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TMI Blog2002 (4) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... been considered by the Full Bench of the Delhi High Court in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1993) 205 ITR 98 (Del)(FB) The learned CIT(A) observed that the Full Bench of the Delhi High Court in the case of Sophia Finance Ltd. has held that s. 68 is very widely worded and the credits of share application money fall within the mischief of this section. The ratio of the decision is that if the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as capital receipt. The Hon'ble Supreme Court has affirmed the decision of the Hon'ble Delhi High Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). The learned CIT(A) observed that the Hon'ble Supreme Court has not dealt with the scope of enquiry and applicability of s. 68 in respect of the credits of share application money. The Hon'ble Supreme Court had affirmed the judgment of Hon'ble Delhi High Court in the case of Steller Investment Ltd. on the ground that Tribunal in that case had drawn its conclusion on facts, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 156 (JU)/2001 of the Jodhpur Bench. 6. The learned authorised representative has also quoted as under from the judgment of Hon'ble Delhi High Court in the case of Steller Investment (supra). It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fall to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. 7. He has also relied on the case of Sh. Bharka Synthetics Ltd. vs. Asstt. CIT in ITA No. 155 (Ju) 2001 of this Bench and Swastika Suitings Ltd. vs. AO 25 TW 273 (Jp). 8. Alternately and without prejudice to above, it was submitted by the learned counsel that the CIT(A) himself has agreed that the decision of Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is thus established. The payments by shareholders were also established. All the shareholders made the payments by account payee cheque. The amount has (sic) respective bank account. Their cheque numbers are available in the chart (PB A) as also the copies of their bank account in the paper book. Not only this but even the copy of the bank statement of the appellant is also in the P.B. Since all of them are regular income-tax assessees, the sources are their regular income/accumulation thereof. In the first 3 cases even their regular cash books were produced from which the accumulation and the source of this payment is clearly ascertainable. Therefore, the fact that the payment was made by them is fully established on record and there is absolutely no contrary material available on record to disprove this. He also relied upon the following case law : (1) Meera Engineering Commercial Industries Co. (P) Ltd vs. Asstt. CIT (1997) 58 TTJ (Jab) 527; (2) Gorawara Plastic General Industries (P) Ltd. vs. Dy. CIT (1999) 63 TTJ (Del) 329; (3) Progressive Services Ltd. vs. ITO (1991) 40 TTJ (Cal) 595; (4) Karimatharuvi Tea Estates Ltd. Anr. vs. Dy, CIT (2000) 163 CTR (Ker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.) 1. Anil Nuwal 3,50,000 2. Madhu Sudan Nuwal 3,50,000 3. Aunita Nuwal 2,00,000 4. Kailash Chand Dad 1,00,000 5. Bal Mukand Somani 1,00,000 6. Smt. Asha Mathur 50,000 7. K.G. Jhanwar 1,00,000 8. Dev Kishan Achariya 50,000 13,00,000 The learned authorised representative had relied upon the case of Steller Investment Ltd. (supra) which has now been affirmed by the Hon'ble Supreme Court in the case of CIT vs. Steller Investment Ltd. (supra). In this judgment of the Hon'ble Supreme Court, the case of Sophia Finance Ltd. (supra) had not been considered. In the case of Sophia Finance Ltd. (supra) it was held that s. 68 is very widely worded and the AO is not precluded from making an enquiry as to the nature and source of a sum credited in the books of account of the assessee-company even if the same is credited as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question to the assessee by account payee cheques which were encashed by the assessee through its own bank. The cheques had also been honoured in favour of the assessee. When the assessee disclosed the names of the creditors and the names of the banks on which the cheques were drawn, the assessee discharged the primary onus and the assessee not only disclosed the identity of the creditors but also the sources of income. Then the onus shifted on the Department to verify. We find that the Department has not discharged the onus cast upon it after initial onus having been discharged by the assessee by filing necessary particulars. The AO should have recorded the statements of all the persons and should have given a specific finding to the effect that they had no means to make deposit the money belonged to the appellant. In the absence of such a finding by the AO. We hereby delete the addition of ₹ 13,00,000 made by the AO and sustained by the CIT(A) on account of unexplained share application money. However, the AO is free to make enquiry and take necessary action in the hands of the share applicants. 15. Ground Wo. 3-Cash credits of ₹ 1,46,300 added under s. 68.-The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases of Smt. Sunita Nuwal and Madhu Sudan Nuwal the assessee has discharged the initial onus cast upon it by furnishing necessary particulars. In the cases of Gordhan Sharma, Kailash Sharrna and Rameshwar Lal, necessary confirmations had been filed. Their statements have been recorded. The additions had been made only on the ground that they were not in a position to save to sum of ₹ 19,300, ₹ 19,000 and ₹ 18,500. We are of the opinion that even a person with meagre income can save such petty amounts. These are not big amounts. Therefore, no addition is called for in the names of these persons. The addition made by the AO and sustained by the CIT(A) is hereby deleted. 22. As regards the cash credits of Rs.. 18,000 and ₹ 15,000 in the names of Ram Nath and Ladu Lal, respectively, we find that these persons could not.be produced before the AO only on the pretext that they were out of station and no specific reasons had been given by the assessee. These are cash payments. Therefore, the addition of ₹ 18,000 in the name of Ram Nath and addition of ₹ 15,000 in the name of Ladu Lal are hereby confirmed. We direct the AO to do accordingly. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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