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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified on the ground that the assessment order suffered from lack of enquiry in respect of payments to specified persons, conveyance expenses and rental receipts.
Analysis: The assessment had been completed under section 143(3) after the assessee had furnished replies and supporting material regarding the nature of services, the payments made to persons covered by section 13(3), the conveyance ledger, and the rental income and rent paid to the lessor. The revisionary order proceeded on the premise that further verification ought to have been made. The Tribunal held that the record disclosed enquiry by the Assessing Officer and that the case was not one of lack of enquiry. It reiterated that section 263 can be invoked only where the order is both erroneous and prejudicial to the interests of the Revenue, and that where the Assessing Officer has taken a plausible view after enquiry, the Commissioner cannot substitute a different opinion or direct revision merely because the enquiry was, in his view, inadequate.
Conclusion: The invocation of section 263 was not sustainable and the revisionary order was set aside.
Final Conclusion: The assessment as originally completed was restored, and the assessee succeeded in the appeal.
Ratio Decidendi: Section 263 cannot be exercised where the Assessing Officer has made enquiry and adopted a plausible view; mere inadequacy of enquiry, without demonstrated error and prejudice, does not justify revision.
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