Section 263 revision fails where the Assessing Officer makes enquiry and adopts a plausible view after considering material on record.

Section 263 revision requires the assessment order to be both erroneous and prejudicial to the Revenue. Where the Assessing Officer issues a detailed questionnaire, examines explanations and supporting records, and adopts a plausible view on the assessee's IDS disclosure, returned income, expenses, cash transactions, loans and penalty non-initiation, revision cannot be justified merely because the revisional authority prefers further enquiry. The record also did not show that the IDS declaration had been revoked for misrepresentation or that acceptance of the assessee's explanation was unsustainable in law. On this reasoning, the revisionary action was held unsustainable and the assessment revision was set aside.

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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified on the footing that the Assessing Officer had not made proper enquiry into the assessee's declaration under the IDS, the returned income, the allowability of expenses, cash payments and loans, and the non-initiation of penalty proceedings.

Analysis: The assessment records showed that the Assessing Officer had issued a detailed questionnaire, called for explanations and supporting material, and then accepted the assessee's explanation after considering the seized and impounded material, the books prepared on that basis, and the disclosure made under the IDS. The revision order did not establish that the assessment was made without enquiry; at most, it expressed a view that further enquiry should have been made. The material did not show that the assessee's IDS declaration was revoked or shown to be based on a proved misrepresentation. The record also did not demonstrate that the acceptance of cash advances or the non-initiation of penalty proceedings under the cited provisions was unsustainable in law. In these circumstances, the Assessing Officer had adopted a permissible and plausible view, and the conditions for exercising revisionary jurisdiction were not satisfied.

Conclusion: The revisionary order under section 263 could not be sustained and was liable to be quashed in favour of the assessee.

Final Conclusion: The consolidated assessment revisions were set aside, and the assessee succeeded on the substantive challenge to the section 263 action, while the separate ground alleging lack of opportunity was not pressed.

Ratio Decidendi: Section 263 can be invoked only when the assessment order is both erroneous and prejudicial to the interests of the revenue, and a revision cannot rest merely on a preference for deeper enquiry where the Assessing Officer has taken a plausible view after calling for and considering material on record.

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