JUDGMENT Girish Chandra Gupta J.-The subject matter of challenge in this appeal is judgment and order dated June 24, 2011, by which Incometax Appellate Tribunal has set aside order passed by Commissioner in exercise of power under section 263 of Income-tax Act, 1961 (hereinafter referred to as "the Act"), on ground, inter alia, that powers envisaged under section 263 of Act in setting aside assessment are large and wide but these cannot be exercised to allow Assessing Officer to make up deficiency of his case. Commissioner of Income-tax had exercised power under section 263 of Act for following reasons: "9. As regards unsecured loans, it is seen that assessee obtained loan aggregating to Rs. 1.60 crores from six private parties creditworthiness of which are doubtful. These are as under: Amount of Return income Name of creditors loan (Rs.) of creditors (Rs.) Samsung Estates (P.) Ltd. 10,00,000 5,560 Woodhat Distributors (P.) 1,10,00,000 5,40,920 Ltd. Rashraj Impact (P.) Ltd. 9,00,000 Nil Shagun Tie Up (P.) Ltd. 9,00,000 11,750 Unique Merchants (P.) Ltd. 15,00,000 5,910 Microsynth Vyapar (P.) Ltd. 7,00,000 Nil 10. From details filed, it is seen that creditors had either nil or negligible income to support such huge cash credits to assessee. Moreover, from their bank accounts, it is seen that identical amount was deposited in bank accounts just 2-3 days before advancing loan. For example, M/s. Samsung Estate (P.) Ltd. received Rs. 10 lakhs from M/s. Pushpak Trading Consultancy (P.) Ltd. in December and advanced Rs. 10 lakhs to assessee on December 16. Similarly, M/s. Unique Merchant (P.) Ltd. received Rs. 5 lakhs from Puspak Trading Co. on 16th December. From nature of these credit and debit entries in bank accounts of parties, loans appear to be in nature of accommodation entries, which require further investigation by Assessing Officer specially regarding creditworthiness of parties. Assessing Officer has mentioned in assessment order that inspector was deputed to verify fresh loans during year and his report is on record. inspector has given identical reports in respect of enquiries made by him in respect of six parties. His report is very elementary and simply mentions that he has verified bank passbook, profit and loss account and balance-sheet. But, in none of reports, he has commented on issue of creditworthiness, i.e., whether these parties had sufficient means to advance such huge loan. It is well established that loan credits from parties, who are of no means cannot be accepted as genuine. Assessing Officer was required to make proper investigation to determine whether loan was really made by third party or it has come out of resources of assessee himself. Thus, he has failed to apply his mind to all aspects of case. Such non- application of mind constitutes passing of erroneous order which as discussed above is also prejudicial to interests of Revenue." learned Tribunal has set aside order of Commissioner of Income-tax for following reasons: "The only other issue is regarding unsecured loan obtained by assessee from six private limited companies. learned Commissioner of Income-tax on perusal of assessment records observed that Assessing Officer did not make proper enquiries about creditworthiness of lenders before accepting loans to assessee. He also found in bank statement of lenders that identical amounts of loan were deposited in respective accounts of some of lenders before they gave loan to assessee. It thus appears that learned Commissioner of Income-tax was not satisfied about enquiry conducted by Assessing Officer to find out source of source. On perusal of assessment order, it is observed that Assessing Officer deputed his inspector to enquire into matter from lenders. Assessing Officer was also made available with return of income, balance-sheet, profit and loss account, bank statement, etc., of lenders. Confirmations from lenders were also filed before Assessing Officer. We find from assessment order itself that as many as on six occasions Assessing Officer heard assessee and discussed case with him. Therefore, it cannot be said that Assessing Officer has not at all enquired into matter and applied his mind before dealing with loan creditors and taking possible view. It is settled position that proceedings under section 263 of Act cannot be initiated by learned Commissioner of Income-tax merely in his supervisory capacity. Before invoking powers under section 263 of Act, it is necessary for learned Commissioner of Income-tax to demonstrate that Assessing Officer had committed patent error which resulted in prejudice to Revenue. On contrary, where learned Assessing Officer has conducted enquiries and after due consideration of facts and circumstances of case, he comes to conclusion, then it is not open to learned Commissioner of Income-tax to invoke supervisory jurisdiction on ground of lack of enquiry. Further, bare reading of section 263 of Act makes it clear that pre-requisite for exercise of jurisdiction by Commissioner suo motu under it, is that order of Assessing Officer is erroneous in so far as it is prejudicial to interests of Revenue. Commissioner has to be satisfied of twin conditions, namely, (i) order of Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to interests of Revenue. If one of them is absent, i.e., if order of Assessing Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263(1) of Act just to re-examine or re-verify issues already examined/verified at assessment level. It is only when order is erroneous that section will be attracted. In case before us, it is not disputed that Assessing Officer made enquiries and gone through documents collected from lenders and then decided issue which he deemed fit in circumstances of case. learned Commissioner of Income-tax stated that Assessing Officer failed to make any enquiries regarding creditworthiness of loan creditors. This observation, in our considered opinion, is not correct on face of enquiry conducted by Assessing Officer. Assessing Officer verified/examined return of income, balance-sheet, profit and loss account, statement, confirmation, etc., of lenders and also perused Inspector's report, it goes without saying that Assessing Officer considered creditworthiness of loan creditors also. Therefore, it is not case that learned Assessing Officer did not make any enquiry at all. In our opinion, entire exercise under section 263 of Act was made by learned Commissioner of Income-tax merely with view to give second inning to Assessing Officer to re-examine and readjudicating concluded issues. powers envisaged under section 263 of Act in setting aside assessment are large and wide, but these cannot be exercised to allow Assessing Officer to make up deficiency of his case. hon'ble Income-tax Appellate Tribunal, Kolkata Bench in case of Plastic Concern v. Asst. CIT [1998] 61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove claim of assessee wrong would not make concluded assessment erroneous so long as learned Assessing Officer had acted judiciously and conducted enquiries in course of assessment proceedings. There is distinction between lack of enquiry and inadequate enquiry. If there is enquiry, even inadequate, that would not by itself give occasion to learned Commissioner of Income-tax to pass order under section 263 of Act, merely because he has different opinion in matter." Aggrieved by order of learned Tribunal, Revenue came up in appeal. question of law framed at time of admission of appeal is as follows: "Whether, on facts and in circumstances of case, learned Tribunal was justified in law in cancelling order passed under section 263 of Income-tax Act, 1961, ignoring facts that no proper enquiries were made regarding genuineness of loan transactions." Mr. Sinha, learned advocate appearing for appellant, submitted that view taken by learned Tribunal is palpably wrong in facts and circumstances of case. Mr. Khaitan, learned senior advocate appearing for assessee-respondent, submitted that all papers required by Assessing Officer were duly furnished. Assessing Officer also had loan transactions enquired into by inspector and being fully satisfied with genuineness of loan transactions, he passed order of assessment. Simply because Commissioner of Income-tax was of opinion that some more enquiry should have been made, he could not have set aside order passed by Assessing Officer. Mr. Khaitan drew our attention to judgment of this court in case of CIT v. Mulchand Bagri [1993] 68 Taxman 215. He relied upon paragraphs 13 and 14 of judgment, which read as follows: "13.There can be no doubt that if Income-tax Officer accepted assessee's case without any enquiry about sale of silver utensils, Commissioner was entitled to come to conclusion that assessment order was erroneous and prejudicial to interests of Revenue. Even if similar utensils were sold in earlier years and some enquiries were made in earlier years, that will not be of any relevance in current assessment year because every sale has to be examined separately and independently by Income-tax Officer. But unfortunately, for Revenue in this case, finding of Tribunal is that: '... but in present case, before us, Income-tax Officer appears to have made enquiry from assessee as can be seen from his letter dated December 29, 1980, which is at page 23 of paper book placed before us to which assessee sent reply, which is at page 21. Having regard to facts of case, we are of opinion that even on merits provisions of section 263 cannot be invoked on facts of present case before us.' 14. This finding has not been challenged by Commissioner as perverse in this case. There is no allegation of any misdirection of law. In other words, finding of Tribunal was that Income-tax Officer had actually made enquiry into sale of silver utensils. Therefore, Commissioner was not right in his conclusion that case of assessee had been accepted by Income-tax Officer without any enquiry. Since this finding of fact of Tribunal has not been challenged, it will be academic to give any answer to question of law posed by Revenue. Tribunal might have wrongly decided question of Commissioner's jurisdiction under section 263 and nature of assessment order made by Income-tax Officer pursuant to direction given by Inspecting Assistant Commissioner. But Tribunal has come to conclusion that Income-tax Officer had made enquiries about sale of silver utensils. Therefore, Commissioner was not right in coming to conclusion that order passed by Income-tax Officer was prejudicial to interests of Revenue because he had not made necessary enquiry in this regard. So long as this finding of fact stands, it has to be held that Commissioner's decision to revise order of Income-tax Officer under section 263 was erroneous." next judgment cited by Mr. Khaitan is in case of CIT v. Development Credit Bank Ltd. [2010] 323 ITR 206 (Bom). He relied upon following observations of Division Bench of hon'ble Bombay High Court (page 210): "In order of assessment, Assessing Officer had after making enquiry and eliciting response from assessee come to conclusion that assessee was entitled to depreciation to extent of Rs. 622.39 lakhs on value of securities held on trading account. In absence of any tangible material to contrary, Commissioner of Income-tax could not have treated this finding to be erroneous or to be prejudicial to interests of Revenue. observations of Commissioner of Income-tax that Assessing Officer had arrived at his finding without conducting enquiry was erroneous since enquiry was specifically held with reference to which disclosure of details was called for by Assessing Officer and made by assessee. We have adverted earlier to directions which have been issued by Commissioner of Income-tax to Assessing Officer with regard to holding of fresh enquiry. Before us, it is common ground between counsel that first and second issues therein relating to capital gain of Rs. 1.26 crores and depreciation of Rs. 622.39 lakhs constitute basis of view of revisional authority and others follow in consequence. Once we come to conclusion that revisional authority was not justified in exercising jurisdiction under section 263 with reference to aforesaid issues (i) and (ii) in directions of Commissioner of Income-tax noted earlier, other issues are consequential to enquiry which was directed in respect of first and second issues. This has not been disputed." third judgment cited by Mr. Khaitan is in case of Spectra Shares and Scrips P. Ltd. v. CIT [2013] 354 ITR 35 (AP). He relied upon sub-paragraphs (e) and (f) at page 59 of report, which reads as follows: "(e) Commissioner cannot initiate proceedings with view to start fishing and roving inquiries in matters or orders which are already concluded; that Department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be inference or proper inference either of facts disclosed or weight of circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted. (f) Whether there was application of mind before allowing expenditure in question has to be seen; that if there was inquiry, even inadequate that would not by itself give occasion to Commissioner to pass orders under section 263 merely because he has different opinion in matter; that it is only in cases of lack of inquiry that such course of action would be open; that assessment order made by Income-tax Officer cannot be branded as erroneous by Commissioner simply because, according to him, order should have been written more elaborately; there must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by application of relevant statute on incorrect or incomplete interpretation, lesser tax than what was just, has been imposed." fourth judgment relied upon by Mr. Khaitan is in case of DIT v. Jyoti Foundation [2013] 357 ITR 388 (Delhi). He relied upon paragraph 5 of judgment, which reads as follows (page 396): "In present case, inquiries were certainly conducted by Assessing Officer. It is not case of no inquiry. order under section 263 itself records that Director felt that inquiries were not sufficient and further inquiries or details should have been called. However, in such cases, as observed in case of CIT v. DG Housing Projects Ltd. [2012] 343 ITR 329 (Delhi), inquiry should have been conducted by Commissioner or Director himself to record finding that assessment order was erroneous. He should not have set aside order and directed Assessing Officer to conduct said inquiry." fifth and last judgment referred to by Mr. Khaitan is in case of CIT v. J. L. Morrison (India) Ltd. [2014] 366 ITR 593 (Cal) to which one of us (G. C. Gupta J.) was party wherein this court upheld order of Tribunal setting aside order under section 263 even though Assessing Officer in that case had omitted to spell out any reason for view taken by him. Mr. Khaitan has not disputed as proposition of law that creditworthiness of alleged lender is relevant enquiry. This was also view expressed by Delhi High Court in case of CIT v. N. R. Portfolio P. Ltd. in I. T. A. No. 1018 of 2011 reported in [2014] 2 ITR-OL 68 (Delhi); [2014] IAD (Delhi) 681; [2014] 264 CTR (Del) 258; [2014] 206 DLT 97 wherein following views were expressed after analysing large number of authorities (page 81 of 2 ITR-OL): "The contention that Revenue must have evidence to show circulation of money from assessee to third party is fallacious and has been repeatedly rejected, even when section 68 of Act was not in statute. In A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC), Supreme Court observed that it was not duty of Revenue to adduce evidence to show from what source, income was derived and why it should be treated as concealed income. assessee must prove satisfactorily source and nature of cash received during accounting year. Similarly observations were made in CIT v. M. Ganapathi Mudaliar [1964] 53 ITR 623 (SC), inter alia, holding that it was not necessary for Revenue to locate exact source. This principle was reiterated in CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC), wherein contention that Assessing Officer should indicate source of income before it was taxable, was described as incorrect legal position. Thus, when there is unexplained cash credit, it is open to Assessing Officer to hold that it was income of assessee and no further burden lies on him to show source. In Yadu Hari Dalmia v. CIT [1980] 126 ITR 48 (Delhi), Division Bench of Delhi High Court has observed (page 57): 'It is well known that whole catena of sections starting from section 68 have been introduced into taxing enactments step by step in order to plug loopholes and in order to place certain situations beyond doubt even though there were judicial decisions covering some of aspects. For example, even long prior to introduction of section 68 in statute book, courts had held that where any amounts were found credited in books of assessee in previous year and assessee offered no explanation about nature and source thereof or explanation offered was, in opinion of Income- tax Officer not satisfactory, sums so credited could be charged to income- tax as income of assessee of relevant previous year. Section 68 was inserted in Income-tax Act, 1961, only to provide statutory recognition to principle which had been clearly adumbrated in judicial decisions.' We are conscious of doctrine of'source of source' or'origin of origin' and also possible difficulty which assessee may be faced with when asked to establish unimpeachable creditworthiness of share subscribers. But this aspect has to be decided on factual matrix of each case and strict or stringent test may not be applied to arm's length angel investors or normal public issues. doctrine of'source of source' or'origin of origin' cannot be applied universally, without reference to factual matrix and facts of each case. said test in case of normal business transactions may be light and not vigorous. said doctrine is applied when there is evidence to show that assessee may not be aware, could not have knowledge or was unconcerned as to source of money paid or belonging to third party. This may be due to nature and character of commercial/business transaction relationship between parties, statutory postulates, etc. However, when there is surrounding evidence and material manifesting and revealing involvement of assessee in the'transaction' and that it was not entirely arm's length transaction, resort or reliance to said doctrine may be counter-productive and contrary to equity and justice. doctrine is not eldritch or camouflage to circulate ill gotten and unrecorded money. Without being oblivious to constraints of assessee, objective and fair approach/determination is required. Thus, no assessee should be harassed and harried but any dishonest facade and smokescreens which masquerade as pretence should be exposed and not accepted. In Lovely Exports (supra), Division Bench examined two earlier decisions of this court in CIT v. Steller Investment Ltd. [1991] 192 ITR 287 (Delhi) and CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) [FB]. decision in Steller Investment's case (supra) was affirmed by Supreme court but by observing that conclusion was on facts and no interference was called for. Lovely Exports (supra) was case of public limited company where shares were subscribed by public and it was accordingly observed (page 276 of 299 ITR): 'This reasoning must apply fortiori to large scale subscriptions to shares of public company where latter may have no material other than application forms and bank transaction details to give some indication of identity of these subscribers. It may not apply in circumstances where shares are allotted directly by company/assessee or to creditors of assessee. This is why this court has adopted very strict approach to burden being laid almost entirely on assessee which receives gift.' Thereafter, reference was made to Full Bench decision in case of Sophia Finance Ltd.'s case (supra) wherein it has been observed that if shareholders exists then,'possibly', no further enquiry needs to be made and that Full Bench had not reflected upon question of whether burden of proof rested entirely on assessee and at which point this burden justifiably shifted to Assessing Officer. Full Bench has observed that they were not deciding as to on whom and to what extent was onus to show that amount credited in books of account was share capital and when onus was discharged, was not decided. standard of proof might be rigorous and stringent and was dependent upon nature of transaction and where there was evidence that source of investment cannot be manipulated, it was material. Similarly, it was observed that assessee could scarcely be heard to say that he did not know particulars of donor in case of gift. It was held (page 280 of 299 ITR): 'There cannot be two opinions on aspect that pernicious practice of conversion of unaccounted money through masquerade or channel of investment in share capital of company must be firmly excoriated by Revenue. Equally, where preponderance of evidence indicates absence of culpability and complexity of assessee it should not be harassed by Revenue's insistence that it should prove negative. In case of public issue, company concerned cannot be expected to know every detail pertaining to identity as well as financial worth of each of its subscribers. company must, however, maintain and make available to Assessing Officer for his perusal, all information contained in statutory share application documents. In case of private placement legal regime would not be same. delicate balance must be maintained while walking tightrope of sections 68 and 69 of Income-tax Act. burden of proof can seldom be discharged to hilt by assessee; if Assessing Officer harbours doubts of legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat subscribed capital as undisclosed income of company... Once material to prove these ingredients are produced it is for Assessing Officer to find out as to whether, on these materials, assessee has succeeded in establishing ingredients mentioned above. Assessing Officer can'lift veil' and enquire into real nature of transaction. CIT v. Ruby Traders and Exporters Ltd. [2003] 263 ITR 300 (Cal), CIT v. Nivedan Vanijya Niyojan Ltd. [2003] 263 ITR 623 (Cal) and CIT v. Kundan Investment Ltd. [2003] 263 ITR 626 (Cal) are other three. In this analysis, distillation of precedents yields following propositions of law in context of section 68 of Income-tax Act. assessee has to prima facie prove (1) identity of creditor/ subscriber; (2) genuineness of transaction, namely, whether it has been transmitted through banking or other indisputable channels ; (3) creditworthiness or financial strength of creditor/subscriber; (4) if relevant details of address or permanent account number identity of creditor/subscriber are furnished to Department along with copies of shareholders register, share application forms, share transfer register, etc., it would constitute acceptable proof or acceptable explanation by assessee; (5) Department would not be justified in drawing adverse inference only because creditor/subscriber fails or neglects to respond to its notices; (6) onus would not stand discharged if creditor/subscriber denies or repudiates transaction set up by assessee nor should Assessing Officer take such repudiation at face value and construe it, without more, against assessee; and (7) Assessing Officer is duty-bound to investigate creditworthiness of creditor/subscriber genuineness of transaction and veracity of repudiation.' decision in case of Lovely Exports (supra) was considered in CIT v. Nova Promoters and Finlease P. Ltd. (supra) and it was elucidated (page 197 of 342 ITR): 'The ratio of decision is to be understood and appreciated in background of facts of that case. So understood, it will be seen that where complete particulars of share applicants such as their names and addresses, income-tax file numbers, their creditworthiness, share application forms and shareholders' register, share transfer register etc. are furnished to Assessing Officer and Assessing Officer has not conducted any enquiry into same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in hands of company under section 68 and remedy open to Revenue is to go after share applicants in accordance with law. We are afraid that we cannot apply ratio to case, such as present one, where Assessing Officer is in possession of material that discredits and impeaches particulars furnished by assessee and also establishes link between self-confessed'accommodation entry providers', whose business it is to help assessees bring into their books of account their unaccounted monies through medium of share subscription, and assessee. ratio is inapplicable to case, again such as present one, where involvement of assessee in such modus operandi is clearly indicated by valid material made available to Assessing Officer as result of investigations carried out by Revenue authorities into activities of such'entry providers'. existence with Assessing Officer of material showing that share subscriptions were collected as part of pre-meditated-plan'a smokescreen'-conceived and executed with connivance or involvement of assessee excludes applicability of ratio. In our understanding, ratio is attracted to case where it is simple question of whether assessee has discharged burden placed upon him under section 68 to prove and establish identity and creditworthiness of share applicant and genuineness of transaction. In such case, Assessing Officer cannot sit back with folded hands till assessee exhausts all evidence or material in his possession and then come forward to merely reject same, without carrying out any verification or enquiry into material placed before him. case before us does not fall under this category and it would be travesty of truth and justice to express view to contrary.' In Nova Promoters and Finlease (supra), it was held that in view of link between entry providers and incriminating evidence, mere filing of permanent account number, acknowledgment of income-tax returns of entry provider, bank account statements, etc., was not sufficient to discharge onus. In CIT v. Nipun Builders and Developers P. Ltd. [2013] 350 ITR 407 (Delhi), this principle has been reiterated holding that assessee and Assessing Officer have to adopt reasonable approach and when initial onus on assessee would stand discharged depends upon facts and circumstances of each case. In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly, buy or subscribe to shares. Upon receipt of money, share subscribers do not lose touch and become incommunicado. Call monies, dividends, warrants, etc., have to be sent and relationship is/was continuing one. In such cases, therefore, assessee cannot simply furnish details and remain quiet even when summons issued to shareholders under section 131 return unserved and uncomplied. This approach would be unreasonable as general proposition as assessee cannot plead that they had received money, but could do nothing more and it was for Assessing Officer to enforce shareholders attendance. Some cases might require or justify visit by Inspector to ascertain whether shareholders/subscribers were functioning or available at addresses but it would be incorrect to state that Assessing Officer should get addresses from Registrar of Companies' website or search for addresses of shareholders and communicate with them. Similarly, creditworthiness was not proved by mere issue of cheque or by furnishing copy of statement of bank account. Circumstances might require that there should be some evidence of positive nature to show that said subscribers had made genuine investment, acted as angel investors, after due diligence or for personal reasons. Thus, finding or conclusion must be practicable, pragmatic and might in given case take into account that assessee might find it difficult to unimpeachably establish creditworthiness of shareholders. What we perceive and regard as correct position of law is that court or tribunal should be convinced about identity, creditworthiness and genuineness of transaction. onus to prove three factum is on assessee as facts are within assessee's knowledge. Mere production of incorporation details, permanent account numbers or fact that third persons or company had filed income-tax details in case of private limited company may not be sufficient when surrounding and attending facts predicate cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon individuals behind them who run and manage said companies. It is persons behind company who take decisions, controls and manage them." When payment by cheque does not establish creditworthiness of lender, mere examination of pass-book or bank statement or letter of confirmation or balance-sheet of lender is also not enough. inspector appointed by Assessing Officer did not go beyond aforesaid documents. Therefore, it cannot be disputed that view formed by Commissioner of Income-tax that in none of reports, he has commented upon issue of creditworthiness, i.e., whether these parties had sufficient means to advance such huge loans is not without basis. It is well established that credits allegedly based on loan from parties, who are not possessed of sufficient means cannot be accepted as genuine. Assessing Officer was required to make proper investigation to determine whether money was really lent by third party or it has come out of resources of assessee himself. source of apparent source is relevant enquiry. That, Assessing Officer has failed to apply his mind to all aspects of case is, therefore, self-evident. Such non-application of mind constituted passing of erroneous order which is also prejudicial to interests of Revenue. If any further authority is required reference may be made to judgment of apex court in case of Malabar Industrial Co. Ltd. v. CIT reported in [2000] 243 ITR 83 (SC); [2000] 2 SCC 718. particulars appearing from paragraph 9, quoted above, of judgment of Commissioner of Income-tax have not been disputed nor factual aspects appearing from paragraph 10 of judgment of Commissioner of Income-tax have been disputed. We are, as such, of opinion that Commissioner of Income-tax had reasons to hold that creditworthiness of alleged lenders was not enquired into. Mere examination of bank pass book, profit and loss account and balance-sheet, as we already have indicated, is not enough. When requisite enquiry was not made, order is bound to be erroneous and prejudicial to interests of Revenue. learned Tribunal proceeded on theory that it was not case of no enquiry; that no doubt is true but that is not enough. If relevant enquiry was not made it may in appropriate cases amount to no enquiry and may also be case of non-application of mind. We are supported in our view by following judgments: (a) In case of Gee Vee Enterprises v. Addl. CIT reported in [1975] 99 ITR 375 (Delhi) Delhi High Court opined as follows (page 386): "... it is not necessary for Commissioner to make further inquiries before cancelling assessment order of Income-tax Officer. Commissioner can regard order as erroneous on ground that in circumstances of case Income-tax Officer should have made further inquiries before accepting statements made by assessee in his return. reason is obvious. position and function of Income-tax Officer is very different from that of civil court. statements made in pleading proved by minimum amount of evidence may be accepted by civil court in absence of any rebuttal. civil court is neutral. It simply gives decision on basis of pleading and evidence which comes before it. Income- tax Officer is not only adjudicator but also investigator. He cannot remain passive in face of return which is apparently in order but calls for further inquiry. It is his duty to ascertain truth of facts stated in return when circumstances of case are such as to provoke inquiry. meaning to be given to word'erroneous' in section 263 emerges out of this context. It is because it is incumbent on Income-tax Officer to further investigate facts stated in return when circumstances would make such inquiry prudent that word'erroneous' in section 263 includes failure to make such enquiry. order becomes erroneous because such inquiry has not been made and not because there is anything wrong with order if all facts stated therein are assumed to be correct." (b) In case of Addl. CIT v. Mukur Corporation reported in [1978] 111 ITR 312 (Guj), Assessing Officer had allowed two deductions of sum of Rs. 2,00,000 and sum of Rs. 1,45,000 without proper enquiry. question arose whether exercise of power by Commissioner under section 263 in circumstances was proper which was answered in affirmative. Division Bench held as follows (headnote): "that words'prejudicial to interests of Revenue' in section 263 have not been defined but they must mean that orders of assessment challenged are such as are not in accordance with law, in consequence whereof lawful revenue due to State has not been realised or cannot be realised. In present case, it was obvious that Income-tax Officer had committed error in not making enquiry into details as regards both deductions and also that want of such enquiry had resulted in prejudice to interests of Revenue. To this extent, initiation of action under section 263 by Commissioner was quite proper." (c) In case of Addl. CIT v. Krishna Narayan Naik [1984] 150 ITR 513 (Bom) Division Bench upheld finding that (headnote): "An order could be said to be erroneous when either it did not decide point and record finding on issue which ought to have been done or decided it wrongly." (d) In case of CIT v. Precision Finance P. Ltd. reported in [1994] 208 ITR 465 (Cal), this court also took following view (page 470): "It is for assessee to prove identity of creditors, their creditworthiness and genuineness of transactions. In our view, on facts of this case, Tribunal did not take into account all these ingredients which have to be satisfied by assessee. Mere furnishing of particulars is not enough. enquiry of Income-tax Officer revealed that either assessee was not traceable or there was no such file and, accordingly, first ingredient as to identity of creditors had not been established. If identity of creditors had not been established, consequently question of establishment of genuineness of transactions or creditworthiness of creditors did not and could not arise. Tribunal did not apply its mind to facts of this particular case and proceeded on footing that since transactions were through bank account, accordingly, it is to be presumed that transactions were genuine. It was not for Income-tax Officer to find out by making investigation from bank accounts unless assessee proves identity of creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make non-genuine transaction genuine." (e) In case of CIT v. Emery Stone Manufacturing Co. [1995] 213 ITR 843 (Raj), it was held by Rajasthan High Court that omission to hold necessary enquiry resulted in non-application of mind reference may be made to following observations (page 849): "From assessment order framed under section 143(3) it is clear that Inspecting Assistant Commissioner has not applied his mind at all and there is no finding in assessment order regarding application or non- application of Explanation 3 to section 43(1). Inspecting Assistant Commissioner having not applied his mind at all and having allowed depreciation at enhanced value without considering Explanation 3, order was prejudicial to interest of Revenue. Not only this, Commissioner of Income-tax found that depreciation has been allowed on land, which is complete non-application of mind and in such situation power under section 263 could be exercised by Commissioner of Income- tax. On point as to whether main purpose of transfer of assets was to reduce tax liability or not, matter could have been decided by assessing authority after taking into consideration oral and written evidence. Commissioner of Income-tax also in such situation should have set aside assessment on this point and should have left it to assessing authority to come to conclusion whether main purpose of transfer of assets was to reduce tax liability or not. He could have called for copy of partnership deed and dissolution deed and could have taken other evidence into consideration. In absence of any finding recorded by assessing authority, though Commissioner of Income-tax has power to record finding after giving opportunity to assessee, proper course for Commissioner of Income-tax was to set aside assessment order on that point so that assessing authority could record his finding whether transfer of assets was for purpose of reduction of tax liability by taking into consideration earlier dissolution deed, new partnership deed, valuation report and other relevant facts including oral evidence. Income-tax Appellate Tribunal has come to conclusion that Commissioner of Income-tax was not justified in invoking Explanation 3 when firm was reconstituted after gap of more than three months with different partners. gap of three months may or may not be relevant looking to particular circumstances of case. Simply because after dissolution of firm new firm was reconstituted after three months, does not mean that main purpose was not for transfer of assets to reduce tax liability. different partners are not outsiders, but family members of same partner, who was partner in earlier firm. It is no doubt true that burden is on assessing authority to prove that main purpose for transfer of assets was to reduce tax liability, but he can definitely take into consideration relevant facts. If view taken by Tribunal is accepted as correct view then Explanation cannot be invoked in any case, and, therefore, in order to find out whether Explanation is applicable or not, entirety of circumstances has to be taken into consideration and it could not be for one reason or other. It was case where assessing authority has not applied his mind. That was end of matter for exercising power under section 263 and, therefore, matter should have been sent back to assessing authority for applying his mind to find as to whether Explanation is applicable or not. observation of Tribunal that full facts were brought to notice of Inspecting Assistant Commissioner (Assessment) is also not correct inasmuch as after giving statement with regard to actual cost of assets and depreciation claimed thereon, assessing authority was bound to consider Explanation. Simply because facts have been disclosed by assessee, it does not give immunity from revisional jurisdiction which Commissioner can exercise under section 263 and as such even in case where facts have been disclosed by assessee to assessing authority and correct provisions of law have not been examined by assessing authority, power under section 263 can be invoked." (f) In case of Duggal and Co. v. CIT [1996] 220 ITR 456 (Delhi) Delhi High Court upheld order of exercise of power under section 263 holding that (page 458): "The Commissioner was perfectly competent to exercise his powers under section 263 whenever he found, prima facie, that there was need to enquire if interests of Revenue had suffered by order of assessment. He has given certain reasons. basis for order of Commissioner is question of fact and whether it is correct or not shall have to be found out after enquiry by Income-tax Officer. Commissioner has found that Income-tax Officer has omitted to enquire into this question found by Commissioner implicit in manner in which amounts were borrowed and advanced by assessee-company." (g) Reference in this regard may also be made to judgment in case of CIT v. Shree Manjunathesware Packing Products and Camphor Works reported in [1998] 231 ITR 53 (SC) wherein following views were expressed (headnote): "The section did not at first contain any Explanation. Explanation was added to section 263(1) by Taxation Laws (Amendment) Act, 1984. By Finance Act, 1988, said Explanation was substituted with effect from June 1, 1988. Explanation was again amended by Finance Act, 1989. By amendments made by Finance Acts of 1988 and 1989 definition of term'record' was provided. It has been provided that'record' shall include and shall be deemed always to have included all records relating to any proceeding under Act available at time of examination by Commissioner. It cannot be said that correct and settled legal position, with respect to meaning of word'record' till June 1, 1988, is that it meant record which was available to Income-tax Officer at time of passing of assessment order. Such narrow interpretation of word'record' is not justified in view of object of provision and nature and scope of power conferred upon Commissioner. revisional power conferred on Commissioner under section 263 is of wide amplitude. It enables Commissioner to call for and examine record of any proceeding under Act. It empowers Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by Assessing Officer is erroneous in so far as it is prejudicial to interests of Revenue. After examining record and after making or causing to be made enquiry, if he considers order to be erroneous, then he can pass order thereon as circumstances of case justify. Obviously, as result of enquiry he may come into possession of new material and he would be entitled to take that new material into account. If material, which was not available to Income-tax Officer when he made assessment could thus be taken into consideration by Commissioner after holding enquiry, there is no reason why material which had already come on record though subsequent to making of assessment, cannot be taken into consideration by him. Moreover, in view of clear words used in clause (b) of Explanation to section 263(1), it has to be held that while calling for and examining record of any proceeding under section 263(1), it is and it was open to Commissioner not only to consider record of that proceeding but also record relating to that proceeding available to him at time of examination." (h) Reference may also be made to judgment in case of Consolidated Photo and Finvest Ltd. v. Asst. CIT [2006] 281 ITR 394 (Delhi) wherein following views were expressed (headnote): "The principle that mere change of opinion could not be basis for reopening completed assessments would be applicable only to situations where Assessing Officer had applied his mind and taken conscious decision on particular matter in issue. It would have no application where order of assessment did not address itself to aspect which was basis for reopening of assessment. Therefore, it was inconsequential whether or not material necessary for taking decision was available to Assessing Officer either generally or in form of reply to questionnaire served upon assessee. What is important was whether Assessing Officer had, based on material available to him taken view. Since he had not done so, reassessment could not be challenged on ground that it was based on change of opinion." (i) Following judgment in case of Mukur Corporation, in case of CIT v. Daga Entrade P. Ltd. [2010] 327 ITR 467 (Gauhati), it was held that (page 474): "The Gujarat High Court in Mukur Corporation [1978] 111 ITR 312 (Guj) has held that when Income-tax Officer at stage of making assessment fails to make inquiry into relevant details, such assessment has to be considered as erroneous. If fresh assessment is thereafter ordered by revisional authority, only proper course for revisional authority would be to desist from expressing any final opinion on controversial points. On submission made on behalf of assessee that more detailed reasoning should have been indicated by Commissioner of Income-tax, we find that it is nobody's case that, finding of appraisal report of Investigation team, following search and seizure made, were not relevant for making assessments. It is also seen that Assessing Officer was very much aware about appraisal report indicting assessee. Yet materials revealed through appraisal report were not considered by Assessing Officer, while finalising assessments, nor were assessees confronted and given opportunity to rebut findings of appraisal report. Assessing Officer merely stated that some loose sheets seized during survey were not relevant for period of assessment under consideration, without referring to actual appraisal report or indicating any reason as to why appraisal report ought not to be considered. Referring to above circumstances, Commissioner held that assessments have been finalised without reference to relevant materials and therefore, said assessment orders, in our considered view, have been rightly held to have been erroneously passed by revisional authority and reasons indicated by Commissioner are found by us to be sufficient, without undue elaboration." views expressed in case of CIT v. Daga Entrade were affirmed by Special Bench of Gauhati High Court in case of CIT v. Jawahar Bhattacharjee [2012] 341 ITR 434 (Gauhati) [FB], wherein following views were taken: "Non-application of mind is ground for interference under section 263 in case of CIT v. Shri Bhagwan Das [2005] 272 ITR 367 (All), Division Bench opined that exercise of power under section 263 was proper when there was no discussion regarding question as to whether amount of income shown by assessee which was claimed to be exempted had actually been earned by him and whether entire amount of income from agriculture and poultry farming was exempted from tax." judgments cited by Mr. Khaitan are all distinguishable because in none of cases, creditworthiness of alleged lender was in issue. In case of CIT v. Mulchand Bagri (supra) issue was whether profit to tune of Rs. 16,237 on sale of some silver utensils can be treated as exempt income because sale was of utensils which constituted personal effects of assessee. Commissioner of Income-tax exercised power holding that no enquiry was made. It transpired that enquiry had, in fact, been made and in earlier years also identical claim of assessee was allowed. Their Lordships of Division Bench in that case held that "even on merits provisions of section 263 cannot be invoked on facts of present case before us". Because order was unexceptionable on merits, exercise of power under section 263 of Act was not upheld. In case of CIT v. Development Credit Bank Ltd. (supra) evidently assessee was bank. assessee claimed depreciation on investments on basis that they were treated as stock-in-trade. claim was allowed after necessary enquiry or investigation that investments was treated as stock-in-trade. mere fact that other investments made by assessee were treated as long-term investment could not be pointer to establish that investments in nature of stock-in-trade could not have been there. Assessing Officer after enquiry was satisfied that those investments were in nature of stock-in-trade and thereafter depreciation was allowed. exercise of power by Commissioner of Income-tax under section 263 of Act in circumstances was not allowed. In case of DIT v. Jyoti Foundation (supra), views drawn to our attention by Mr. Khaitan, quoted above, are on basis of Explanation added to section 263 of Act by amendment of Finance Act, 1988, which clarifies that supervisory authority is entitled to hold order erroneous on basis of further enquiry made by supervisory authority itself. Ordinarily, supervisory authority is expected to confine itself to evidence which was before trial court or forum of first instance. But section 263 conferred wider powers which was clarified by Explanation. Reference in this regard may also be made to judgment in case of CIT v. Manjunathesware (supra). fact that Commissioner is entitled to make enquiries does not mean that he is powerless to ask Assessing Officer to make fresh assessment after making fresh enquiry because assessment inheres enquiry. (j) In any event Division Bench, in case relied upon by Mr. Khaitan, followed judgment in case of ITO v. DG Housing Projects Ltd. reported in [2012] 343 ITR 329 (Delhi) wherein Delhi High Court itself opined as follows (page 339): "In some cases possibly though rarely, Commissioner of Income-tax can also show and establish that facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but Assessing Officer had erroneously not undertaken same. However, said finding must be clear, unambiguous and not debatable." Mr. Khaitan, as aforesaid, has not disputed that creditworthiness of alleged creditors, insisted upon by Commissioner of Income-tax, is relevant enquiry. judgments cited by Mr. Khaitan in case of Spectra Shares and Scrips (supra) is authority for proposition that change of opinion cannot be ground for exercise of power under section 263. question of change of opinion cannot arise when all relevant facts have not been ascertained as is case before us. judgment in case of J. L. Morrison does not assist assessee because in that case question was whether receipt was revenue receipt or capital receipt. Assessing Officer treated receipt as capital receipt which Division Bench found was possible view. Unlike in present case no factual enquiry was necessary in that case. learned Tribunal entertained incorrect impression of law which was responsible for impugned judgment which is also evident from following sentence: "The powers envisaged under section 263 of Act in setting aside assessment are large and wide, but these cannot be exercised to allow Assessing Officer to make up deficiency of his case." power under section 263 of Act can be exercised where order of Assessing Officer is erroneous and prejudicial to interests of Revenue. When order is erroneous, then order is also deficient and in order to remedy situation, power under section 263 of Act has been given. Therefore, view that power could not have been exercised to allow Assessing Officer to make up deficiency is altogether incorrect impression of law. Further, incorrect impression of law of learned Tribunal is to be found from following sentence. "If there is enquiry, even inadequate, that would not by itself give occasion to learned Commissioner of Income-tax to pass order under section 263 of Act." sentence quoted above, as matter of law, has to be understood in its proper perspective. Inadequacy of enquiry by itself is not ground for revision. If it can be shown that inadequate enquiry led Assessing Officer or may have led him to assumption of incorrect facts that would make order erroneous and prejudicial to interests of Revenue. Setting bad trend is also prejudicial to Revenue. In Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129 (Mad) at page 138 it was opined that "There must be some grievous error in order passed by Income-tax Officer, which might set bad trend or pattern for similar assessments, which on broad reckoning, Commissioner might think to be prejudicial to interests of Revenue administration." It is not law that Assessing Officer occupying position of investigator and adjudicator can discharge his function by perfunctory or inadequate investigation. Such course is bound to result in erroneous and prejudicial orders. Where relevant enquiry was not undertaken, as in this case, order is erroneous and prejudicial too and, therefore, revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued enquiry cannot be said to have been faithfully conducted. In different context apex court observed "contra veritatem lex nunquam aliquid permittit: implies duty on court to accept and accord its approval only to report which is result of faithful and fruitful investigation" (See Sidhartha Vashisht alais Manu Sharma v. State (NCT of Delhi) reported in [2010] 6 SCC 1 paragraph 200 at page 80) For aforesaid reasons, order under challenge is set aside. It is clarified that order under challenge also touches questions involving section 92 of Act but that part of order is not within scope of appeal. Therefore, order of Tribunal is set aside for purpose of this appeal and question, as framed, is answered in negative and in favour of Revenue. appeal to that extent is allowed. Arindam Sinha J.-I agree. *** Commissioner of Income-tax v. Maithan International