Section 263 revision fails where enquiry was made and the assessment adopted one plausible view on a debatable tax issue.

Revisional jurisdiction under section 263 could not be invoked where the Assessing Officer had made specific enquiries, considered the assessee's explanation that interest under section 28 of the Land Acquisition Act, 1894 formed part of enhanced compensation, and adopted a plausible view supporting exemption under section 10(37) of the Income-tax Act, 1961. The matter involved a debatable issue, and the existence of one legally possible view barred revision. A mere audit objection did not establish error or prejudice to the Revenue, and reliance on a High Court decision on its own facts, or a non-speaking dismissal of an SLP, did not alter the binding legal position. The revisional order was therefore invalid and the assessment remained undisturbed.

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Issues: Whether the Principal Commissioner could invoke revisional jurisdiction under section 263 on the ground that the Assessing Officer had not properly examined the taxability of interest received under section 28 of the Land Acquisition Act, 1894 on enhanced compensation, and whether the assessment order was erroneous and prejudicial to the interests of the Revenue.

Analysis: The record showed that the Assessing Officer had issued specific queries and the assessee had explained that the interest under section 28 formed part of enhanced compensation and was claimed exempt under section 10(37) of the Income-tax Act, 1961. This was not a case of no enquiry or lack of enquiry. The revision was triggered mainly by an audit objection and by reliance on a High Court decision rendered on its own facts, whereas the binding Supreme Court position in Ghanshyam HUF and the distinction between interest under sections 28 and 34 of the Land Acquisition Act continued to support the assessee's stand. The dismissal of SLP in limine did not amount to declaration of law or affirmation of the High Court's reasoning. Since the assessment view was supported by one of the possible views on a debatable issue, the preconditions for section 263 were not satisfied.

Conclusion: The invocation of section 263 was invalid and the revision order could not stand.

Final Conclusion: The assessment was left undisturbed and the assessee obtained full relief against the revisional order.

Ratio Decidendi: Revisional power under section 263 cannot be exercised where the Assessing Officer has made enquiry and adopted one of two possible legal views on a debatable issue, and a mere audit objection or non-speaking dismissal of an SLP does not supply the requisite legal basis for revision.

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