Revision U/s. 263 justified for Erroneous & prejudicial Assessment without proper inquiry

In the case in hand, it is not in dispute that the assessee had income of interest through FDRs and while setting off that the assessing officer as well as the ITAT did not examine the aspect as to under which provision the assessee claimed deduction or set off of his income from other sources against interest payable on the borrowed fund. The reason given is that the amount pertaining to FDR was not surplus amount but part of amount that was kept to obtain letter of credit for purchase of machinery. While accepting the fact that the FDR was for obtaining letter

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