Section 263 revision fails where the Assessing Officer adopts a possible view after proper enquiry and legal examination.

Revision under section 263 was unsustainable where the Assessing Officer had made enquiries, examined the amended double taxation agreement, and adopted a possible view on the taxability of the receipts. An internal audit objection did not by itself justify revision, and the Commissioner was still required to exercise independent judgment before treating the assessment as erroneous and prejudicial to revenue. Because the assessment order reflected proper enquiry and a legally supportable view, it could not be revised merely because a different view was preferred.

---

---

Issues: Whether the Commissioner was justified in exercising revisionary jurisdiction under section 263 on the basis of an internal audit objection and in treating the assessment as erroneous and prejudicial to the interests of revenue when the Assessing Officer had made enquiries and adopted a possible view on taxability.

Analysis: The requirement for revision under section 263 is that the assessment order must be both erroneous and prejudicial to the interests of revenue. The record showed that the Assessing Officer had called for explanations, examined the amended double taxation agreement, and considered the assessee's materials on the nature of the receipts. The existence of an internal audit objection did not by itself invalidate the revisionary process, but the Commissioner was still required to apply independent mind before acting. On the facts, the Assessing Officer had made proper enquiries and had adopted one of two possible views on the taxability of the receipts. Where a view taken by the Assessing Officer is a possible view and is supported by judicial authority, the order cannot be treated as erroneous merely because the Commissioner prefers a different view.

Conclusion: The invocation of section 263 was not sustainable, and the assessment order could not be revised on the ground that it was erroneous and prejudicial to the interests of revenue.

---