TaxTMI 
TaxTMI 
2007 (7) TMI 626
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.... challenged the order dated 17-3-2006 passed by the Income-tax Appellate Tribunal (for short as 'ITAT') in the case of assessee in miscellaneous application No. 734/Delhi/2005 in ITA No. 5087(Delhi)/2004 for the assessment year 2000-01 vide which the ITAT deleted the addition of Rs. 5,87,27,000 made by the Assessing Officer on account of share capital holding that the assessee had duly identified and established the existence of share applicants in question and no material has been brought on record by the Assessing Officer to doubt the genuineness of the assessee's shares issue. 4. The assessee is engaged in the business of growing mushrooms and manufacturing calcium carbonate. During the assessment proceedings, the Assessing Officer fo....
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....sessing Officer to doubt the genuineness of the assessee's share issue. 8. It has been contended by learned counsel for the revenue that under section 68 of the Act onus is upon the assessee to establish the identity of the subscribers of the shares and he has to prove the credit worthiness and genuineness of the transaction, which he has failed to do. 9. On the other hand, learned counsel for the assessee has argued that the assessee has furnished the addresses of the shareholders and the payments have been made by account-payee cheque and as such, there is no reason to doubt the creditworthiness of the creditors and the genuineness of the transaction. In support of his contentions learned counsel cited a decision of Division Bench o....
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.... upheld the order of the Commissioner (Appeals) on the ground that the Assessing Officer had not brought any evidence to indicate that any part of the share capital represented the company's own income from undisclosed sources. 14. On appeal this Court held that :- "There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the revenue's insistence that it should prove the negative. In the case of public issue, the company c....
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...., Share Application Forms, Share Transfer Register, etc., it would constitute acceptable proof or acceptable explanation by the assessee; (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notice; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiated the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee; (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." 15. Since, in the present cas....