2012 (12) TMI 845 - DELHI HIGH COURT

Unexplained credit - share application money from 9 applicants - CIT (A) opined that the assessee had discharged the basic onus cast upon it after considering the ruling in Lovely Exports [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Held that:- While there can be no doubt that in Lovely Exports (2008 (1) TMI 575 - SUPREME COURT OF INDIA) the Court indicated the rule of “shifting onus” i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable.

In this case, 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to a circumstance which the AO in this case proceeded to draw inferences from. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. Having regard to the totality of the facts, i.e., that the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between Rs.90-190 per share and was able to garner a colossal amount of Rs.4.34 Crores, this Court is of the opinion that the CIT (Appeals) and the ITAT fell into error in holding that AO could not have added back the said amount under Section 68 - The question of law consequently is answered in favour of the Revenue.