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2010 (5) TMI 614 - AT - Income TaxSource of share capital - Introduction of share capital - creditworthiness of the companies and the genuineness of the transaction. - AO made the addition whereas CIT(A) deleted such additions - Held That:- When companies had issued confirmation letters regarding purchase of shares from the assessee-company. They had also quote their PAN. Furthermore, these companies had also furnished memorandum of association and articles of association, certificate of incorporation issued by the Asstt. RoC and certificate issued by the Asstt. RoC regarding commencement of business. The assessee had also submitted resolution of board of directors of each company regarding investment in purchase of equity shares of M/s Hitkarni Prakashan Ltd. and copy of their bank accounts indicating availability of funds for purchase of shares. Thus, the assessee had proved the identity of the four companies, genuineness of transactions and also creditworthiness of the companies. We also find that each company is income-tax assessee and disclosed share application money in their accounts which were duly reflected in their IT returns. In our considered view, the learned CIT (A) was fully justified in deleting the addition. Recently, in the case of Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] 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, but it cannot be regarded as undisclosed income of assessee company. Thus the appeal of revenue is dismissed.
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