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2008 (8) TMI 391 - AT - Income TaxShare Application Money - Addition u/s 68 as share capital - transactions and genuineness of the credit related to three accounts - CIT(A) confirmed the addition on account of share capital as the source of it was not proved, which was in name of Smt. Kamla Devi, Smt. Sarita Agrawal and Anju Chordia - assessee has fully established transactions, genuineness of the credit in their names by filing evidences - addition made is unjustified. HELD THAT:- From the record, we found that assessee company has filed confirmation in respect of all the three share applicants the amount of which was received by account payee cheques. All these documents clearly establish not only identity of the share applicants but also the source from which they have given the money to the assessee company in the form of share capital. Hon'ble Supreme Court in case of Lovely Exports (P) Ltd.[2008 (1) TMI 575 - SC ORDER] has clearly laid down that if the share application money is received by the assessee company from the 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, however, no addition is to be made in the hands of the company. Keeping in view of the above precedent, we do not find any merit in the action of lower authorities for adding the amount of share capital in the hands of the assessee company by invoking provisions of s. 68. At the very same time, the Department is at liberty to proceed to reopen their individual assessments in accordance with law. We direct accordingly. In the result, the appeal of the assessee is allowed.
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