Dispute over undisclosed income under Income Tax Act section 68. CIT decision upheld.

The dispute revolved around the addition of undisclosed income under section 68 of the Income Tax Act. The CIT reversed the Assessing Officer's decision to add Rs. 1,85,55,000 as undisclosed income, a ruling upheld by the I.T.A.T. The I.T.A.T emphasized that the company did not purchase the shares in question and that if purchased by an individual, the addition should have been made in that individual's hands. The Tribunal referred to precedent and stated that share application money from alleged bogus shareholders does not constitute undisclosed income for the company. The appeal was dismissed as no legal question arose beyond this issue.

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Issues involved: Dispute over addition of undisclosed income u/s 68 of the Income Tax Act.

Summary:
The appeal centered on the addition of Rs. 1,85,55,000 as undisclosed income u/s 68 of the Income Tax Act. The CIT reversed the Assessing Officer's decision and deleted the addition, a ruling upheld by the I.T.A.T. The I.T.A.T emphasized that the company did not purchase the shares in question, and if purchased by an individual, the addition should have been made in that individual's hands, not the company's. Referring to the judgment in CIT v. Lovely Exports (P.) Ltd., the I.T.A.T stated that share application money from alleged bogus shareholders does not constitute undisclosed income for the company. The Tribunal highlighted that proceedings could be initiated against the individual who allegedly purchased the shares, Sh. P.K. Sharma, under section 153(3) of the Act. Consequently, the appeal was dismissed as no legal question arose apart from the aforementioned issue.

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