TaxTMI 
TaxTMI 
TaxTMI 
2002 (4) TMI 955
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....92 ITR 287 (Del) had already been considered by the Full Bench of the Delhi High Court in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1993) 205 ITR 98 (Del)(FB) The learned CIT(A) observed that the Full Bench of the Delhi High Court in the case of Sophia Finance Ltd. has held that s. 68 is very widely worded and the credits of share application money fall within the mischief of this section. The ratio of the decision is that if the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as capital receipt. The Hon'ble Supreme Court has affirmed the decision of the Hon'ble Delhi High Court in the case of CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC). The learned CIT(A) observed that the Hon'ble Supreme Court has not dealt with the scope of enquiry and applicability of s. 68 in respect of the credits of share application money. The Hon'ble Supreme Court had affirmed the judgment of Hon'ble Delhi High Court in the case of Steller Investment Ltd. on the ground that Tribunal in that case had drawn....
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....y (India) Ltd. vs. AO in ITA No. 156 (JU)/2001 of the Jodhpur Bench. 6. The learned authorised representative has also quoted as under from the judgment of Hon'ble Delhi High Court in the case of Steller Investment (supra). "It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fall to understand as to how this amount of increased share capital can be assessed in the hands of the company itself." 7. He has also relied on the case of Sh. Bharka Synthetics Ltd. vs. Asstt. CIT in ITA No. 155 (Ju) 2001 of this Bench and Swastika Suitings Ltd. vs. AO 25 TW 273 (Jp). 8. Alternately and without prejudice to above, it was submitted by the learned counsel that the CIT(A) himself has agreed that the decision....
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.... not doubt their identity, which is thus established. The payments by shareholders were also established. All the shareholders made the payments by account payee cheque. The amount has (sic) respective bank account. Their cheque numbers are available in the chart (PB A) as also the copies of their bank account in the paper book. Not only this but even the copy of the bank statement of the appellant is also in the P.B. Since all of them are regular income-tax assessees, the sources are their regular income/accumulation thereof. In the first 3 cases even their regular cash books were produced from which the accumulation and the source of this payment is clearly ascertainable. Therefore, the fact that the payment was made by them is fully established on record and there is absolutely no contrary material available on record to disprove this. He also relied upon the following case law : (1) Meera Engineering & Commercial Industries Co. (P) Ltd vs. Asstt. CIT (1997) 58 TTJ (Jab) 527; (2) Gorawara Plastic & General Industries (P) Ltd. vs. Dy. CIT (1999) 63 TTJ (Del) 329; (3) Progressive Services Ltd. vs. ITO (1991) 40 TTJ (Cal) 595; (4) Karimatharuvi Tea Estates Ltd. & Anr. vs. D....
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....,50,000 2. Madhu Sudan Nuwal 3,50,000 3. Aunita Nuwal 2,00,000 4. Kailash Chand Dad 1,00,000 5. Bal Mukand Somani 1,00,000 6. Smt. Asha Mathur 50,000 7. K.G. Jhanwar 1,00,000 8. Dev Kishan Achariya 50,000 13,00,000 The learned authorised representative had relied upon the case of Steller Investment Ltd. (supra) which has now been affirmed by the Hon'ble Supreme Court in the case of CIT vs. Steller Investment Ltd. (supra). In this judgment of the Hon'ble Supreme Court, the case of Sophia Finance Ltd. (supra) had not been considered. In the case of Sophia Finance Ltd. (supra) it was held that s. 68 is very widely worded and the AO is not precluded from making an enquiry as to the nature and source of a sum credited in the books of account of the assessee-company even if the same is credited as receipt of share application money..... In such a case the AO would be entitled to enquire, and it would indeed be his duty to do so, whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly no further enquiry need be made. But if the AO finds that the alleged shareholders do not exist then, in effect, it would mean that there is....
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....ity of the creditors but also the sources of income. Then the onus shifted on the Department to verify. We find that the Department has not discharged the onus cast upon it after initial onus having been discharged by the assessee by filing necessary particulars. The AO should have recorded the statements of all the persons and should have given a specific finding to the effect that they had no means to make deposit the money belonged to the appellant. In the absence of such a finding by the AO. We hereby delete the addition of ₹ 13,00,000 made by the AO and sustained by the CIT(A) on account of unexplained share application money. However, the AO is free to make enquiry and take necessary action in the hands of the share applicants. 15. Ground Wo. 3-Cash credits of ₹ 1,46,300 added under s. 68.-The appellant had received cash credits of ₹ 1,46,300 in the names of following persons : Rs. 1. Sunita Nuwal 26,500 2. Madhu Sudan Nuwal 30,000 3. Gordhan Sharma 19,300 4. Kailash Sharma 19,000 5. Rameshwar Lal 18,500 6. Ram Nath 18,000 7. Ladu Lal 15,000 1,46,300 The AO had made the addition on the ground that these persons were not in a position to sav....