Section 263 revision fails where the Assessing Officer made enquiries, examined records, and adopted a plausible assessment view.

Section 263 revision was held unsustainable where the Assessing Officer had already called for the joint venture agreement, loan details, construction expense workings, WIP statements and supporting documents, and the assessee had disclosed the relevant development-rights payment, expenditure heads and related records in audited accounts and the tax audit report. The record showed enquiry and application of mind, so the Commissioner could not revise the assessment merely because further enquiry was considered desirable. As the assessment view was plausible on the material before the Assessing Officer, the revisional order was cancelled and the assessment order restored.

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Issues: Whether the order of assessment could be revised under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had not made proper enquiry into the allowability and nature of construction expenses, payment for development rights, and related party transactions.

Analysis: The assessee had disclosed the relevant transactions in its audited accounts and tax audit report. The assessment record showed that the Assessing Officer had issued a detailed notice under section 142(1) calling for the joint venture agreement, loan details, construction expenses, WIP workings, and supporting documents. The assessee furnished the development agreement, variation agreement, explanations on payment of Rs. 90 crores for development rights, and details of the other expenditure heads. The closing work-in-progress also reflected the impugned expenditures. In these circumstances, the record did not support the Commissioner's conclusion that there was no enquiry or verification. The revision was founded only on a view that more enquiry ought to have been made, which is insufficient for section 263 where the Assessing Officer had already applied his mind and taken a plausible view.

Conclusion: The revision under section 263 was not sustainable and the assessee succeeded on this issue.

Final Conclusion: The assessment order was restored and the revisional order was cancelled because the prerequisites for invoking section 263 were not established.

Ratio Decidendi: Section 263 cannot be invoked merely because the Commissioner considers that further enquiry was desirable when the Assessing Officer had already made enquiry, called for relevant material, and adopted a plausible view on the basis of the record.

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