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Issues: Whether the Principal Commissioner could invoke revisionary jurisdiction under section 263 when the Assessing Officer had examined the receipt of interest on enhanced compensation and adopted a plausible view on taxability.
Analysis: The assessment records showed that the assessee had disclosed the receipt relating to acquisition of agricultural land and had specifically explained that interest under section 28 of the Land Acquisition Act, 1894 formed part of enhanced compensation and was claimed to be exempt under section 10(37) of the Income-tax Act, 1961. The Assessing Officer had issued notices, called for details, and considered the reply before completing the assessment. In these circumstances, the order could not be treated as one passed without enquiry. The governing principle is that revision under section 263 is not justified merely because the Commissioner prefers another view; where the Assessing Officer has taken one of two plausible views after enquiry, the order is not erroneous and prejudicial to the interests of the Revenue unless the view taken is unsustainable in law.
Conclusion: The revisionary order under section 263 was not sustainable, and the assessee succeeded.
Ratio Decidendi: Section 263 cannot be invoked where the Assessing Officer has conducted enquiry and adopted a plausible view on a debatable issue; mere disagreement with that view does not make the assessment order erroneous and prejudicial to the interests of the Revenue.
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