COMMISSIONER OF INCOME TAX Vs. ACHAL INVESTMENT LTD

JUDGEMENT

(1.) The Revenue's reference is to be heard for the assessment year 1982-83 against the assessee M/s Achal Investments Ltd. The reference is under Section 256(2) of the Income-tax Act and the question framed is as under:

(2.) The Assessing Officer completed the assessment under Section 143(3) of the Act after making necessary inquiries as contemplated. The company was incorporated on 14.7.1980 and the accounts were closed on 30.6.1981. The capital of the company consisting of 2,00,000 shares of Rs.10/- each amounting to Rs.20,00,000/-. The company received Rs.3,05,500/- as share application money. The Assessing Officer did not allow certain expenditure in view of the fact that there was no income of the company during the first year. It is also noted that certain confirmation letters in respect of the amounts invested by the promoters in the share capital were filed. However, in view of the opinion of the Commissioner of Income Tax, the Assessing Officer did not verify the genuineness of the said confirmation letters and, therefore, he issued notice under Section 263 of the Income-tax Act.

(3.) After hearing the representative of the Assessee, the Commissioner of Income-tax vide order dated 18.2.1987, set aside the order made by the Assessing Officer and the Assessing Officer was directed to carry out the exercise as indicated in the order.