Section 263 revision requires a specific erroneous assessment and revenue prejudice, not merely a preference for further inquiry.

Revision under Section 263 requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer sought and examined details on related-party payments, GST-exempt services, suppliers, tax deductions, financial statements, returns, invoices and supporting records, the record demonstrated inquiry and application of mind. A revisionary authority cannot invoke Section 263 merely because it considers the inquiry inadequate, prefers further verification, or adopts another possible view without identifying a specific error and resulting prejudice. The revisionary order was quashed.

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Issues: Whether the assessment order was erroneous and prejudicial to the interests of the Revenue so as to justify revision under Section 263 of the Income-tax Act, 1961.

Analysis: The Assessing Officer had specifically called for details concerning payments to related parties, expenses towards services exempt from GST, supplier information, tax deductions, financial statements, returns, invoices and supporting records. The assessee furnished the requested details during the assessment and revision proceedings, and the Assessing Officer accepted the returned income. The record therefore disclosed inquiry and application of mind, even if the Principal Commissioner considered the inquiry inadequate or desired further verification. Revision under Section 263 requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. The provision does not permit revision merely because the Commissioner prefers additional inquiry, a different manner of inquiry, or another possible view, without identifying a specific error and resulting prejudice.

Conclusion: The assessment order was not shown to be erroneous and prejudicial to the interests of the Revenue. The revisionary order under Section 263 was quashed.

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