Section 263 revision fails where the Assessing Officer made enquiries and adopted a possible view on the record.

Revision under section 263 was held unsustainable where the Assessing Officer had examined the joint venture agreement, balance sheet and notes to accounts, raised queries, and adopted a possible view on the material before him. The Tribunal held that a revisional authority cannot interfere merely because the assessment order is brief, because a later year is viewed differently, or because it prefers a different inference. It also found no basis to treat the arrangement as sham or to say there was no application of mind. The disputed tax consequence of the share transfer arose in the later year of transfer, not in the years under revision, and the assessments were restored.

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Issues: Whether the revisional orders under section 263 were validly passed on the ground that the Assessing Officer had not properly enquired into the taxability of option money received under the joint venture arrangement and the capitalization of related interest and professional es.

Analysis: The assessment records showed that the joint venture agreement, the balance sheet and the notes to accounts had been examined in earlier scrutiny assessments, and the same line of disclosure had been consistently accepted for several years. The Tribunal held that the Assessing Officer had raised queries and taken a possible view after considering the material on record. It further held that the revisional authority could not invoke section 263 merely because the order did not contain elaborate discussion or because a later year took a different view. The facts concerning actual transfer of shares and any tax consequence thereof were found to arise in the later year of transfer, not in the years under revision. The Tribunal also found no basis to treat the arrangement as sham or colorable, and no basis to conclude that the assessments were passed without application of mind.

Conclusion: The orders under section 263 were unsustainable and were set aside; the assessments were restored. The decision is in favour of the assessee.

Final Conclusion: Revision could not be sustained because the assessments were made after enquiry and on a permissible view of the facts, and the disputed tax consequence was linked to the later transfer year rather than the years under revision.

Ratio Decidendi: Where the Assessing Officer has made enquiry and adopted a possible view on the basis of material on record, revision under section 263 cannot be invoked merely because the Commissioner considers the enquiry inadequate or wishes a different inference to be drawn.

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