2016 (6) TMI 1377 - HC - Income Tax

Revision u/s 263 - addition on account of bogus share application and premium investment - Commissioner who was of the opinion that inquiries were not made in respect of 11 share and premium applicants therefore restored the matter back to the AO for carrying out necessary inquiries with respect to identity and creditworthiness of these 11 share applicants and then to decide about genuineness of the share application transactions - HELD THAT - Tribunal in impugned judgment upon perusal of the record particularly of the assessment proceedings held that the Assessing Officer had in fact made inquiries with these 11 applicants also. The Tribunal held that even the Commissioner did not dispute this fact. The Tribunal was therefore of the opinion that this was not a case where it can be said that the Assessing Officer failed to carry out any inquiry at all. The Tribunal also noted that the Assessing Officer had called for the reply of the assessee who had given elaborate explanation. In fact it was this exercise undertaken by the AO in the reassessment proceedings which led to addition of 26 lacs in case of the assessee on account of bogus share application and premium investment. The facts being such we do not found any error in the Tribunal striking down the order of the Commissioner of Incometax (Appeals) passed under section 263 - No question of law arises

Summary

Issues: Validity of order passed by Commissioner under section 263 of the Income Tax Act.

In this case, the issue revolves around the validity of the order passed by the Commissioner under section 263 of the Income Tax Act against the order passed by the Assessing Officer in reassessment. The Commissioner believed that inquiries were not conducted regarding 11 share and premium applicants, amounting to &8377; 56 lacs, and thus directed the Assessing Officer to carry out necessary inquiries. However, the Tribunal found that the Assessing Officer did, in fact, make inquiries with these 11 applicants, and the Commissioner did not dispute this fact. The Tribunal concluded that the Assessing Officer did not fail to conduct any inquiry and noted that the Assessing Officer had called for and received a detailed explanation from the assessee. Consequently, the Tribunal upheld the Assessing Officer's actions, leading to the addition of &8377; 26 lacs in the case of the assessee due to bogus share application and premium investment.

The High Court, after considering the facts of the case, found no error in the Tribunal's decision to strike down the order of the Commissioner under section 263 of the Income Tax Act. The court determined that no question of law arose from the Tribunal's decision and, therefore, dismissed the Tax Appeal.