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2011 (6) TMI 789 - HC - Income TaxUnexplained Cash Credits u/s 68 - As per AO the creditors were not creditworthy and they were not assessed to tax; hence, the assessee has failed to explain the source of such cash - HELD THAT:- The Supreme Court in the case of COMMR. OF INCOME TAX VERSUS M/S LOVELY EXPORTS (PVT) LTD [2008 (1) TMI 575 - SC ORDER], has held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. In the case of COMMISSIONER OF INCOME TAX VERSUS STELLER INVESTMENT LTD. [2000 (7) TMI 76 - SC ORDER], the Supreme Court agreed with the decision of the Delhi High Court in the case of COMMISSIONER OF INCOME-TAX VERSUS STELLAR INVESTMENT LIMITED [1991 (4) TMI 100 - DELHI HIGH COURT], wherein the Court had held that, it is evident that even if it is assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. In the circumstances, in the light of the aforesaid decisions, the Department is free to proceed to reopen the individual assessments of the depositors named by the assessee, however, under no circumstances, can the amount of share capital be regarded as the undisclosed income of the assessee - Decision in favour of Assessee.
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