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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified where the Assessing Officer had examined the impugned cash transactions, treated them as unaccounted sales, and applied gross profit rate instead of taxing the entire receipts.
Analysis: The issue was examined in the original assessment proceedings, including enquiry under section 133(6) and verification of the material obtained from the angadia concern. On that basis, the Assessing Officer treated the amount as unaccounted cash sales and brought to tax only the estimated profit element by applying the gross profit rate already adopted by the assessee. Revision under section 263 is permissible only when the assessment order is both erroneous and prejudicial to the interests of the Revenue. Where the Assessing Officer has taken one of the possible and legally sustainable views after enquiry, the Commissioner cannot substitute a different view merely because a higher addition was possible. The record showed application of mind and a plausible assessment approach, and the Revenue's contention that the entire receipts should be taxed was not sufficient to render the assessment order revisable.
Conclusion: Section 263 could not be invoked, and the revisionary order was unsustainable.
Ratio Decidendi: An assessment order is not erroneous and prejudicial to the interests of the Revenue where the Assessing Officer, after due enquiry, adopts one of the legally permissible views; section 263 cannot be used to substitute the Commissioner's view for that of the Assessing Officer.
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