TaxTMI 
TaxTMI 
2005 (4) TMI 33
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....relevant assessment year. The issue now involved before us and which was before the Tribunal was relating to additions of Rs. 5,80,000 made by the assessing authority on account of unexplained share capital/share application money which was confirmed by the Commissioner of Income-tax (Appeals) under section 68 of the Income-tax Act, 1961. Rs. 70,000 were added by the Assessing Officer as unexplained share capital shown to be invested by seven investors, namely, Shri Kailash Chandra Chhabra, Smt. Seema Chhabra, Sandeep Kothari, Smt. Seema Kothari, Sanjay Shah, Smt. Sonali Shah and Smt. Heema Shah, who had contributed share capital out of money advanced by the assessee. The Assessing Officer has held that the source of investment made by the....
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....an be made. On the other hand, the assessee has relied on the decision of the Supreme Court rendered in CIT v. Steller Investment Ltd. [2001] 251 ITR 263. The Tribunal finding that even the Delhi High Court in its Full Bench decision in CIT v. Sophia Finance Ltd. [1994] 205 ITR 98, held that when the assessee-company established the identity of the shareholders, there was no scope for further enquiry and also relying on the ratio laid down by the Supreme Court in Steller Investment Ltd.'s case [2001] 251 ITR 263 allowed the appeal filed by the assessee and additions of Rs. 5,80,000 were deleted as not tenable. In fact, the Full Bench in CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 (Delhi) agreed with the principle stated by the Delhi High....
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....], the Revenue had made additions of such amount in the income of the assessee as income from undisclosed sources. But the Tribunal did not sustain the additions. This court held after referring to the aforesaid decisions, that once the initial burden has been discharged in respect of the identity of investors, about their existence, and the confirmation from such investors has been obtained, the burden shifts to the Revenue to prove otherwise not only that the invested amount did not belong to the creditors but further it has to prove the said amount belonging to the assessee. It is pertinent to notice in this connection the observations made by the Delhi High Court in Stellar Investment Ltd.'s case [1991] 192 ITR 287 as to the ambit and....
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....rse or based on no evidence so as to raise any question of law. The decision in Sophia Finance Ltd.'s case shows that the burden of the assessee lies to the extent of making out a case that the investors exist and thereafter it is not for the assessee to further prove wherefrom they have brought money and invested with him. The Delhi High Court has clearly stated in Sophia Finance Ltd.'s case [1994] 205 ITR 98 (Delhi)[FB]: "Where, therefore, the assessee represents that it has issued shares on the receipt of share application money then the amount so received would be credited in the books of account of the company. The Income-tax Officer would be entitled to enquire, and it would indeed be his duty to do so, whether the alleged sharehol....