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Issues: Whether revision under section 263 was justified where the Assessing Officer had made enquiries on the scrutiny issues and accepted the assessee's explanation, but the Principal Commissioner sought revision on the ground of alleged inadequate enquiry and on additional issues.
Analysis: The scrutiny was selected to examine the increase in turnover with no corresponding increase in net profit. The record showed repeated notices under section 142(1), specific queries on fall in gross profit, project installation expenses, commission, rent, advances to M/s Narula Exports and the possible application of section 2(22)(e), followed by replies and supporting documents from the assessee. On those materials, the Assessing Officer took a view and accepted the returned income. The Principal Commissioner did not identify any specific error or omission in the material already examined and instead sought further enquiry. The governing principle applied was that revision cannot rest merely on a different view of the depth or manner of enquiry once enquiry has in fact been made; a mere allegation of inadequate enquiry does not suffice. The decision also noted that issues not forming part of the scrutiny reasons, such as some of the additional observations in the revision order, could not support revision in the absence of demonstrated lack of enquiry or error on the record.
Conclusion: Revision under section 263 was not sustainable and the revisional order was quashed in favour of the assessee.
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