Section 263 revision fails where TDS enquiries were made and the assessment took a plausible view on disallowance.

Revision under section 263 was not justified where the Assessing Officer had made specific enquiries on TDS, obtained replies and supporting material, and independently verified the payees' confirmations. On those facts, the payments were treated as supplies of earth, mitti and stones rather than contract, sub-contract or commission payments, so sections 194C and 194H were held inapplicable and section 40(a)(ia) was not attracted. The Commissioner could not revise the assessment merely because a different inference was possible or because every investigative step was not expressly discussed in the order. Initiation of penalty proceedings under section 271C did not support revision on the disallowance issue.

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Issues: Whether the revisionary jurisdiction under section 263 of the Income-tax Act, 1961 was validly invoked when the Assessing Officer had made enquiries on the TDS issue and taken a possible view that no disallowance under section 40(a)(ia) was called for.

Analysis: The assessment records showed that the Assessing Officer specifically queried the nature of the payments and the non-deduction of tax, and the assessee furnished replies and supporting material. The Assessing Officer also made independent enquiries from the payees, who confirmed that the payments were for supply of earth, mitti and stones. On those facts, the payments were treated as being for supply of material and not for contract or sub-contract work or commission, so sections 194C and 194H were found inapplicable and, consequently, section 40(a)(ia) was not attracted. The order could not be branded erroneous merely because the Commissioner preferred a different inference or because the assessment order did not expressly discuss every investigative step. Initiation of penalty proceedings under section 271C did not justify revision on the question of disallowance.

Conclusion: The conditions for invoking section 263 were not satisfied, and the revisional order was unsustainable in favour of the assessee.

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