TaxTMI 
TaxTMI 
2014 (8) TMI 605
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....se, the Income Tax Tribunal was right in upholding the order of the CIT(A) who deleted the addition of Rs. 2,20,00,000/- made under Section 68 of the Income Tax Act, 1961, being the share application money and share premium amount credited by the assessee which was not proved? 2.1.The brief facts of the case are as under: The respondent/ assessee, it appears, received share application money and share premium money totaling to Rs. 2.20 Crores from four parties, which are all limited companies. According to the department, the said amount was liable to be treated as unexplained credit under Section 68 of the Act. That was resisted by the assessee stating that the share application money and share premium money was received from limited co....
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....apital as genuine and should have refrained from making addition u/s 68 of the IT Act. The appellant further placed their relevance on the decisions in the cases of- (a) Stellar Finance Ltd. Vs. Commissioner of Income Tax, reported in 251 ITR 263 (Hon'ble Supreme Court) (b) Commissioner of Income Tax Vs. Electropoly Chem Ltd., reported in 294 ITR 661 (Hon'ble Madras High Court) wherein it was held that in no circumstances can the share application money received by a company can be added u/s 68 of the IT Act. 5.2. I have carefully gone through the case and the case law submitted by the appellant. I am of the considered opinion that the addition u/s 68 of the IT Act can not be made on account of share application money recei....
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....nt of the Hon'ble Apex Court is reproduced hereunder: '2. Can the amount of share money be regarded as undisclosed income under s.68 of the IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given go the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment.' There is no case for the Revenue that the applicants for the shares were bogus. In our opinion, the additions were rightly deleted by the CIT (A). No interference is called for." 2.4. Aggrieved by the said or....
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....the four parties, who are subscribers of the shares, are limited companies and enquiries were made and received from the four companies and all the companies accepted their investment. Thus, the assessee has categorically established the nature and source of the said sum and discharged the onus that lies on it in terms of Section 68 of the Act. When the nature and source of the amount so invested is known, it cannot be said to be undisclosed income. Therefore, the addition of such subscriptions as unexplained credit under Section 68 of the Act is unwarranted. 7. That apart, a reading of the decision of the Supreme Court in Lovely Exports (P) Ltd. case, referred supra, makes it clear that the department has a right to reopen the individua....