9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (9) TMI 119 - HC - Income Taxunexplained share application money under Section 68 of the Act - Held that - assessee has discharged its primary onus as per law in proving the identity of all the share holders - share application money cannot be regarded as undisclosed income of assessee under Section 68 of Act.
Issues:
Challenge to the deletion of addition of unexplained share application money under Section 68 of the Income Tax Act, 1961. Analysis: The appeal was filed challenging the Tribunal's order deleting the addition of ' 42,50,000/- on account of unexplained share application money under Section 68 of the Act for the Assessment Year 2005-2006. The Revenue contended that the respondent-assessee failed to discharge the onus of proving the identity of investors/share applicants as they were not produced. However, the Commissioner of Income Tax (Appeals) and the Tribunal found that the share applicants were income tax assessees with valid PAN, and the share application money was paid through cheques. The CIT(A) noted that the assessee provided a list of shareholders with full details, confirmations, bank statements, and other evidence, thereby meeting the primary onus of proving identity. The AO failed to provide adverse material to disbelieve the claim, and the Tribunal upheld the deletion of the addition based on the evidence presented. The Tribunal highlighted that the assessee submitted confirmations of shareholders, addresses, PAN numbers, cheque details, income tax returns, and audited balance sheets during the assessment proceedings. Referring to relevant decisions, the Tribunal emphasized that even if share application money is received from alleged bogus shareholders, it does not constitute undisclosed income of the assessee company. The Department can reopen assessments of individual shareholders but cannot treat it as undisclosed income of the assessee. The High Court, in line with the Supreme Court decision in Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., upheld the approach of the CIT(A) and the Tribunal. It was concluded that the share application money cannot be considered undisclosed income under Section 68 of the Act based on the evidence provided and the legal principles established. Consequently, the appeal was dismissed.
|
