Section 263 revision fails where the Assessing Officer made enquiries and took a plausible view on capital loss and 80IA claims.

Revision under section 263 was not justified where the assessment record showed that the Assessing Officer had issued specific enquiries on the assessee's claim for carry forward of long-term capital loss from the Dahej land transaction and the deduction under section 80IA, and the assessee had furnished replies, supporting documents, audit reports and working details. The absence of an elaborate discussion in the assessment order did not by itself establish lack of enquiry. A revisionary order can stand only if the assessment is both erroneous and prejudicial to the interests of the revenue, and Explanation 2 does not apply where the Assessing Officer has examined the issues and adopted one of the plausible views on the material available. The revisionary order was unsustainable.

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Issues: Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 on the ground that the Assessing Officer had not made proper enquiry into the assessee's claim for carry forward of long-term capital loss on the Dahej land transaction and deduction under section 80IA.

Analysis: The assessment record showed that the Assessing Officer had issued specific queries during scrutiny on both the long-term capital loss claim and the section 80IA deduction, and the assessee had furnished replies, supporting documents, audit reports, and working details. The mere absence of detailed discussion in the assessment order did not establish lack of enquiry. Revision under section 263 requires the order to be both erroneous and prejudicial to the interests of the revenue, and Explanation 2 does not apply where the Assessing Officer has in fact examined the issues and adopted one of the plausible views on the basis of material placed before him.

Conclusion: The revisionary order was not sustainable, and the assessee succeeded on merits.

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