Section 263 revision fails where the Assessing Officer made enquiries and adopted a plausible view on share capital transactions.

Revision under section 263 of the Income-tax Act requires the assessment order to be both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer, after the earlier revisional directions, examined the share capital and share premium receipts, called for details from the share applicants, and reviewed financial statements, bank records, returns and sworn statements, the order could not be treated as one passed without enquiry merely because the revisional authority wanted deeper examination. Acceptance of the transactions on that material was a plausible view on facts. A second revision on the same subject matter was therefore not sustainable without showing a specific legal error in the enquiry already made.

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Issues: Whether the revisional order under section 263 of the Income-tax Act, 1961 was sustainable when the Assessing Officer, in the second round, had conducted enquiries pursuant to the earlier revisional directions and taken a plausible view on the share capital and share premium received by the assessee.

Analysis: The revisionary power under section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer has made enquiries, obtained details from the share applicants, examined their financial statements, bank statements, income-tax returns and statements recorded under summons, the order cannot be branded as one passed without enquiry merely because the revisional authority considers further or deeper enquiry desirable. The material on record showed compliance with the earlier directions, and the Assessing Officer's acceptance of the share transactions was a possible view on the facts. In such circumstances, the revisional authority could not invoke section 263 again on the same subject matter without demonstrating a specific and legally sustainable error in the enquiry already made.

Conclusion: The revisional order was not justified and was liable to be set aside. The exercise of jurisdiction under section 263 failed because the assessment order was neither shown to be without enquiry nor shown to be an unsustainable view in law.

Final Conclusion: The assessee's assessment as completed after the second round of enquiry stood undisturbed, and the attempted second revision under section 263 was invalid.

Ratio Decidendi: An order cannot be revised under section 263 on the ground of lack of enquiry when the Assessing Officer has in fact conducted enquiry, collected relevant material, and adopted a plausible view; mere dissatisfaction with the depth of enquiry does not satisfy the statutory requirement that the order be both erroneous and prejudicial to the interests of the Revenue.

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