Section 263 revision fails where the Assessing Officer made specific enquiries and adopted a plausible view after due verification.

Revision under section 263 was held unjustified where the Assessing Officer had issued specific queries on the allowability of provision for construction expenditure and defect warranty, and the assessee had furnished replies with supporting material before assessment under section 143(3). The assessment record showed enquiry and application of mind, so the order could not be treated as passed without requisite verification. Explanation 2(a) to section 263(1) does not permit revision merely because the Principal Commissioner considers the enquiry inadequate or prefers a deeper scrutiny when a plausible view has already been taken after examination. The revisional order was therefore unsustainable and set aside.

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Issues: Whether revision under section 263 was justified where the Assessing Officer had raised specific queries on the allowability of provision for construction expenditure and defect warranty, and the assessee had furnished replies and supporting details.

Analysis: The assessment record showed that the Assessing Officer had issued notices under section 142(1) and had specifically asked for an explanation regarding the impugned expenditure. The assessee furnished a detailed reply and supporting material, which the Assessing Officer considered before completing the assessment under section 143(3). In such circumstances, the record evidenced enquiry and application of mind. A revisionary order cannot be sustained merely because the Principal Commissioner considers the enquiry to be inadequate or prefers a deeper scrutiny. Explanation 2(a) to section 263(1) applies where an order is passed without making the inquiries or verification that should have been made, but it does not authorise substitution of the revisional authority's view for a plausible assessment view already taken after enquiry.

Conclusion: The invocation of section 263 was not justified. The revisional order was unsustainable and was set aside.

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