Section 263 revision fails where the Assessing Officer made proper enquiry and adopted a permissible view.

Revision under section 263 was not sustainable where the Assessing Officer had issued notices, examined the sale agreement and cancellation, verified the supporting evidence, and recorded statements of the agriculturists before accepting the assessee's explanation on cash deposits. Once the assessment was made after enquiry and on a permissible view, the revisional authority could not invoke section 263 merely because it preferred a different conclusion. The order was therefore set aside in favour of the assessee.

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Issues: Whether the revisionary order under section 263 of the Income-tax Act, 1961 was sustainable when the Assessing Officer had examined the cash deposits and taken a view after verification.

Analysis: The record showed that the Assessing Officer had issued notices, called for documents, examined the sale agreement and cancellation, considered the supporting evidence filed by the assessee, and also recorded the statements of the agriculturists who confirmed the transaction. The assessment was thus made after enquiry and verification on the very issue on which revision was initiated. For invoking section 263, both conditions must coexist, namely that the assessment order is erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer has adopted one permissible view after enquiry, the revisional authority cannot substitute its own view merely because it prefers a different conclusion. On the facts, the revisional order proceeded on a second view and not on any demonstrated lack of enquiry or patent error.

Conclusion: The revision under section 263 was not sustainable, and the order was liable to be set aside in favour of the assessee.

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