TaxTMI 
TaxTMI 
2008 (11) TMI 681
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....r Ltd. in the appellant company which stood fully disclosed in the regularly filed balance sheets of the appellant company with the regularly filed Income Tax returns. That the share capital so subscribed was fully disclosed and the addition thereof as undisclosed income is untenable per se. (C) That the learned Commissioner (Appeals) has erred in observing that the Authorised Representative has argued that CVL has purchased 1,25,000 shares from open market and that the appellant company is not involved in this transaction in any manner. That the learned Commissioner (Appeals) has erred in making a mistake of fact as no such argument was ever made by the Authorised Representative. (D) That the learned Commissioner (Appeals) has also erred in drawing adverse inference against the appellant company when the entire share subscription by CVL stood fully disclosed and confirmed by CVL. That the identity, creditworthiness and genuineness of the subscriber to share capital was fully established and was not in doubt. That the learned Commissioner (Appeals) has erred in drawing adverse inference merely because documents were found showing the proposal to takeover CVL by various family m....
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....e addition of Rs. 40,250 made by the assessing officer on account of premium paid by the assessee @ 1 per cent for obtaining the entries in the garb of share capital. 3. The Commissioner (Appeals) has erred in law and on facts in deleting the addition of Rs. 19,00,000 made by the assessing officer under Section 68 of the Income Tax Act. 2. Brief facts of the case are that all the assessee companies are engaged in the business of manufacturing of automobile parts, mainly supplied to automobile manufacturers as original equipments having its plant in Gurgaon and Chennai. Its Chennai plant feeds southern market. These companies also undertake the job work of M/s Jay Yushin Ltd. Shri J.P. Minda and his two sons namely Shri Anil Minda and Shri Ashwani Minda are the controlling persons. On 19-3-2001 a search operation under Section 132(1) was conducted on this group by Chandigarh Directorate, including the appellant company at 102-103, Udyog Vihar, Phase-IV, Gurgaon, Haryana. During the course of search, on the basis of documents found, the assessing officer made addition on account of bogus share capital. En the case of J.P.M. Farms (P) Ltd. and MEW Tools (P) Ltd., Anu Auto Industrie....
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.... shareholders whose names are given to the assessing officer. Further the Hon'ble Supreme Court has categorically held that the revenue is free to proceed to reopen the individual assessments of such alleged bogus shareholders. The decision of the Hon'ble jurisdictional High Court in the case of Value Capital Services Ltd. has also categorically held that there is additional burden on the revenue to show that even if the applicant does not have the means to make the investment, but the investment made by the applicant should be shown to have emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee. It is noticed that the revenue has not been able to specifically show that the investments had emanated from the coffers of the assessee in this case. In these circumstances, respectfully following the decision of the Hon'ble jurisdictional High Court as also Hon'ble Supreme Court referred to supra, the addition made by the assessing officer and confirmed by the learned Commissioner (Appeals) in regard to the alleged bogus shareholders represented by the increase in share capital of the assessee cannot be treated as ....
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.... wherein the Hon'ble Supreme Court has held that when the share application money is received by assessee company from alleged bogus shareholders whose names are given to the assessing officer, then the department is free to proceed to reopen their individual assessments in accordance with law. Similar was the finding of the Hon'ble Supreme Court in the case of Shipra Retailers (P) Ltd. in SLP No. 451 of 2008, dated 21-1-2008 as also in the case of Divine Leasing & Finance Ltd. in SLP No. 375 of 2008, dated 21-1-2008. He further submitted that the decision of the Hon'ble Supreme Court on the issue had a binding effect under Article 141 for which proposition he relied upon the decision of the Hon'ble Supreme Court in the case of Kunhayammed and Ors. v. State of Kerala (2000) 245 ITR 360 (SC). 5. On the other hand contention of learned Departmental Representative was that assessee could not establish the genuineness of share application transactions, therefore assessing officer was perfectly justified in making the addition. He further supported the findings recorded by assessing officer. It was his further submission that the assessing officer has clearly brought ou....