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Challenge to deletion of addition under section 68 of the Income-tax Act regarding share application money received by the assessee-company. Analysis: The appeal was filed by the revenue challenging the deletion of an addition of Rs. 8,28,000 under section 68 of the Income-tax Act, related to share application money received by the assessee-company. The Assessing Officer was not satisfied with the genuineness of the share application money and added the amount as unexplained cash credit. The Commissioner (Appeals) deleted the addition based on the Delhi Bench of ITAT's order in the case of Standard Cylinders Ltd. The revenue appealed to the ITAT, Hyderabad, citing the Full Bench decision of the Delhi High Court in the case of Sophia Finance Ltd., emphasizing the Assessing Officer's jurisdiction to inquire into the nature and source of the sum credited. The ITAT remitted the matter back to the Commissioner (Appeals) for fresh consideration. The Commissioner (Appeals) re-examined the case, finding that the share holders genuinely existed and had made the deposits, leading to the deletion of the addition. The revenue contended that the deletion was unjustified, relying on the judgment of the Delhi High Court in the case of Sophia Finance Ltd. They argued that the Commissioner (Appeals) should have given the Assessing Officer an opportunity to re-examine the evidence and should have considered the decision of the Delhi High Court. On the other hand, the assessee's representative argued that the company was not authorized to inquire into the source of investment by the share holders under the Companies Act, 1956. They referred to relevant case laws, including the judgment in the case of CIT v. Stellar Investment Ltd., to support their position. They asserted that the Assessing Officer had no jurisdiction to inquire into the share capital contributed by share holders under section 68 of the Act. The ITAT upheld the Commissioner (Appeals)'s decision, noting that the share holders were genuine, identifiable, and had confirmed their investments. They referenced the Supreme Court's decision in the case of Stellar Investment Ltd., emphasizing that even if the subscribers were not genuine, the share capital could not be treated as undisclosed income. Therefore, the ITAT found no fault in the Commissioner (Appeals)'s order deleting the addition under section 68, ultimately dismissing the appeal filed by the revenue.
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