2010 (8) TMI 981 - HC - Income Tax

Summary

Issues involved: Challenge to the order of the Income Tax Appellate Tribunal (ITAT) u/s 260A of the Income Tax Act, 1961 regarding deletion of addition of share application money u/s 68 for Assessment Year 2005-2006.

Summary:
1. The appeal challenged the ITAT's order deleting the addition of rupees twenty five lacs as unexplained share application money u/s 68 of the Income Tax Act, 1961. The Revenue contended that the primary onus had not been discharged by the respondent-assessee.

2. However, upon review, it was found that the addition was deleted by the Commissioner of Income Tax (Appeals) and ITAT based on the fact that the share applicant paid the amount from its current account with Vijaya Bank by way of cheques, without any cash deposit. The ITAT upheld the deletion, citing various decisions including the Supreme Court ruling in Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., emphasizing that share application money cannot be considered undisclosed income u/s 68 of the Act.

3. The approach taken by CIT(A) and ITAT was deemed consistent with legal precedents, leading to the conclusion that the share application money in question cannot be treated as undisclosed income u/s 68 of the Income Tax Act, 1961. As a result, the appeal was dismissed without costs.