Law:

Section:

Section 256, read with section 263, of the Income-tax Act, 1961 - Reference - Question of fact - Though ITO accepted increase in assessee's subscribed capital Commissioner set aside ITO's order under section 263 holding that ITO had failed to conduct detailed investigation into genuineness of shareholders - Whether a question of law arose from Tribunal's order setting aside Commissioner's order - Held, no FACTS The assessee-company increased its subscribed capital. The ITO assessed the assessee-company and accepted the increase in the subscribed capital. Setting aside the order of assessment, the Commissioner concluded that the Assessing Officer did not make enquiries with regard to the genuineness and creditworthiness of the subscribers of the share capital. On appeal, the Tribunal reversed the Commissioner's order. On an application under section 256(2): HELD If it be assumed that the subscribers to the increased share capital were not genuine, even then under no circumstances could the amount of share capital be regarded as undisclosed income of the assessee. It may be there were some bogus shareholders and the money may have been provided by some other persons. It would have been more sensible to re-open, the assessments of the persons alleged to have advanced the money. How this amount of increased share capital could be assessed in the hands of the company itself was beyond understanding. Hence, no question of law arose from the Tribunal's order holding that the provisions of section 263 had not been validly invoked B. Gupta and R.C. Pandey for the Applicant. S.K. Aggarwal for the Respondent ORDER 1. The petitioner seeks reference of the following question: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct both on facts and in law in holding that the provisions of section 263 of the Income-tax Act, 1961, have not been validly invoked in this case by ignoring the material fact that the Assessing…

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