9911796707
TMI Blog2010 (8) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a Public Limited Company which was incorporated on 30.8.1984 with a share capital of ₹ 50 lacs. Out of ₹ 50 lacs, shares worth ₹ 20 lacs were by way of private placement and the remaining share capital of ₹ 30 lacs was through public issue. Search action came to be conducted under section 132 of the Income Tax Act, 1961 (the Act) on 30.08.1988 at the registered office of the company and the residential premises of the directors and various books of accounts, share certificates and other incriminating documents were seized. The office premises of Shri Deepak R. Shah, Chartered Accountant, who was auditor of the assessee, was also covered under section 132 and share certificates and share transfer forms were seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 64 persons examined, most of them denied having even signed the application forms. Some others admitted having signed the forms, but categorically stated that the funds were invariably provided by Shri Bharat C. Shah, Shri Prakash C. Shah and Shri Rahul C. Shah, who were promoters and directors of the assessee company. Some of the applicants admitted that they had made investment but had not received share certificates. There were 421 applicants in respect of the public issue of shares of ₹ 30 lacs. Summonses were issued at random to 144 persons, out of whom 20 persons were not traceable. Majority of the applicants categorically denied having invested any money for allotment of shares. Some stated that they have not even signed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unexplained investment in the hands of the company. The assessee carried the mater in appeal before Commissioner (Appeals) who confirmed the addition. The assessee preferred second appeal before the Tribunal and partly 6. On behalf of the revenue, the learned Senior Advocate has placed reliance upon the orders made by the Assessing Officer as well as the Commissioner (Appeals). 7. On the other hand, Mr. S. N. Soparkar, learned Senior Advocate has placed reliance upon the decision of the Supreme Court in the case of Commissioner of Income-tax v. Lovely Exports (P) Ltd., (2008) 216 CTR 195 (SC). 8. As can be seen from the impugned order made by the Tribunal, the Tribunal has recorded the following findings: [7] Coming to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generate income of ₹ 50 lakhs. The Assessing Officer on inquiry has found many of the alleged shareholders to be benamidars or having not invested the money, but at the same time, he has traced out the source of money to some specific persons, who were the real investors. The Supreme Court has in the case of Commissioner of Income-tax v. Lovely Exports (P) Ltd., (supra), held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen the individual assessments in accordance with law. Such amounts cannot be regarded as undisclosed income under section 68 of the assessee company. Applying the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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