Brevity vs. Inquiry: Calcutta HC Restricts Section 263 Revision on Plausible AO Views

A brief assessment order is not automatically an erroneous one. The Calcutta High Court has reaffirmed that Section 263 of the Income Tax Act cannot be used by the Principal Commissioner of Income Tax (PCIT) to substitute their opinion over a legally plausible view taken by the Assessing Officer (AO).

"14. ...The distinction between 'lack of inquiry' and 'inadequate inquiry' is well settled. Revisional jurisdiction under Section 263 can be invoked in a case of 'lack of inquiry', but not where the AO has conducted inquiries and adopted a plausible view in accordance with law and CBDT instructions."

"18. ...Brevity of discussion in an assessment order does not lead to an inference that no inquiry was made by the Assessing Officer..."

Key Takeaways

1. Inadequate vs. Lack of Inquiry: Revisional powers under Section 263 apply only to complete non-inquiry, not where the AO reached a plausible conclusion after examining records.
2. CBDT Binding Nature: An assessment order following official CBDT instructions cannot be treated as "erroneous and prejudicial to the interests of the revenue."
3. Opinion Substitution Barred: PCIT cannot set aside an assessment order simply because another view is possible.

Statutory Provisions Referenced

• Section 263: Revision of Orders Prejudicial to Revenue.
• CBDT Circular/Instruction (May 2, 2016): Assessment of Capital Gains on Shares.

Case Details

• Court: High Court at Calcutta
• Case: Principal Commissioner of Income Tax vs. M/s Russel Credit Limited
• Neutral Citation: 2026:CALHC:019482-DB