Revisional jurisdiction under section 263: Commissioner cannot overturn a plausible AO view after adequate enquiry; revision quashed.

Whether the Principal Commissioner's revision under section 263 was sustainable was examined by reference to the legal test that an assessing officer's order must be both erroneous and prejudicial to revenue to permit revision; where the AO undertakes adequate enquiry and adopts a plausible view, revisional jurisdiction is not available simply because the Commissioner prefers a different view. The Tribunal found the AO had considered sale deed, government valuer report, computations and purchase evidence and therefore took a plausible view; the revisional order was quashed and the appeal allowed for the assessee.

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Issues: Whether the order of the Principal Commissioner of Income-tax dated 11-03-2024 revising the assessment order passed under section 147 r.w.s. 144B of the Income-tax Act, 1961 by invoking section 263 is sustainable, i.e., whether the assessing officer's order was erroneous and prejudicial to the interest of the revenue.

Analysis: The Tribunal examined whether the assessing officer had conducted adequate enquiry and applied his mind while accepting the returned income and allowing deduction under section 54B, and whether the assessing officer's view was one of the plausible views permissible in law. The Tribunal noted the materials placed before the assessing officer including sale deed, valuation report by government approved valuer, computations of capital gain based on jantri value and purchase valuation, and documentary evidence of purchase of agricultural land within the statutory period. The Tribunal applied the legal test for exercise of revisional jurisdiction under section 263 which requires that the assessing officer's order must be both erroneous and prejudicial to the revenue; where the assessing officer has taken a plausible view after enquiry, such view is not to be treated as erroneous merely because the Commissioner prefers a different view.

Conclusion: The assessing officer had made adequate inquiry and taken a plausible view; therefore the conditions for invoking jurisdiction under section 263 (that the order is erroneous and prejudicial to the interest of revenue) are not satisfied. The revision order dated 11-03-2024 is quashed and the appeal is allowed in favour of the assessee.

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