2009 (12) TMI 33

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..... ing to the assessment year 1996-97, while raising the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in upholding the order of the learned CIT (A) in deleting the addition of Rs. 3,30,000/- made by the Assessing Officer on account of liability of M/s Axis Chemicals & Pharmaceuticals even though the assessee had failed to prove the existence and genuineness of the liability? (ii) Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in confirming the order of the learned CIT (A) in deleting the addition of Rs. 15,00,000/- made by the Assessing Officer on account of unproved share capital disregarding the fact tha .....

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..... ng of the Assessing Officer, the assessee has confirmed that the said liability is still outstanding. In spite of that material, the Assessing Officer made the addition of the amount on the basis that this liability has ceased to exist and the same is not payable by the assessee, and treated the said liability as income by invoking provision of Section 41 (1) of the Act. The CIT (A), while deleting the said addition, has observed that the similar addition was made in the case of Febon Con, Faridabad, where the similar liability was shown to be payable to the same party i.e. M/s Axis Chemicals and Pharmaceuticals Ltd., Faridabad. In that case, the said addition was deleted by the ITAT. It is the admitted position that the said order of the I .....

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..... nd to the notice issued by the Assessing Officer under Section 133 (6) of the Act, it cannot be taken that the said transaction was ingenuine. It has been held by the Hon'ble Supreme Court in Commissioner of Income Tax v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) 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 re-open their individual assessments in accordance with law. But the said amount cannot be taken as unexplained income in the hands of the assessee. 6. In view of the above, we do not find any illegality in the impugned order passed by the ITAT and in our opinion, no substantial ques .....

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