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2014 (11) TMI 1135 - AT - Income TaxAddition on account of share capital/share application money - AO rejecting the evidence and details submitted by the assessee - Held that:- AO was not justified in rejecting the evidence and details submitted by the assessee without any further verification and examination of the same. We also observe that the AO made addition by accepting the statement of the alleged entry providers recorded by the Investigation Wing accepting the same as gospel truth without affording opportunity of cross-examination to the assessee. See case of CIT vs Divine Leasing and Finance Ltd. (2008 (1) TMI 927 - SUPREME COURT) wherein dismissing the special writ petition of the department, their lordships held that if 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 assessment in accordance with law. Under the facts and circumstances of the present case, we are in agreement with the conclusion of the CIT(A) that once the identity of the investor has been manifested and proved by the assessee by submitting their names, addresses, PAN Nos. and other relevant details, then the capital receipt of share application money cannot be said to be the undisclosed income of the assessee and addition u/s 68 of the Act is not sustainable. However, the AO is free to proceed to reopen the individual assessments of the respective persons who provided share capital money. - Decided in favour of assessee.
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