TaxTMI 
TaxTMI 
2010 (11) TMI 1005
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....e cash deposit of the assessee, which was routed back through intermediateries. 2. That on the facts and the circumstances of the case and in law, the Ld. CIT (Appeals) -VIII, Kolkata, allowed relief to the assessee without considering the judicial pronouncements, which are not applicable to the facts of the assessee's case." 2. The facts, in brief, relating to the above issue are that during the previous year relevant to assessment year under appeal, the assessee-company raised share application money to the tune of Rs. 82 lakhs against 1,64,000 shares of face value of Rs. 10 at a premium of Rs. 40 per share from 8 share applicant-companies, the details of which are given on pages-2 & 3 of the C.I.T.(A)'s order. All the share applicants are assessed to income-tax and the transactions were by cheques. During the course of assessment proceedings, the A.O. issued notices u/s. 133(6) to all the share applicants and in reply they confirmed having made application for purchase of shares of the assessee-company and also gave the details of their bank accounts and source of their respective investment. The A.O. observed that the parties, who were having the same address, have ....
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.... and Hon'ble Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd. [216 CTR 195 (SC)]. Hence this appeal by the Revenue. 4. At the time of hearing before us, the Ld. Departmental Representative supported the order of the A.O. He further submitted that in the case of CIT vs. Divine Leasing & Finance Ltd.; General Exports & Credits Ltd. & Lovely Exports Ltd. [299 ITR 268 (Del)], although the Hon'ble Delhi High Court has deleted the addition on account of share capital u/s. 68 of the Act, but the facts in those cases were that the I.T.O. noted that the assessee was a public limited company which had received subscriptions to the public issue through banking channels and the shares were allotted in consonance with the provisions of the Securities Contracts (Regulation) Act, 1956, as also the rules & regulations of Delhi Stock Exchange. But in the case of the assessee, it is a private limited company and there was no involvement of any broker or Stock Exchange for selling of the shares of the assessee-company and these were indeed direct or private placement of shares to the said five companies. He, therefore, submitted that the ld. C.I.T.(A) was not justified in deleting the....
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....to him, therefore, money ultimately went to the beneficiary through these companies. That no advertisement was published by the assessee-company inviting share application and no Registrar was engaged for such raising of share capital. There is no dispute that all the share applicant-companies are assessed to tax and their PAN and acknowledgement of I.T. return along with their audited balance sheet, bank statement showing transaction etc. were made available to the A.O. Further, in our opinion, there is no legal bar to more than one company being registered at the same address. Therefore, the doubt posed by the A.O. about offices of these companies at the same address does not hold good. Considering the above, in our opinion, the existence/identity of these shareapplicant companies cannot be doubted and the A.O. also, in fact, did not dispute so. We further observe that the A.O. failed to establish that the share applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the assessee-company. The receipt of share application money has been duly recorded in the books of the assessee-company and the payment of share app....
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....e capital of the assessee-company by the above named share applicants is not the money of the share applicants but of the assessee-company, is on the department. However, the department has not brought any material on record to establish the same. In view of the above, we are of the considered view that the A.O. doubted the genuineness of the share application money on surmises and conjecture and has not brought any cogent material on record to establish his such doubt that the assessee's own unaccounted money came back to it by way of fake introduction of share capital. 6.2. Third Member decision of I.T.A.T., Jodhpur Bench in the case of Polymers (P) Ltd. vs. DCIT [111 TTJ 112] has held that in respect of share application money, assessee-company has to prove existence of persons in whose name share application is received. No burden is cast on the assessee to prove whether that person himself has invested or some other person has made investment in his name. The burden to prove that the money did not belong to him but to some body else is on the revenue. It was further held that if any of the shareholders is found to have made unexplained investment, then addition of such inve....