TMI Blog1992 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... their statements. In respect of Shri Ashok Arora, it was observed that "he was a man of no means and was earning livelihood as a hawker, selling cloth on the road side pavements or in the village markets. Note was also taken of the fact that he did not maintain any books of account and nor did he have any bank account. The payment for the purchase of shares was also found to have been given in cash. On the basis of these facts, the Assessing Officer treated the sum of Rs. 25,000 attributed to Shri Ashok Arora as the income of the assessee from undisclosed sources. 4. Similarly, in respect of Shri Satish Chopra (Party at Serial No. 2), the Assessing Officer on the basis of the statement recorded came to the conclusion that he was not in a position to possess the aforesaid sum and being a salaried employee having monthly salary of Rs. 2,000 per month from which he had to meet normal expenses, he was incapable of advancing any money to the assessee for purchase of shares. The amount pertaining to Shri Satish Chopra was also found to have been advanced in cash. The said sum of Rs. 45,000 was also added as income from undisclosed sources. 5. As regards the other four persons appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders the sources of their funds and in case the ITO had to make enquiries, he could do so in the respective cases and the natural consequence of such enquiries could follows once again in the individual cases. (vi) That on the facts of the present case, it could not be said that the money given by the aforesaid persons towards the shares in the assessee-company could be said to be the money of the said company from undisclosed sources. 7. On the basis of the aforesaid submissions, the learned counsel contended that the addition sustained by the CIT(A) be deleted. In support of his arguments, he placed reliance on the following decision: CIT vs. Steller Investments Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) Standard Cylinders P. Ltd. vs. ITO (1988) 24 ITD 504 (Del) Nathu Ram Prem Chand vs. CIT (1963) 49 ITR 561 (All) CIT vs. Orissa Corpn. P. Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC) Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 (SC) 8. The learned Departmental Representative on the other hand, supported the orders passed by the ITO and the CIT(A) and the subsequent arguments advanced by him were a reiteration of the reasons recorded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by the Assessing Officer owned up the purchase of shares and the issue of share certificates to them by the company. It is a different matter that the Assessing Officer proceeded to hold in the ultimate analysis that these two persons were not capable of possessing funds of the magnitude which had been advanced to the company for purchase of shares. 11. At this stage, we may refer to some of the decisions cited by the learned counsel and for the purpose of disposing of the appeal, the decision of the Hon'ble Delhi High Court in the case of Steller Investments Ltd. and that of the Delhi Benches of the Tribunal in the case of Standard Cylinders P. Ltd. would be relevant. It may not be out of place to mention that the Benches at Delhi have been taking the consistent view that an addition in respect of the funds invested in the purchase of shares cannot be made in the hands of a company, whether public or private and any action on the part of the Department should be directed in the individual assessments of the persons concerned. We refer to one such unreported decision, namely, M/s. Sahu Refrigeration Industries (P) Ltd. vs. ITO in ITA No. 3527/Del/89 dt.17th Aug., 1992. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been a device of converting black money into white money by issuing shares with the help of formation of an investment company and that the Assessing Officer did not make any enquiries with regard to the genuineness of the subscribers to the capital. This view was reversed on appeal by the Tribunal. On a reference to the High Court at the instance of the CIT, the Delhi High Court held that even if it is assumed that the subscribers to the increased share capital were not genuine, under no circumstances could the amount of share capital be regarded as the undisclosed income of the company. The High Court went to the extent of saying that no question of law arose out of the order of the Tribunal. The High Court pointed out that: "It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. This decision is given by the jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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