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Issues involved: The correctness of the order passed by the Commissioner of Income-tax u/s 263 of the Income-tax Act, the acceptance of revised return by the Income-tax Officer without additions, lack of independent verification of confirmations by shareholders, discrepancy in received confirmations and raised capital, and the reflection of trading in shares in the profit and loss account.
Judgment Summary: The petitioner sought reference of a question regarding the cancellation of the order passed by the Commissioner of Income-tax u/s 263 of the Income-tax Act. The respondent initially filed a loss return but later revised it to declare income, including a sum from other sources related to share issuances. The Income-tax Officer accepted the revised return without any additions. However, the Commissioner of Income-tax found the assessment order prejudicial to revenue interests due to lack of independent verification of shareholder confirmations and discrepancies in raised capital versus received confirmations. The Income-tax Appellate Tribunal concluded that the Commissioner of Income-tax wrongly exercised jurisdiction, but failed to address the issue of independent verification highlighted by the Commissioner. The Tribunal mentioned inquiries made to the assessee but did not conduct independent verification, which the Commissioner deemed necessary, especially considering the disclosed undisclosed income. A similar case was cited, but the essential difference was noted where the present case involved the disclosure of undisclosed income from other sources. Citing previous court decisions, the High Court directed the Income-tax Appellate Tribunal to refer the question to the court based on the decision's ratio in a specific case. The petition was disposed of with no costs awarded.
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