2002 (8) TMI 852 - HC - Income Tax

Summary

Issues Involved:
The issue involves the interpretation of section 68 of the Income Tax Act regarding the addition made under this section in relation to share application money.

Judgment Details:

1. The Tribunal referred a question of law to the High Court regarding the deletion of an addition made under section 68 of the IT Act by the CIT(A), citing a decision of the Delhi High Court in CIT v. Stellar Investments Ltd. The Tribunal and CIT(A) relied on this decision, but it was later overruled by a Full Bench of the Delhi High Court in CIT v. Sophia Finance Ltd., which clarified that section 68 is indeed applicable to share application money. The burden of proving the genuineness of the entries lies with the assessee.

2. The High Court held that the earlier decision of the Delhi High Court in CIT v. Stellar Investments Ltd. was overruled by a subsequent Full Bench decision in CIT v. Sophia Finance Ltd., establishing that section 68 of the IT Act is applicable to share application money. The Court ruled against the assessee and in favor of the Revenue, emphasizing that the genuineness of the entries related to share application money is a factual matter to be determined by the assessing authority based on the evidence on record.

3. The High Court answered the reference in the negative, indicating that the addition made under section 68 of the IT Act was justified. The Court highlighted that the genuineness of the entries concerning share application money is a factual issue to be decided by the assessing authority based on the available evidence. No costs were awarded in this matter.

This judgment clarifies the legal position regarding the applicability of section 68 of the IT Act to share application money and emphasizes the burden of proving the genuineness of such entries on the assessee.