Section 263 revision cannot replace a plausible assessment view on bogus purchases after inquiry

Revision under section 263 was not justified where the Assessing Officer had made an addition of 12.5% of alleged bogus purchases after inquiry and adopted a legally plausible view. The Principal Commissioner could not invoke revision merely to substitute a different approach by insisting that the entire amount be added under section 69C and taxed under section 115BBE. The Tribunal and HC held that this was not a case of lack of inquiry, and the assessment order was neither erroneous nor prejudicial to the interests of revenue. The Tribunal's order was upheld.

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Issues: Whether revision under section 263 of the Income-tax Act, 1961 was justified where the Assessing Officer had made an addition of 12.5% of alleged bogus purchases on a plausible view, and whether such order could be treated as erroneous and prejudicial to the interests of revenue.

Analysis: The Assessing Officer had examined the matter and adopted a view that only 12.5% of the alleged bogus purchases should be added. The Principal Commissioner sought to revise the assessment on the basis that the entire amount ought to have been added under section 69C and taxed under section 115BBE. The Tribunal found that this was not a case of lack of inquiry, but of an attempt to substitute one possible view with another. The Court agreed that where the Assessing Officer has taken a legally plausible view after inquiry, the revisionary power cannot be used merely because the Commissioner prefers a different approach. The order was therefore not unsustainable in law and did not satisfy the requirements of section 263.

Conclusion: The revision under section 263 was not justified, and the Tribunal's order was upheld.

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