TaxTMI 
TaxTMI 
2016 (4) TMI 213
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....143(1) of the Income Tax Act, 1961 (hereinafter called 'the Act') on 21.11.2007 and later the case was selected for scrutiny through CASS. The Assessing Officer completed the assessment u/s 143(3) of the Income Tax Act, 1961 at an income of Rs. 76,46,970/- after adding Rs. 76.00 lacs on account of share capital as unexplained sum u/s 68 of the Act. The Ld. CIT (A), on appeal, deleted this entire addition. Now, the department is in appeal against the deletion by the Ld. CIT (A). 3. It is seen from the records that during the year, the assessee company had shown receipt of share application money/share capital of Rs. 76.00 lacs from the following companies in its books:- S. No. Name and address of the person form whom taken Amount....
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....ctions: a) Name and address of the shareholders b) Income Tax particulars of the shareholders c) Share application forms d) Confirmation of shareholders with regard to share capital subscribed by them 6. The Ld. CIT(A) has observed that the Assessing Officer could not prove with certainty that the investors/entities were entry providers and that the transactions entered into by the assessee were bogus. He has observed that the Assessing Officer has not effected any inquiries to bring out any fact which could suggest that the parties have given accommodation entries to the assessee and that the money received from these parties was assessee's own undisclosed income routed back to the assessee in the guise of share application ....
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....amining the issue u/s. 68 of the Act. In the case of CIT vs. Divine Leasing & Finance Ltd. 207 CTR 38, the Hon'ble Jurisdictional High Court has observed as under:- '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 concerned cannot be expected to know every details pertaining to the identity as well as financial worth of eac....
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....ation 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 denied of 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 credit worthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." 10. With regard to the issue of share application money, while dismissing the SLP filed by the Department, the Hon'ble Supreme Court in the ca....
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.... burden back onto the assessee-company without the Assessing Officer producing any tangible material to doubt the veracity of the documents furnished by the assessee. The Income-tax Appellate Tribunal concurred with the views taken by the Commissioner of Income-tax (Appeals)." 12. In the case of Anu Industries Ltd. vs ACIT (2009) 19 DTR (Del), Delhi ITAT observed as under:- "We have considered the rival contentions and found that identity of the share applicants are not in dispute. The Hon'ble Supreme Court in case of Divine Leasing & Finance Ltd. (supra) has held that if the share application money is received by the assessee company even from the bogus shareholders whose names are given to the AO then the Department is free to proce....
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....ot 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 AO and confirmed by the learned CIT(A) in regard to the alleged bogus shareholders represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. Respectfully following the decision of the Hon'ble Supreme Court we direct the Assessing Officer to delete the addition made under s.68. However, the Department is free to proceed to reopen the individual assessments of the share applicant ....