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TMI Blog2017 (5) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... has been placed on record to show that they are perverse. - Decided in favour of revenue. - Tax Case (Appeal) No. 1498 of 2007 - - - Dated:- 24-4-2017 - Huluvadi G. Ramesh And Anita Sumanth, JJ. For Appellant : Mr. S. Sridhar For Respondent : Mr. T. Ravikumar ORDER ( Order of the Court was pronounced by Dr. Anita Sumanth, J. ) The following Substantial Questions of Law have been admitted by this court for consideration in an appeal challenging an order of the Income Tax Appellate Tribunal dated 27.4.2007 in respect of AY 2001-02. 1. Whether the Tribunal is correct in law in concluding that the assessment of share capital contribution in terms of Section 68 of the Act even though the decision of the Supreme Court in the case of M/s. Steller Investments Limited would nullify such an action in the hands of the Appellant on various grounds? 2. Whether the Tribunal is correct in law in sustaining the action of the Assessing Officer/ Respondent in bringing to tax the assessment of share capital in terms of Section 68 of the Act irrespective of the fact of lack of opportunity and irrespective of the fact of non consideration of the facts either discusse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the financial capacity of the creditors nor the genuineness of transactions. The order of the tribunal dated 27.4.2007 is assailed in appeal before us by the assessee. 4. We have heard the submissions of Sri. S.Sridhar appearing on behalf of the assessee and Sri.T.Ravikumar, appearing on behalf of the Department. 5. Reliance is placed by the assessee on the judgments of the Supreme Court in the case of Commissioner of Income Tax Vs. Lovely Exports ( 216 CTR 195) and CIT Vs. Steller Investiment (251 ITR 263). He would contend that in the light of the aforesaid pronouncements of the Supreme Court , no addition could be made invoking Section 68 of the Act in cases of contributions to share capital and that the Department was free to proceed against the share holders itself in cases where the genuineness of the transaction was in question. He would also contend that in the light of the aforesaid judgments of the Supreme Court, the decision of the Full Bench of the Delhi High Court in the case of Sofia Finance (supra) was no longer good law. 6. The aforesaid judgments of the Supreme Court has been followed by several High Courts - the Division Bench of Delhi High Court in DCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered and distinguished on facts. Reference was also made to the Judgment of the Supreme Court in the case of Sumathi Dayal Vs. CIT (214 ITR 801) and CIT Vs. P. Mohanakala (291 ITR 278) that, while not dealing with share contributions per se deal with the interpretation of section 68 of the Act and the parameters to be adopted in determining accessibility of credits appearing in the accounts of an assessee. 9. The provisions of Section 68 of the Act read as under: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Provided that where the assessee is a company, (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share premium or any shall amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed by the Supreme Court in CIT Vs. Steller Investiment (251 ITR 263) in the following terms: We have read the question which the High Court answered against the Revenue. We are in agreement with the High Court. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to Costs. 13. Reference was also made to the Judgment of the Supreme Court in CIT Vs. Lovely Expos Pvt Ltd, where the issue was held in the favour of asssesse by Judgment reported in 216 CTR 195 in the following terms: 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 she share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we fine no infirmity with the impugned judgment. 14. The judgment extracted above should be same in the context of the facts of the case that have been dealt with in extensor by the Division Bench of the Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/ subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Shared Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation 16. In all, the result of enquiries carried out by the department should reveal and satisfy transparently all parameters of section 68, concurrently. In the present case, the finding of fact is to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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