2013 (11) TMI 1381 - HC - Income Tax

Share application money - additions u/s 68 - Held that:- As per the decision in CIT vs. Nova Promoters and Finlease (P) Ltd. [2012 (2) TMI 194 - DELHI HIGH COURT] - Where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders’ register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law.

The assessing officer had the knowledge on the basis of information received from the Investigation Wing that the assessee was one of the beneficiaries, who had procured share application money from entry providers - Where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed “accommodation entry providers”, whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee - Mere filing of PAN number, acknowledgement of income tax returns of the entry provider, bank account statements etc. was not sufficient to discharge the onus.

In this case - Other than the share application forms, no other agreement between the respondent and third companies had been placed on record. The persons behind these companies were not produced by the assessee company – The assessee adopted non- cooperation attitude before the Assessing Officer - Identity, creditworthiness or genuineness of the transaction is not established by merely showing that the transaction was through banking channels or by account payee instrument - Whether or not onus is discharged depends upon facts of each case - It depends on whether the two parties are related or known to each - The manner or mode by which the parties approached each other - Whether the transaction was entered into through written documentation to protect the investment - Whether the investor professes and was an angel investor - Decided in favour of Revenue.