer had issued queries, sought details and explanations, and examined the material before accepting the return. Explanation 2 to section 263 permits revision for lack of enquiry or verification on a material issue, but that prerequisite was not established here. The revisionary order relied on broad assertions of inadequate enquiry without identifying specific lapses with precision, so the assessment could not be set aside for de novo examination on a blanket basis. The ITAT therefore quashed the revisionary order.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was sustainable on the ground that the assessment was passed without requisite enquiry and was therefore erroneous and prejudicial to the interests of the Revenue.

Analysis: Explanation 2 to section 263 permits revision where the assessment order is passed without making enquiries or verification that should have been made. The record showed that the Assessing Officer had issued multiple queries on the impugned issues, called for details and explanations, and examined the material produced by the assessee before accepting the returned income. The revisionary order did not identify specific lapses with precision and instead proceeded on a broad assertion that enquiries were inadequate or absent on several heads. On these facts, the prerequisite of "no enquiry" was not established, and the material on record did not justify setting aside the assessment for de novo examination on a blanket basis.

Conclusion: The invocation of section 263 was not valid and the revisionary order was liable to be quashed.

Ratio Decidendi: Revision under section 263 on the ground of lack of enquiry is permissible only when the assessment order is ibly made without enquiry or verification on a material issue; where the Assessing Officer has raised queries, considered replies, and applied mind, section 263 cannot be sustained merely because the Commissioner views the enquiry as inadequate.

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