Section 263 revision fails where the assessment made enquiry and accepted excess stock as business income.

Section 263 revision was invalid where the Assessing Officer had examined the survey material, considered the excess stock discrepancy, and adopted the plausible view that the disclosed amount constituted business income. The Principal Commissioner could not invoke revision merely to recharacterise the same facts as unexplained investment under section 69 read with section 115BBE, because Explanation 2 to section 263 does not permit interference when enquiry was made and a sustainable view was taken. In the absence of independent material showing a real error of fact or law causing prejudice to the Revenue, the revisional order was quashed and the assessment was left undisturbed.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 on the ground that the assessment order failed to treat excess stock disclosed during survey as unexplained investment chargeable under section 69 and section 115BBE.

Analysis: The assessment records showed that the Assessing Officer had examined the stock discrepancy, considered the statement recorded during survey, and taken the view that the amount offered represented business income arising from excess stock. Section 263 can be invoked only when the order is both erroneous and prejudicial to the interests of the Revenue. Explanation 2 to section 263 does not authorise revision where the Assessing Officer has made enquiries and adopted a plausible view on the material before him. The Principal Commissioner did not bring any independent material to show that the source of the excess stock was something other than business income, and the revisional order effectively sought a fresh or fuller enquiry and substituted a different view on the same facts.

Conclusion: The invocation of section 263 was not sustainable and the revisionary order was quashed, in favour of the assessee.

Final Conclusion: The assessment order stood undisturbed because the Assessing Officer had made the relevant enquiry and adopted a permissible view, and the revisional authority could not interfere merely to pursue a different characterization of the income.

Ratio Decidendi: Revision under section 263 is impermissible where the Assessing Officer has conducted enquiry and adopted a plausible view, unless the Principal Commissioner demonstrates a real error of fact or law causing prejudice to the Revenue.

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