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Issues Involved:
1. Deletion of addition u/s 68 of the IT Act on account of unexplained share capital. Summary: Issue 1: Deletion of Addition u/s 68 of the IT Act on Account of Unexplained Share Capital The only ground raised by the revenue in this appeal is that the CIT(A) erred in deleting the addition of Rs. 31,80,000/- u/s 68 of the IT Act on account of unexplained share capital. In the assessment made u/s 143(3), the Assessing Officer (AO) added Rs. 31,80,000/- as unexplained share capital. The assessee had received share application money amounting to Rs. 54,80,000/- from 10 parties, out of which Rs. 23,00,000/- was accepted as genuine by the AO, and the balance Rs. 31,80,000/- was treated as unexplained income. The AO issued notices u/s 133(6) to all share applicants, but some notices were either not responded to or returned undelivered. The assessee provided all requisite details, including confirmations, income tax returns, PAN, and bank statements of the share applicants. The CIT(A) deleted the addition, noting that the assessee had submitted sufficient evidence to prove the identity and creditworthiness of the share applicants, and the transactions were through banking channels. The CIT(A) observed that the mere non-availability of share applicants at given addresses does not justify treating the share capital as undisclosed income. The CIT(A) relied on various judicial precedents, including CIT vs. Lovely Exports (P) Ltd., which held that if the share application money is received from alleged bogus shareholders whose names are given to the AO, the Department is free to proceed against them individually. The Tribunal upheld the CIT(A)'s order, emphasizing that the initial burden of proof lies on the assessee to prove the identity of the share applicants by furnishing their PAN or income tax assessment number and showing the genuineness of the transaction. Once this is done, the onus shifts to the Revenue. The Tribunal noted that the AO did not bring any material to contradict the documents provided by the assessee. The Tribunal also referred to several decisions of the Hon'ble Delhi High Court, including CIT vs. Dwarkadhish Investment (P) Ltd., CIT vs. Victor Electrodes Ltd., and CIT vs. Winstral Petrochemicals Pvt. Ltd., which supported the assessee's case. The Tribunal concluded that the assessee had discharged its initial burden, and the Revenue failed to rebut the evidence provided. Therefore, the addition of Rs. 31,80,000/- was rightly deleted by the CIT(A). In the result, the appeal filed by the revenue was dismissed. This decision was pronounced in the Open Court on 7th January, 2011.
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