2008 (12) TMI 7

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....Rs'20,50,000/- had been made under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as the 'said Act'). The addition had been made on account of the share application money received by the assessee company from the following parties:- Sr. No. Name Amount in Rupees 1. M/s Sukhshanti Holding Pvt. Ltd 7,00,000/- 2. M/s Sumesh Financiers Pvt. Ltd (Director Shri R. P. Barodia) 5,50,000/- 3.   M/s S. K. Chemicals (Prop. Kamal Singh Dugar) 3,00,000/- 4. M/s Cosmos Holding (India) Pvt. Ltd 4,00,000/- 5. M/s Yamunotri Financial Pvt. Ltd 1,00,000/-   TOTAL 20,50,000/-   3. The Tribunal reversed the findings of the authorities below and deleted the addition. The Tribunal examined the facts of the....

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....t details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee; (2) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (3) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee; (4) the Assessing Officer is duty bound to investigate the creditworthiness of the creditor/subscriber, the genuineness of the transaction and the veracity of any repudiation. 5. I....

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.... Income-tax Officer may even be justified in trying to ascertain the source of the depositor, assuming he is identified, in order to determine whether that depositor is mere name-lender or not. In the present case, however, we find that there is nothing in the decision in Sophia Finance Ltd.(supra) which would enable us to take a contrary view than the view taken by the Tribunal. This is so because the identity of the subscribers stands established and it is also a fact that they have shown the said amounts in their audited balance sheets and have also filed returns before the Income Tax Authorities. We may also take note of the decision of the Supreme Court in the case of CIT v. Lovely Exports (P) Ltd: 216 CTR 195 wherein the Supreme Court....