Revision under section 263 failed where inquiry supported a plausible Rule 6DD cash-payment claim.

Revision under section 263 was unwarranted where the Assessing Officer had examined the assessee's documents and confirmations for cash payments and accepted the claim that they fell within Rule 6DD(e)(ii). The Tribunal treated the parties as milk producers, noted exceptional circumstances and only limited cash payment, and held that the assessment was made after inquiry on a plausible view. In those circumstances, the assessment order could not be branded erroneous merely because the Principal Commissioner preferred a different view, including reliance on Explanation 2(a). The Gujarat HC therefore upheld the view that the order was not liable to revision for alleged lack of inquiry.

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Issues: Whether the order under section 263 of the Income-tax Act, 1961 was justified on the ground that the Assessing Officer had allegedly not made proper inquiry into cash payments claimed to be covered by Rule 6DD, and whether the Tribunal was right in holding the assessment order to be a plausible view not amenable to revision.

Analysis: The assessment record showed that the assessee had produced the relevant documents and confirmations regarding the cash payments, and the Assessing Officer had examined the material before accepting the claim that the payments were covered by the exception in Rule 6DD(e)(ii) of the Income-tax Rules, 1962. The Tribunal found that the parties were milk producers and that the payments were made in exceptional circumstances, with only a small portion in cash. On these facts, the Assessing Officer had taken a possible view after inquiry. In such a situation, the assessment order could not be treated as erroneous merely because the Principal Commissioner held a different view under section 263, including reliance on Explanation 2(a).

Conclusion: The revision under section 263 was not justified, and the assessment order was not liable to be set aside for alleged lack of inquiry.

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