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2022 (7) TMI 159 - AT - Income TaxAddition u/s 68 - unexplained share capital - as per AO no documentary evidences to prove the genuineness of the transactions as well as the identity and creditworthiness of the investors given - HELD THAT:- AO took no steps to verify the creditworthiness of the creditors or identity of the subscribers to ascertain that the transactions were genuine or whether these were bogus entries of money lenders and, therefore, we are of the considered view that the judgement of the Hon’ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] does not help the case of the Department. Hon'ble Delhi High Court in the case of M/s Nova Promoters and Finlease (P) Ltd [2012 (2) TMI 194 - DELHI HIGH COURT] wherein the Hon'ble High Court has pointed out that the evidence or the material adduced by the assessee cannot be thrown out without any inquiry. In the present case, there exists no material to implicate the assessee for the failure to produce the common director or the failure to explain the source of source when the AO himself has not conducted any inquiry which could indicate that the impugned transactions were not genuine. In our considered view, the suspicion however strong cannot substitute the documentary evidence, until proved to be false. Therefore, in our considered opinion, the impugned addition on the facts of the case is not sustainable. Also we would like to make a reference to the judgement of the Hon'ble Apex Court in the case of CIT vs Lovely Exports [2008 (1) TMI 575 - SC ORDER] 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 assessment in accordance with law but it cannot be regarded as undisclosed income of the assessee company. Therefore, for the reasons given in the preceding paragraphs, we hold that the impugned addition u/s 68 of the Act is not sustainable in the eyes of law and while setting aside the order of the Ld. CIT(A), we direct the AO to delete the impugned addition. - Decided in favour of assessee.
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