Delhi High Court
Commissioner Of Income-Tax vs Achal Investment Ltd. on 20 January, 2004
Equivalent citations: (2004)187CTR(DEL)475, 2004(73)DRJ462, [2004]268ITR203(DELHI)
Author: Badar Durrez Ahmed
Bench: Badar Durrez Ahmed
JUDGMENT B.C. Patel, C.J.
1. The Revenue's reference is to be heard for the assessment year 1982-83 against the assessed M/s Achal Investments Ltd. The reference is under Section 256(2) of the Income-tax Act and the question framed is as under:
"Whether the Tribunal was right in coming to the conclusion that the provisions of section 263 of the Income-tax Act, 1961 had not been rightly invoked in this case?"
2. The Assessing Officer completed the assessment under Section 143(3) of the Act after making necessary inquiries as contemplated. The company was incorporated on 14.7.1980 and the accounts were closed on 30.6.1981. The capital of the company consisting of 2,00,000 shares of Rs.10/- each amounting to Rs.20,00,000/-. The company received Rs.3,05,500/- as share application money. The Assessing Officer did not allow certain expenditure in view of the fact that there was no income of the company during the first year. It is also noted that certain confirmation letters in respect of the amounts invested by the promoters in the share capital were filed. However, in view of the opinion of the Commissioner of Income Tax, the Assessing Officer did not verify the genuineness of the said confirmation letters and, therefore, he issued notice under Section 263 of the Income-tax Act.
3. After hearing the representative of the assessed, the Commissioner of Income-tax vide order dated 18.2.1987, set aside the order made by the Assessing Officer and the Assessing Officer was directed to carry out the exercise as indicated in the order.
4. Against the said order made by the Income-tax Commissioner, the assessed preferred an appeal being ITA No. 2160(Del)/1987. The Income-tax Tribunal on identical facts had earlier cancelled the Commissioner of Income-tax's order in the case of M/s Steller Investment Ltd. Following its decision, the Tribunal, hearing the appeal of the assessed, allowed the same on 22.3.1990 against which the Revenue submitted an application being R.A.No.884/(Del)/1990, inter alia, requesting the Tribunal to refer the case to the High Court. However, the same was rejected. The Revenue, thereafter, moved the High Court under Section 256(2) of the Act and that application was allowed and hence the present reference.
5. We are not required to examine the matter in detail as we are of the opinion that the Tribunal has allowed the appeal of the assessed following its judgment delivered in M/s Steller Investment Ltd case which was the subject matter of a reference entitled Commissioner of Income-Tax vs. Stellar Investment Ltd: 192 ITR 287 decided on 16th April, 1991. In that case, the subscribed capital of the respondent-company had been increased and the Income-tax Officer accepted the increase and assessed the company. The Commissioner, in revision, set aside the order of assessment, being of the view that there had been a device of converting black money into white by issuing shares with the help of formation of an investment company, and that the Assessing Officer did not make any enquiries with regard to the genuineness of the subscribers to the share capital. While confirming the decision of the Appellate Tribunal, the division Bench held as under:
"It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessed. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself.
In our opinion, no question of law arises and the petition is, therefore, dismissed."
6. The aforesaid decision in the case of M/s Steller Investment Ltd was challenged by the Revenue before the Supreme Court which, by its decision reported in case of Commissioner of Income-Tax vs. M/s Steller Investment Ltd: 251 ITR 263 disposed of the appeal by passing the following order:
"We have read the question which the High Court answered against the Revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs."
7. It is in view of this, the question framed need not be answered. The reference is, accordingly, disposed of.