TMI Blog2017 (4) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... titute substantial compliance of the provisions of Section 282 of the Act. Tribunal, being the highest fact finding body, has already come to the finding that there has been proper service. Furthermore, we find from the order of Tribunal that the appellant was heard at length on factual as well as legal issues. We do not consider it necessary to go into the question as to whether Section 282 of the Act requires compliance or not for effecting service of notice in respect of a proceeding under Section 263 of the Act as we are of the opinion that substantial compliance of the provision of Section 282(1) has been effected in the case of the assessee. We do not find any perversity on the finding of the Tribunal on this issue upholding the proceedings under section 263. first proviso to Section 68 inserted by the Finance Act, 2012 w.e.f 1.4.2013 applies to the Assessment Year:2008 – 2009 as held by ITAT - Held that:- Question is already covered by our judgment in the case of Pragati [2017 (3) TMI 1242 - CALCUTTA HIGH COURT] as specifically held that the exercise which is contemplated by the impugned order of the Commissioner was permissible under Section 68 of the 1961 Act, as it st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued 2,36,000 shares having face value of ₹ 10/- each at a premium of ₹ 240/- and 10,000 shares at ₹ 10/- each to different body corporates. It is also the asssessee s case that the assessing officer had made queries regarding infusion of share capital and the assessee had furnished details thereof. Notices were issued to the share subscribing companies, which exercise the assessee refers to as on test check basis . The share applicants, according to the assessee, had given their response. The order was passed on 9th April, 2010 in the reassessment proceeding computing the total income of the assessee to be ₹ 30,890/-, and income tax payable was calculated on that basis. 3. A proceeding under section 263 was initiated by the Commissioner of Income Tax: Kolkata-III in respect of the assessment of the assessee and the reason for initiation of such proceeding would appear from the first two paragraphs of the order passed by the Commissioner under the aforesaid provision on 22nd March, 2013:- In this case return of income was filed on 28.07.2008 declaring total income of Rs.Nil/-. Subsequently, it was found that the company has earned consultancy fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cash by credit in the assessee company s bank account. The source of this money also needs to be examined. The A.O. is also directed to look into the investment in shares or stock of shares, as the case may be with a view to verify as to whether the assessee s name appears in the list of share holders of those companies whose shares the assessee is holding. Further, information should be sent to the A.Os of the subscriber companies and to the other companies through which the capital has been rotated regarding the findings of the A.O. Subsequent to the inquiries verification of all relevant aspects of the case, the A.O. should pass a speaking order after providing adequate opportunity to the assessee. (quoted verbatim) 5. The assessee went up in appeal against the order before the Income Tax Appellate Tribunal. The appeal of the assessee was registered as ITA No. 1707/Kol./2013. That appeal was heard along with 24 other appeals of different assessees involving similar legal issues. All these appeals were dismissed by a composite order passed by the Tribunal on 10th August, 2015. In the proceeding before the Tribunal, all the assessees were represented by their learned Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be chargeable to income tax under the head Income from other sources by insertion of sub Clause (viib) to sub Section (2) of Section 56 of the Act under the 2012 Finance Act. The assessees contentions were based mainly on the grounds that there could not be any further enquiry in respect of capital receipts and with regard to source of such funds through which there was infusion of share capital with high premium. There were certain other grounds also on which those appeals were founded, but the Coordinate Bench in Rajmandir (supra) and this Bench in Pragati (supra) had repelled all the contentions of the assessees. 7. Mr. Agarwal in this appeal has not raised the grounds which stand already covered by the said two judgements of this Court. He sought to argue this appeal on certain revised questions of law suggested by him. These are :- (1) Whether the Learned Tribunal was justified in not adjudicating the specific issue raised before it that the alleged lack of proper enquiries as to the issue of share capital/ premium in the course of proceedings under section 147 cannot be considered as erroneous and prejudicial to the interest of revenue when reopening was done f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. This was found to be impermissible by the Delhi High Court. It was held that an assessing officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings were initiated but he was not justified to undertake such exercise when the reasons for initiation of the proceeding did not survive. In the case of Alagendran Finance Ltd. (supra), the revisional power of the Commissioner was in issue before the Supreme Court, but it was in relation to the question of limitation. In that case also, reassessment was made under certain specific heads. The Commissioner thereafter exercised his revisional jurisdiction in relation to part of the assessment order involving certain other items not involved in the reassessment proceeding. These items did not form the basis of reassessment proceeding. The jurisdiction of the Commissioner to invoke his revisional power was questioned on the ground of limitation, as provided for in sub-section (2) of Section 263 of the 1961 Act. In the factual context of that case, the Commissioner s power to exercise his revisional jurisdiction could be retained if the date of reassessment was treated to be the starting point for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no error in the order of reassessment and it could not be said to be prejudicial to the interest of the Revenue. But this point also stands covered in our judgment in the case of Pragati (supra) following the decision of the Coordinate Bench in Rajmandir (supra). In the Commissioner s orders passed under section 263 of the Act in both these appeals, inquiries were directed under similar factual context. 11. Next point urged before us by Mr. Agarwal is that there could be no addition to income of the company in the very first year of its incorporation. On that question, he relied on the cases of C.I.T. Vs. Bharat Engineering Construction Co.[1972] 831 ITR 187 (SC), C.I.T. vs. Smt. P. K. Noorjahan, [237 ITR 570 (SC)] and also Mitesh Rolling Mills P Ltd. Vs. C.I.T. [258 ITR 278 (Guj.)]. The last decision was delivered following the judgment of the Supreme Court in the case of Smt. P.K. Noorjahan (supra). His submission is that both Sections 68 and 69 of the Act vest the assessing officer with a discretion to add back to the income of the assessee, cash credits or investments from unexplained source, but such adding back is not an automatic process. His specific submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been observed in this judgment that the 1922 Act did not have any provision corresponding to the provisions of sections 68 and 69 of the 1961 Act. Moreover, in the judgment of Rajmandir (supra), while construing the provisions of section 68 of the 1961 Act, the Coordinate Bench found no flaw on the part of the Revenue in examining source of funds received on capital account. In Pragati (supra), we have followed the same reasoning. In our view, the mere fact that the assessment year is the year of commencement of business of the assessee cannot insulate it from an inquiry directed towards steps contemplated under Section 68 of the 1961 Act. The decision in the case of P.K.Noorjahan (supra) involved application of the provisions of 69 of the 1961 Act. This decision is an authority for the proposition that even if the assessing officer finds the explanation of the assessee on source of investment income to be inadequate, still the assessing officer would have to use his discretion as to whether such sum shall be added as income or not. As we have already indicated, that situation has not yet arisen in this appeal. The judgment in the case of Mitesh Rolling Mills (P) Ltd. (supra) ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to proceedings under the 1922 Act and there was evidence of notices of the proceeding being served 16 days after the orders were passed. The authorities sought to justify service on affixing of notice. It was held by an Appellate Bench of the High Court that service was not properly effected, and appeal against the decision of the Appellate Bench was dismissed by the Supreme Court. Another judgment of the Supreme Court, C.I.T. Vs. Electro House [82 ITR 824 (SC)] on the point of service of notice has been referred to on behalf of the appellant. In that judgment, delivered in the context of Section 33B of the 1922 Act, the question which was examined by the Supreme Court was whether the Commissioner before assuming jurisdiction to proceed against an assessee was required to give any notice or not. This decision does not strengthen the appellant s case on the point of service of notice. 16. So far as the present Act is concerned, Section 282(1) provides: 282.(1) The service of a notice or summon or requisition or order or any other communication under this Act (hereafter in this Section referred to as communication ) may be made by delivering or transmitting a copy ..... 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