TaxTMI 
TaxTMI 
2011 (6) TMI 789
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....he following substantial question of law : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the addition of Rs. 4,30,760 on account of unexplained cash credits in the case of the assessee, a company, where the amounts are alleged to have been introduced by subscribers to the initial share application money at the time of formation of the company ?" 3. The grievance of the appellant in the present case relates to the confirmation of an addition of Rs. 4,30,760 on account of unexplained cash credits. During the course of assessment proceedings, the AO on scrutiny of the accounts found that the assessee had introduced cash in its books in the form of share capital from 12 persons. O....
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....at all, the Department could have proceeded to reopen their individual assessments and that no additions could be made in the hands of the assessee. 5. Opposing the appeal, Mr. M.R. Bhatt, learned senior advocate appearing on behalf of the respondent invited attention to the assessment order, to submit that in case of Mr. Uday Vaidya, he was not assessed to tax and no confirmation had been filed by him and that his present whereabouts and credentials were also not known to the IT Department. It was submitted that in the circumstances, the petitioner has failed to establish the identity of all the subscribers. 6. A perusal of the assessment order shows that the AO has held that the creditworthiness of the cash creditors is doubtful and suc....
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.... is apparent that none of the parties have recorded any findings to the effect that the identity of the depositors had not been established by the assessee. The case of the respondent is that the assessee has failed to explain the source of such cash as well as creditworthiness of the depositors. 8. The Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd. (supra), while considering the question as to whether the amount of share money be regarded as undisclosed income under s. 68 of the IT Act, 1961, has held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordan....