TaxTMI 
TaxTMI 
TaxTMI 
2010 (5) TMI 869
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....ts and in the circumstances of the case the ld.CIT(A) erred in upholding the A.O.'s action for charging interest u/s 234B. It is submitted that the Ld. A.O. be directed to charge interest as per provisions of section 234B(3) of the Income Tax Act. 2. During hearing of these appeals, we have heard Shri Prakash Jain, ld. Counsel for the assessee and Shri K.K. Singh, learned CIT DR. The assessee has also filed written arguments/synopsis. The crux of arguments on behalf of the assessee is that due reply was filed by the assessee to the query raised by the ld. Assessing Officer along with confirmation letters of concerned subscribers to the share application money in the form of affidavit containing the particulars like name, age and address of the applicant. The number of shares for which application was made along with the amount and source of income were also furnished. It was further claimed that the assessee proved the identity and source of the subscribers. It was pointed out that the subscribers even while affirming the contents of the affidavits, duly appeared before the notary public and entered their signatures in the register maintained by the said notary. The Assessing Offi....
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....Income Tax and PAN are not mentioned. On perusal of affidavits filed, it is seen that all the affidavits are in the handwriting of one person. It is also noticed that even on the same page the signatures of deponent differs. It is quite unlikely that when a person applying huge amounts such as Rs. 5,00,000/- are more is not assessed to tax. Hence considering the above, the names of the persons are not genuine and it is the unexplained money of the assessee, which is introduced by the assessee company under the name of share application money. These persons appear to be dumy persons and hence the entire amount of the share application money is considered as Bogus share application money. The assessee company has not proved the genuineness of such persona dna slo not proved their capacity to apply for such huge amount. These are dumy and the assessee company has introduced its own money as share application money." 4. On appeal, the ld. first appellate authority by following the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Rathi Finlease Limited; 215 CTR (MP) 429 to the effect that onus is on the assessee to establish the genuineness of the credits, affirm....
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....ments in accordance with law, but it cannot be regarded as undisclosed income of the assessee company." Our view if further fortified by the decision of the Hon'ble Delhi High Court in CIT v. Divine Leasing & Finance Limited; General Exports & Credit Limited and Lovely Exports Private Limited (2008) 299 ITR 268 (Del) wherein it was held that it is the duty of the Assessing Officer to investigate the credit worthiness of the share holders and in view of the finding that the assessee proved genuineness of shareholders no addition can be made u/s 68 of the Act. In the present appeal, since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscribers to share application is not in doubt as the assessee duly furnished their names. Age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that that there is no justification for making the impugne....
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....e, without disproving the Affidavits filed and submissions made. 3. That on the facts and in the circumstances of the case the ld.CIT(A) erred in upholding the A.O.'s action for charging interest u/s 234B. It is submitted that the Ld. A.O. be directed to charge interest as per provisions of section 234B(3) of the Income Tax Act. 2. During hearing of these appeals, we have heard Shri Prakash Jain, ld. Counsel for the assessee and Shri K.K. Singh, learned CIT DR. The assessee has also filed written arguments/synopsis. The crux of arguments on behalf of the assessee is that due reply was filed by the assessee to the query raised by the ld. Assessing Officer along with confirmation letters of concerned subscribers to the share application money in the form of affidavit containing the particulars like name, age and address of the applicant. The number of shares for which application was made along with the amount and source of income were also furnished. It was further claimed that the assessee proved the identity and source of the subscribers. It was pointed out that the subscribers even while affirming the contents of the affidavits, duly appeared before the notary public and entere....
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....see has received share application money in cash. These persons are not assessed to Income Tax and PAN are not mentioned. On perusal of affidavits filed, it is seen that all the affidavits are in the handwriting of one person. It is also noticed that even on the same page the signatures of deponent differs. It is quite unlikely that when a person applying huge amounts such as Rs. 5,00,000/- are more is not assessed to tax. Hence considering the above, the names of the persons are not genuine and it is the unexplained money of the assessee, which is introduced by the assessee company under the name of share application money. These persons appear to be dumy persons and hence the entire amount of the share application money is considered as Bogus share application money. The assessee company has not proved the genuineness of such persona dna slo not proved their capacity to apply for such huge amount. These are dumy and the assessee company has introduced its own money as share application money." 4. On appeal, the ld. first appellate authority by following the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Rathi Finlease Limited; 215 CTR (MP) 429 to the eff....
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....to the A.O. then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of the assessee company." Our view if further fortified by the decision of the Hon'ble Delhi High Court in CIT v. Divine Leasing & Finance Limited; General Exports & Credit Limited and Lovely Exports Private Limited (2008) 299 ITR 268 (Del) wherein it was held that it is the duty of the Assessing Officer to investigate the credit worthiness of the share holders and in view of the finding that the assessee proved genuineness of shareholders no addition can be made u/s 68 of the Act. In the present appeal, since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscribers to share application is not in doubt as the assessee duly furnished their names. Age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are ....