2011 (1) TMI 194 - DELHI HIGH COURT

Addition - Unexplained share application money - Undisclosed income - Held that: in Commissioner of Income Tax Vs. Stellar Investment Ltd. [1991 -TMI - 22311 - DELHI High Court] it was observed that: where the increase in subscribed capital of the respondent company accepted by the ITRO and rejected by the CIT on the ground that a detailed investigation was required regarding the genuineness of subscribers to share capital, as there was a device of converting black money by issuing shares with the help of formation of an investment which was reversed by the Tribunal, this Court held that even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company. This view was confirmed by the Apex Courtin CIT Vs. Steller Investment Ltd. [2000 -TMI - 40317 - SUPREME Court].

Share application money - even after considering the alleged discrepancies, it does not follow that the amount of share capital was the undisclosed income of the assessee. Even the correct Bank statements as claimed by the AO reveal that the assessee has received cheques from the shareholders - no addition could be made

Genuineness of the transactions, identity of the share applicants, creditworthiness - Held that: addition was rightly deleted by the CIT (A) and the Tribunal. Requisite documents were furnished showing the existence of the shareholders from bank accounts and even their income tax details. From bank accounts of these shareholders, it was found that they had deposed certain cash and source thereof was questionable. The AO should have made further probe which he failed to do. Moreover, remedy with the Department lies in reopening the case of these investors and the addition cannot be made in the hands of assessee.

Unexplained investment - the assessee had not given satisfactory evidence to discharge the onus. It had merely given names of the parties without anything more. That would not be sufficient compliance. Even the bank statement of the assessee which was submitted has not been proved. - assessee had not been able to discharge the onus ptomaine and addition was rightly made.

Penalty u/s 271(1)(c) - Tribunal is right in holding that insofar as penalty proceedings are concerned, case against the assessee of concealment of income is not made out. - penalty not to be levied.