Section 263 revision fails where scrutiny assessment reflects a sustainable view and no prima facie error is shown.

Revision under section 263 of the Income-tax Act was held unsustainable where the Assessing Officer had issued questionnaires, examined books and supporting details, and accepted the deduction claim under section 80IB(10) after scrutiny. The revisional authority could not invoke section 263 merely because it considered that further enquiry should have been made or because it preferred a different view. As the assessment was based on one of the possible sustainable views and there was no prima facie material showing the order to be both erroneous and prejudicial to the interests of the Revenue, the order setting aside the assessment was quashed.

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Issues: Whether the revisional order under section 263 of the Income-tax Act, 1961 setting aside the assessment was justified on the ground that the Assessing Officer had not made proper enquiry while allowing deduction under section 80IB(10).

Analysis: The assessment record showed that the Assessing Officer had issued questionnaires, examined the books and details furnished, and accepted the claim after scrutiny. The revisional authority proceeded on the view that further enquiry ought to have been made and that the material on record was insufficient. For invoking section 263, the assessment order must be shown to be both erroneous and prejudicial to the interests of the revenue, and there must be prima facie material supporting that conclusion. Where the Assessing Officer has taken one of the possible views and the view is sustainable in law, revisional jurisdiction cannot be used merely to direct deeper enquiry or to substitute a different opinion.

Conclusion: The revision under section 263 was not sustainable and the order setting aside the assessment was quashed. The assessee succeeded.

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