TMI Blog1991 (5) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessment made as erroneous and prejudicial to the interest of Revenue principally on following two counts: (i) that no enquiry to verify genuineness and creditworthiness of shares subscribers was made by the Assessing Officer as he was duty bound to do under s. 68 of the IT Act; and (ii) the Assessing Officer failed to enquire and find out whether hybrid system of accounting was justified in respect of loans and advances given on interest by the debtors and whether interest was realised at market rate. The CIT set aside the assessment and directed the Assessing Officer to make fresh assessment. The assessee has challenged the above order in appeal before the Tribunal. 4. Sri S.K. Tulsiyan, learned counsel for the assessee, submitted that assessee is a public limited company and had collected public subscription through banks. Before the Assessing Officer complete details of subscribers, i.e., their names and addresses, number of shares acquired and money paid were furnished. Assessing Officer made enquiry and after enquiry accepted the claim of the assessee. CIT has not pointed out even one bogus shareholder. Merely on suspicion the assessment has been set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment erroneous and caused prejudice to the interest of Revenue. The expression "interest of Revenue" has wide import. The investigation in this case may reveal that there were benami and bogus shareholders and unexplained investment and such investigation may be useful for other cases as well. Thus, non-investigation caused prejudice to the Revenue as a whole. The order of CIT does not cause any loss to the assessee and, therefore, the assessee should have no objection to the setting aside of the same. Sri Sarkar further stressed that the CIT acted bona fidely and, therefore, his order should be maintained. 7. We have carefully considered the rival submissions, facts and circumstances of case and material on record. We would like to deal first with the second objection taken by CIT regarding non-examination of hybrid system of accounting alleged to be followed by the assessee in respect of interest income. The assessee admittedly is an investment company and main source of its income is from interest. In the assessment order the Assessing Officer has observed: "The assessee company continues to carry on the business of financing and investments as in the past. The details f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Mourya Udyog Ltd. as also in several other cases as copies of orders placed in the paper book. No reason was shown as to why aforesaid decision should not be applied in the case in hand, In above view of the matter the order of the Assessing Officer for not considering question of addition under s. 68 of the IT Act cannot held to be erroneous and prejudicial to the interest of Revenue even if factual position as stated in the impugned order is accepted to be correct. Assessing Officer as per the above decision could not make any addition under s. 68 of the IT Act and, therefore, question of making any enquiry or investigation under the above provision of law becomes immaterial and, therefore, impugned order cannot be sustained on this short ground. 9. The present case, however, need not be decided on above view as even otherwise the impugned order is not sustainable. For the present we would presume that s. 68 is also applicable to the amount received by a company in public subscription. The Assessing Officer while completing the assessment made the following observation: "Return was accompanied by copies of audited balance sheet and profit and loss account. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh; the conclusion must be based on materials and reasonable to a prudent man. An assessment order would be prejudicial to the interest of Revenue if it is not in accordance with law in consequence whereof lawful revenue due to state has not been realised. The aim of s. 263 is not set aside merely unfavourable orders and bring to tax some more money to the treasury. 11. In the present case the learned CIT has specifically observed that large number of companies in Delhi were laundering unaccounted money through the device of bogus or benami subscriptions. On reasonable construction of impugned order the learned CIT appears of view that it being a case of investment company the Assessing Officer should have insisted upon strict proof in case of each and every subscriber and only when suspicion regarding in-genuineness in this case of investment company was completely dispelled by the assessee that the matter should have been accepted. We are unable to agree to this approach. It is not right to view each case of investment company with suspicion. The Assessing Officer cannot start assessment with any preconceived notion about unaccounted investment based on what happened not in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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