High Court confirms deletion of unexplained share application money under Income Tax Act Section 68. Shareholder source confirmed.

The High Court upheld the deletion of the addition of unexplained share application money under Section 68 of the Income Tax Act. The court agreed with the lower authorities' decision based on documents provided by the share applicants confirming the source of investment. Citing precedent cases, the court ruled that if share application money is received from alleged bogus shareholders, the tax department can reopen their individual assessments. Consequently, the appeal challenging the addition of twenty-two lacs rupees as undisclosed income was dismissed.

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Issues Involved:
The appeal filed u/s 260A of Income Tax Act, 1961 challenging the ITAT order regarding addition of unexplained share application money u/s 68.

Addition of Share Application Money:
The Revenue contended that ITAT erred in law by deleting the addition of rupees twenty two lacs under Section 68 of the Act, as the primary onus was not discharged by the respondent-assessee. However, the CIT (A) and ITAT had deleted the addition based on the documents provided by the four share applicants, confirming their source of investment and PAN numbers. The ITAT referred to the judgment in the case of CIT Vs. Lovely Exports Pvt. Ltd. and upheld the deletion of the addition. The High Court concurred with this decision, citing the Supreme Court's ruling that if share application money is received from alleged bogus shareholders, the Department can proceed to reopen their individual assessments. Therefore, the share application money of rupees twenty two lacs was not considered undisclosed income under Section 68, leading to the dismissal of the appeal.

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