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TMI Blog1991 (5) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... share capital contribution. In response to the notice under section 263, Shri M.L. Dujari, C.A. appeared. He explained that the company had already filed the Amnesty return surrendering a sum of Rs. 2,75,000 for assessment. According to him, in the light of this surrender, there was no cause of action under section 263. I find that the assessee-company raised capital of Rs. 24 lacs. This included the subscription by the members of the public whose authenticity has not been verified by the ITO when he completed the assessment. The amount of such subscription totalled to Rs. 10,15,000. The Amnesty return filed by the company covers Rs. 2,75,000. The assessment is set aside. The ITO is directed to redo the same in accordance with law." 2. It will be seen from this order that what motivated the CIT in invoking the provisions of section 263 was the return filed by the assessee on 30-3-1987 offering for tax a sum of Rs. 2,75,000 said to be part of the share capital collected as income from undisclosed sources. This return was admittedly filed under the Amnesty Scheme. The assessee sought the benefit of Amnesty Scheme by filing a return on 30-3-1987 by offering the said sum of Rs. 2,75,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose genuineness, status and file numbers were given along with returns of income. There could not, therefore, be any question as to the manner, method, nature and source of the contribution by the promoters because these appeared to be a son of entries in the books by way of adjustments. It was further pointed out in that letter that this company followed the procedure prescribed by the Companies Act and also, the Securities Contract Regulations Act, and the Rules & Regulations of the Delhi Stock Exchange in raising the capital. It was only in respect of public issue that the assessee, with a view to purchase peace because the Department was harassing them, took advantage of the Amnesty Scheme and offered the sum of Rs. 2,75,000 as income from other sources by paying the tax of Rs. 1,59,224. it was specifically pointed out in this letter that as a consequence of this offer, the Department would not make any further enquiry. It was further made clear that by agreeing to pay the tax on the aforesaid amount, the company did not in any way admit nor should it be construed as admitted that the said amount represented the income from undisclosed sources because the question of having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and then copies of the audited balance sheet and profit & loss account were filed, the list of shareholders, prospectus were all filed and were examined by him. It is, therefore, not clear from the assessment order as to what aspect the ITO did not look into and what was the information in the possession of the CIT based upon which he could say that the assessment made by the ITO caused prejudice to the interest of the revenue except bare suspicion. Even if enquiries were made or allowed to be made as directed by the CIT what enquiries could be made by the ITO in the case of the company. Even if he had summoned all the shareholders and found that some of them had not properly explained the source, would it be open to the ITO to add that sum as the income of the assessee even by invoking section 68 because section 68 would apply only to cash credits and not to share capital. The assessee-company had no means under the Companies Act to question the shareholders of their source of money. This apart when the assessee made a voluntary disclosure of Rs. 2,75,000 and sought the benefits guaranteed by the Government under that scheme, the assessee is entitled under the terms guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity must be a full opportunity which should disclose the purpose for which the assessee was being asked to appear and why the CIT wanted to pass an order under section 263 and what were the points the assessee was required to meet. Any notice without disclosing any of these things when particularly it is affecting his rights of disturbing a concluded assessment cannot be said to be giving of an opportunity. In Administrative Law, the safeguard provided is the observance of principles of natural justice. If the principles of natural justice are violated by giving such bald notices, it cannot be said that the assessees were given opportunities of being heard, particularly when the assessees were not told on what points they were required to make their submissions. We are, therefore, of the opinion that the opportunity provided by the CIT to the assessee is not an opportunity meeting even partly the requirements of law, although the assessee filed a reply conjuring up what could be passing in the mind of the CIT. Maybe there was some discussion on this point between the officials of the Department and the assessee from which the assessee could have known or gathered the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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