Revisionary power limits: enquiry-based assessment and merger doctrine barred reopening of issues already examined.

A revision under section 263 is unsustainable where the Assessing Officer has conducted enquiries, called for explanations and accepted a plausible view on cash deposits, turnover, audit applicability, licence fee and related deductions. The revisionary authority cannot substitute its own view without properly considering the assessee's material, and it cannot reopen issues already dealt with in appeal because of the doctrine of merger. Compulsory audit depends on turnover or gross receipts, not bank deposits alone. Issues outside the notice, including licence fee and Chapter VI-A matters, could not be adversely revised. The revisionary order was quashed and the assessment order restored.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was sustainable where the Assessing Officer had conducted enquiries on cash deposits, turnover, audit applicability, licence fee and related deductions, and whether the Commissioner could revise issues already examined in assessment or appeal.

Analysis: The assessment record showed detailed questionnaire proceedings, summons, statement recording and replies supported by bank statements and ledger accounts. The Assessing Officer had examined the cash deposits and accepted the explanation after enquiry. The Tribunal held that the Commissioner did not properly consider the assessee's explanations and even proceeded on incorrect figures. It further held that where the CIT(A) had already dealt with the turnover-related addition, the revisionary authority could not reopen that matter because of the doctrine of merger. The Tribunal also held that compulsory audit under section 44AB depends on turnover or gross receipts, not on bank deposits alone, and that the licence fee and Chapter VI-A related points could not be adversely revised in the absence of notice on those issues.

Conclusion: The order under section 263 was unsustainable and was quashed. The assessment order under section 143(3) was restored, and the assessee succeeded.

Ratio Decidendi: Revision under section 263 cannot be sustained where the Assessing Officer has made enquiry and taken a plausible view, the Commissioner has failed to consider the assessee's explanation, and the proposed revision seeks to reopen matters already decided in appeal or beyond the scope of notice.

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