TaxTMI 
TaxTMI 
TaxTMI 
2005 (8) TMI 67
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....estion of law arose in the case by adverting to the contentions raised before the Tribunal and the facts of the case. In the present case, the Assessing Officer reached his conclusion that in the previous year relating to the assessment year, there has been increase in the share capital of the assessee-company on account of issue of shares. The shares have been issued to limited companies as well as individuals on the basis of receipt of share applications through banking channels. The Tribunal has noticed the break-up of share application money, which has been added by the Assessing Officer in the taxable income of the assessee as unexplained cash credits, by invoking section 68 of the Income-tax Act, 1961. The aforesaid amount has been....
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....the income of the assessee from undisclosed sources under section 68 of the Income-tax Act which was sustained. The Revenue had filed Income-tax Appeal No. 9 of 2003 (see [2004] 270 ITR 477 (Raj)) to the extent it was aggrieved with deleting the additions made by the Assessing Officer on account of increase in share capital relating to six companies and individuals other than Umesh Kumar. The said appeal has since been dismissed. The aforesaid two additions are the subject-matter of this appeal by the assessee. The following substantial questions of law were framed at the time of the admission by the court: "Question No. 1. Whether the Income-tax Appellate Tribunal has failed to appreciate the burden of proof lies on the Department to s....
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....pened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself." The reason for the aforesaid conclusion was obvious that there is no personal contract between the company and the share applicants. The transactions are made through banking channels and, therefore, once the existence of persons by name in the share applications has been made and in whose name the shares have been issued, the company cannot be held responsible to prove whether the person in whose name the share application has been applied is the very same person or is somebody else. The position may be somewhat different in a case of cash credit found in the books of accoun....
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.... finding the existence of certain persons having been established has deleted such amount to be added in the income of the assessee for the assessment year in question. It is in the light of the aforesaid judgment, the principle relating to burden of proof concerning the assessee is that where the matter concerns money receipts by way of share application from investors through banking channel, he has to prove the existence of the person in whose name the share application is received. Once the existence of the investor is proved, it is not further the burden of the assessee to prove whether that person itself has invested the said money or some other person had made investment in the name of that person. The burden then shifts on to the R....
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....fficer about the effect of return of notices is concerned, the Tribunal has not acted upon it. The Tribunal has clearly found in its order that the Assessing Officer issued notices to the parties on July 7, 2001, but the notices so issued to the creditors by the Department returned unserved. The notices sent to them including Westbury Investors P. Ltd. could not be served on them for the reason of change in address and it is not clear whether the assessing authority has again sent notices at the changed addresses submitted by the authorised representatives of the assessee. On this aspect of the matter, the Tribunal recorded its finding as under: "In the instant case analysing the fact situation in its entirety we find that as regards the ....