Section 263 revision fails where the Assessing Officer made enquiries and took a plausible view on section 10BA deduction.

Revision under section 263 was not justified where the Assessing Officer had raised queries, considered the assessee's reply and adopted a plausible view allowing deduction under section 10BA. Mere allegation of inadequate enquiry was insufficient because the Commissioner did not identify any specific failure to satisfy the statutory conditions for deduction, nor show that the exported articles were ineligible or that any expenditure was outside the books. As section 263 requires the order to be both erroneous and prejudicial to the interests of the Revenue, the revisional order could not be sustained and the deduction was upheld in favour of the assessee.

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Issues: Whether the revision order under section 263 of the Income-tax Act, 1961 was valid where the Assessing Officer had allowed deduction under section 10BA after making enquiries and the Commissioner alleged inadequate verification.

Analysis: The record showed that the Assessing Officer had raised queries, considered the reply and taken a possible view that the deduction under section 10BA was allowable. The Commissioner did not record a specific finding that the statutory conditions for deduction were not fulfilled, nor that the exported articles were ineligible. The order also did not establish that any expense had been incurred outside the books. The mere allegation of inadequate enquiry did not satisfy section 263, which requires the order to be both erroneous and prejudicial to the interests of the Revenue.

Conclusion: The revisionary order was not sustainable and the challenge to the allowance of deduction failed. The issue was decided in favour of the assessee.

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