Section 263 revision barred where reassessment enquiry was made and a plausible view was taken on reopening issues.

Revision under section 263 is not justified where the Assessing Officer, in reassessment under section 144B read with section 147, examines the assessee's supporting material and accepts the returned income on the very issues that triggered reopening. The revisional authority cannot treat the order as erroneous merely because it believes further enquiry should have been made or prefers a different view. Explanation 2 to section 263 does not permit revision where enquiry was in fact conducted and a plausible view was taken. The critical distinction is between absence of enquiry and inadequate enquiry; once the issue has been examined, revision on a mere difference of opinion is impermissible.

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Issues: Whether the Principal Commissioner could invoke revisionary jurisdiction under section 263 of the Income-tax Act, 1961 to revise a reassessment order passed under section 144B read with section 147 of the Income-tax Act, 1961, when the Assessing Officer had examined the material furnished by the assessee and accepted the returned income on the very issues that formed the basis for reopening.

Analysis: The reassessment was initiated on the ground that the assessee had sold shares which, according to the reopening material, had not been purchased in earlier years. In the reassessment proceedings, the assessee furnished contract notes, bank statements, audited accounts, computation and other supporting evidence, and the Assessing Officer accepted the explanation without making an addition. The revision order was founded on the same material and grievance that the Assessing Officer had not made proper enquiries. In such circumstances, the order could not be treated as erroneous merely because the Principal Commissioner took a different view. Explanation 2 to section 263 does not authorise revision where enquiries were in fact made and a plausible view was taken. A distinction must be maintained between absence of enquiry and inadequate enquiry; where enquiry has been made and the issue has been examined, revision on a mere difference of opinion is impermissible.

Conclusion: The invocation of section 263 was invalid and the reassessment order could not be revised.

Ratio Decidendi: Revision under section 263 is not available where the Assessing Officer has conducted enquiry on the reopening issue, examined the material and taken a plausible view, since such an order is not erroneous merely because the revisional authority prefers a different view.

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