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TMI Blog2011 (1) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted by the AO to be genuine and the balance of ₹ 31,80,000/- was treated to be unexplained income of the assessee. During the course of assessment proceedings, the assessee filed all the requisite details of all the share applicants before the AO, such as, form of application of shares, certificate of incorporation, bank statements, share certificates, financial statements, copy of PAN, board resolution, Form No.2 of Company Act etc. The AO issued notices under sec. 133(6) to all the share applicants. Some of the share applicants confirmed the transaction but in the following cases, notices were either received back or not responded to by the shareholders:- 1. Kuberco Sales (Pvt.) Ltd. 5,00,000/- 2. Kesri Industrial Lab (Pvt.) Ltd. 10,00,000/- 3. SRS Vijay Sales (Pvt.) Ltd. 1,80,000/- 4. Himachal Petrochemical Industries (Pvt.) Ltd. 5,00,000/- 5. Dynamics Solutions (Pvt.) Ltd. 5,00,000/- 6. Nipun Infotech (Pvt.) Ltd. 5,00,000/- TOTAL 31,80,000/- 3. The Assessing Officer issued notice dated 24.11.2008 to the assessee to show cause as to why the share capital money received by the assessee be not added to the assessee s income as share app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion money through bank draft or account payee cheque in favour of the appellant company. ii. that the applicant company has already issued and allotted shares to the subscribers. iii. that all the share applicants were regularly assessed to tax and have given their assessment details, PAN and in some cases their bank accounts and copies of their statement of affairs. In the circumstances, all the share applicants were and are identifiable and creditworthy. iv. that the mere fact that the queries, as raised by the AO could not be served on the shareholders directly cannot make the identity of the shareholders doubtful. v. that it is undisputed that all the share applicants had confirmed their investment in the share capital of the appellant company and all had given their PAN and other relevant particulars under which they were assessed to tax relied on CIT vs. Makhni and Tyagi (P) Ltd. Reported in 267 ITR (2004) at Pg. 433. 7. After considering the assessee s submissions and the facts and circumstances of the case and the Assessing Officer s order, the learned CIT(A) deleted the addition by observing and holding as under:- 6. I have gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own by the Hon ble jurisdictional Delhi High Court in the following cases:- (i) The Hon ble Delhi High Court in the case of CIT vs. M/s. Dwarkadhish Investment (P) Ltd. In ITA 911/2010 decided on 2nd August, 2010, held as under:- 6. In our opinion, as Section 68 of the Act, 1961 has been interpreted as recently as 208 by a Division Bench of this Court in Divine Leasing Finance Ltd. (supra) after considering all the relevant judgments, we do not have to reconsider all the judgments referred to by Mr. Sahni which are prior in date and time to the aforesaid judgment. In fact, a Special Leave Petition filed against the said Division Bench judgment was dismissed by the Supreme Court by way of a speaking order in Commissioner of Income Tax Vs. Lovely Exports (P) Ltd., 216 CTR 195 (SC). The Supreme Court in Lovely Exports (P) Ltd. (supra) has held as under:- 2. Can the amount of share money be regarded as undisclosed income under s 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other details. Therefore, identity of the shareholders can said to have been proved by the assessee and department has not been able to rebut the same. In that case, before the Hon ble High Court, it has also been held that genuineness of the transactions can be proved by showing that the money in the books had been received either by account payee cheque or by draft or by any other mode, which condition is satisfied in the present case before us. It is not in dispute that the assessee has received the share application money by account payee cheque, and details of the bank account of share applicants as well as of the assessee have been duly furnished. Therefore, in the light of the above-referred decision of Hon ble Delhi High Court, we hold that the assessee has been able to discharge its initial burden to prove the identity of the share applicants and genuineness of the transaction. The same cannot be rejected merely because the share applicants could not be found at the address given and it would not give the revenue the right to invoke sec. 68 of the Act. Therefore, in the light of the proposition laid down by the Hon ble Delhi High Court in this case, the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such course was, however, adopted by him. 9. There was no legal obligation on the assessee to produce some director or other representative of the applicant companies before the AO. Therefore, failure of assessee to produce them could not, by itself, have justified the additions made by the AO, when the assessee had furnished documents, on the basis of which, the AO, if he so wanted, could have summoned them for verification. No attempt was made by the AO to summon the directors of the applicant companies. The addresses of these companies must be available on the share applications, memorandum and articles of association and their IT returns. If the AO had any doubt about identity of the share applicants, he could have summoned the directors of the applicant companies. No such attempt was, however, made by him. Therefore, the CIT(A) and the Tribunal, in our view were justified in holding that the identity of share applicants and the genuineness of the transactions had been established by the assessee. 11. In this decision, in the case of CIT vs. Victor Electrodes Ltd. (supra), it has been clearly laid down by the Hon ble Delhi High Court that there is no legal obligation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer did not even make an attempt to verify the genuineness of these documents by summoning the record of Registrar of companies or Department of Company Affairs. If he entertained any doubt about the genuineness of these documents, nothing prevented him from summoning the record from these authorities. If the Assessing Officer so desired, the genuineness of the PAN cards and PAN details could easily have been verified by him from the record available with the Department. The assessee company also furnished written confirmation from the applicant companies. All the share applicants were duly served with the notices under Section 133(6) of the Act. In these circumstances, the finding of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal that the identity of the subscribers stood duly established from the documents produced by the assessee, cannot be said to be perverse and does not call for interference by this Court. 9. The finding of fact recorded by the Tribunal, which is the final fact finding authority, cannot be said to be perverse merely because some of the applicants had a common address and the Inspector deputed by the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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