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2013 (2) TMI 499 - ITAT KOLKATAAddition u/s 68 – Assessee received share application money from M/s. Deevee Commercial Ltd – AO treated the amount received as unaccounted money – Search & seizure operation conducted at Gouri Business Centre u/s. 132 and in course of such operation, statements of the six persons were recorded u/s. 132(4) – From the statements of the above six persons, it was clear that Deevee Commercial Ltd. is nothing but a paper company/ jamakharchi company which is used to channelise unaccounted money by way of share application money – Held that:- Addition u/s. 68 of the Act can be made where an assessee fails to prove identity of the creditor; his creditworthiness and genuineness of the transaction – As decided in Nemichand Kothari vs. CIT [2003 (9) TMI 62 - GAUHATI HIGH COURT ] where an assessee receives any money by account payee cheque from another person, then u/s. 106 of the Evidence Act the assessee can be said to have established the genuineness and creditworthiness of the payer. In CIT vs. Value Capital Services Pvt. Ltd. [2008 (4) TMI 263 - DELHI HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application. Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances. Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account - assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd – In past the assessee has not been indulging in share trading business – AO was directed to treat the surplus as short-term capital gain instead of business income – Against the revenue.
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