TMI Blog2017 (3) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... t are retrospective in their operation, and delivered the decision against the assessee in that case that reasoning. In the appeal of Rajmandir Estates Private Ltd. (supra), the Coordinate Bench did not consider it necessary to examine the question of retroactivity of the aforesaid provision. The Coordinate Bench found the order of the C.I.T. to be valid examining the order applying the unamended provision of Section 68 of the Act only. We do not find any other distinguishing element in these appeals which would require addressing the question as to whether the amendment to Section 68 of the Act was retrospective in operation or not. Neither do we need to address the issue that if the inquiries, as directed, revealed that share capital infused were actually unaccounted money, whether the same could be taxed in accordance with Section 56(2) (vii b) or not. It is not necessary in these appeals to deal with the question of retroactivity of the aforesaid provisions, for which that authority was cited. Asking for source of source can be relevant inquiry. - Decided against the assessee - GA 997 of 2016, 998 of 2016, 93 of 2017 94 of 2017, 3909 of 2015, 276 of 2016 , 601 of 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (Pragati) is engaged in investment activities. In the concerned accounting year, being 2007- 08, the appellant had filed return declaring loss of ₹ 24,805/-. After submission of return, the assessee had sent a letter to the assessing officer, indicating therein that the company had earned consultancy fees to the tune of ₹ 75,000/-, which was not offered for tax in its return of income. On receiving such letter, the assessing officer issued notice under Section 148 of the Income Tax Act, 1961. On 31st May, 2010, the assessing officer passed an order under Section 147/143(3) of the Act on 31st March, 2010 determining the assessee s total income to be ₹ 60,800/-. 3. The Commissioner of Income Tax : Kolkata III (C.I.T.), in exercise of his power under Section 263 of the Act issued a showcause notice dated 1st March 2013, to which the assessee filed written submission. In the stay petition, it has been alleged that no showcause notice was issued and the order under Section 263 of the Act was passed ex-parte. This point, however, was not pressed before us at the time of hearing of this appeal. From the Grounds on which the Tribunal heard the appeal (annexed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the assessee. The Commissioner, however, issued the order upon coming to a finding that the assessing officer had not pursued the inquiries to their logical end and had made an order prejudicial to the interest of the Revenue. The C.I.T. in his order held and directed:- I have considered the facts of the case and the decisions of the superior Courts cited above. I am of the opinion that the A.O. by not pursuing the inquiries to their logical end has made the order erroneous and prejudicial to the interest of revenue. The order is, therefore, set aside and the A.O is directed to carry out through detailed enquiries in the case. He should carry out inquiries about the various layers through which the share capital has been rotated. The A.O. is also directed to summon the present past Directors of the assessee company and the subscriber companies and examine them. The A.O. should also examine as to when this company was sold. At that point of time the fictitious assets such as shares in other companies or loans given to other companies is converted back into cash by credit in the assessee company s bank account. The source of this money also needs to be examined. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen, the Tribunal opined, addition under Section 68 of the Act would have been called for. That would be the ultimate outcome of the inquiry directed by the C.I.T., provided of course, the assessing officer remained unsatisfied with the explanation furnished by the assessees. Section 68 of the Act permits adding the sum credited to the income of an assessee in situations specified under that provision. For the assessment years concerned, Section 68 of the Act read:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 6. There was amendment to the aforesaid Section and following provisos were added to Section 68 by the Finance Act, 2012, with effect from 1st April, 2013:- Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the sums being projected by the appellants as capital receipts. Mr. Majumdar wants us to reject the finding of the Tribunal that Section 68 of the Act, as amended, has retrospective operation. In support of his submissions on this point, he has relied on a Constitution Bench judgment of Supreme Court delivered in the case of the Commissioner of Income Tax Vs. Vatika Township Pvt. Ltd. [(2015) 1 SCC 1]. Argument of the appellant is that in the event the amendment made to section 56 (2) of the Act is given prospective effect along with provisos to Section 68, then sums received as share capital or share premium would not be taxable in the light of particulars already disclosed by each appellant, and the exercise directed by the C.I.T. would be a futile or redundant exercise. Mr. Majumdar wants the appeal to be admitted on formulating the following question, which, according to him, would involve substantial question of law:- Whether in the facts and circumstances of the case and in law, the learned Tribunal erred in holding that the proviso to Section 68 inserted by the Finance Act, 2012 with effect from April 1, 2013 would be applicable to Assessment Year 2008 09? 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same. A copy of the order of the Hon ble Supreme Court has been made available to us by Mr. Nizamuddin, learned counsel representing the Revenue. 13. In that judgment, the Coordinate Bench had referred to particulars of the assessee s account in detail. Reference was made specifically to its subsisting share capital, quantum rise in share capital and reserve and surplus on issue of share capital with high premium during the relevant previous year. In this judgment, we do not consider it necessary either to reproduce the particulars of accounts of individual assessees or to refer to the manner in which the capital receipts were realised. The factual background of these cases are more or less similar to the facts involved in the case of Rajmandir Estates Private Ltd. (supra), and learned counsel for the parties have also confined their submissions to points of law only. The capital receipts in respect of which inquires have been ordered by the C.I.T. have similar features, being fresh share capital issued at high premium. Mr. Majumdar, however, drew his strength to urge the point that it was only after the aforesaid amendments such inquiries would have relevance. He sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon ble Supreme Court in the case of Vedika Township Private Ltd. (supra) does not apply in the legal context in which we are deciding these appeals. It is not necessary in these appeals to deal with the question of retroactivity of the aforesaid provisions, for which that authority was cited. 15. Arguments in all these appeals have been advanced in the same line, and for that reason we have not recorded in this judgment the submissions made individually in each appeal. Another decision of a Coordinate Bench in ITA No. 723 of 2008 in the case of Commissioner of Income Tax, Central II, Kolkata Vs. Shyam Sel Ltd. decided on 28th June 2016 was referred to on behalf of the appellants. This decision was cited to contend that the assessee cannot be asked to discharge the onus of proving the genuineness of transaction relating to the source of its source of share application. But in the decision of Rajmandir Estate Pvt. Ltd. (supra), the Coordinate Bench had directly addressed this issue and observed that source of source can be relevant inquiry. 16. The points sought to be raised before us in these appeals stand covered by the aforesaid judgment of the Coordinate Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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