TaxTMI 
TaxTMI 
2002 (5) TMI 211
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....engaged in purchase and sale of shares and advancing money to industrial and other corporate bodies. During the course of assessment proceedings, the AO noted that the following share application money has been received by the assessee: (i) M/s National Commercial (P) Ltd. Rs. 89,50,000 (ii) Nobru Commercial (P) Ltd. Rs. 45,00,000 3. In order to verify the genuineness of shares application money, the assessee was asked to produce Shri Ajay Gupta, theDelhibased director of both the companies. The assessee was also asked to furnish evidence for the source of the above two companies from whom the share application money was received, nature of business done by them, the assessment of income by their respective ITOs and also to establish a....
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....on the decision of Hon'ble Delhi High Court in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del) 472 : (1993) 70 Taxman 69 (Del). 4. On appeal, the CIT(A) deleted the addition by observing that the existence of both the companies was established. They have their bank accounts from where the amount has been advanced to the assessee. In order to prove the identity and creditworthiness of the two companies, the following documents were also furnished: (i) Confirmation letters from both the companies. (ii) Copies of the accounts of the two companies as found in the appellant's books. (iii) Copies of the memorandum and article of association of both the companies. (iv) Copies of the bank accounts of the two companies from where t....
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....ceived by it. The Department did not accept the decision of the Hon'ble Delhi High Court and filed SLP before the Hon'ble Supreme Court. In the meantime, the issue was reconsidered by the Hon'ble Delhi High Court in the case of Sophia Finance Ltd. The Hon'ble High Court held that in case the identity of the shareholder was established, perhaps no further investigation about creditworthiness of the shareholders was required. While doing so, theHon'ble Courtdid not lay down any norms for deciding the extent of onus of proof of the amounts credited. However, theHon'ble Courtalso observed that if the identity of the shareholder is not established then the addition could be made under s. 68 of the Act because the shares could not be issued to a ....
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....ipt of share application money, the allotment of the shares, the CIT(A) has examined the identity of both the share applicants, their creditwothiness and genuineness of the transaction. He has observed that confirmation letters from both the companies have been furnished. The copies of their accounts in the assessee's book have also been furnished. The copies of the memorandum and articles of association of both the companies have been furnished. The copies of the bank account of both the companies have been furnished. Even the certified copies of the auditor's report of both the companies as on31st March, 1992, has also been furnished. All these documents clearly indicates that both the companies were identifiable. Their identity, therefor....
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.... M/s National Commercial (P) Ltd. cannot be doubted. 11. Similarly, the other share applicant Norbu Commercial (P). Ltd. was registered inSikkimvide Government of Sikkim letter dt.29th March, 1989. The main object of this company as per memorandum of association was acquiring shares, stocks, debentures, etc. The address of the company was specified in the return of allotment in persuance of s. 75(1) of the Companies Act. It has maintained the bank A/c No. 4/098 with Dena Bank, DaryaganjBr.New Delhi. The opening balance in this account as on1st April, 1991, was Rs. 39,809.49 and the closing stock as on31st March, 1992, was Rs. 8,601.67. The perusal of this bank account shows that there were more than 250 transactions of deposits and withdra....
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.... because at the time of inspection by the AO, the companies were not found inSikkimcannot be a ground for holding that the share application money received by the assessee was not genuine. Similarly Ajay Gupta did not appear before the AO though the summons under s. 131 were served on him. This is evident from the following observations made by the AO on p. 2 of his order: "For the verification of these advances against the share application money a summon was issued to Mr. Ajay Gupta who isDelhibased director at his local address to present on20th Jan., 1995. On20th Jan., 1995, Shri Dinesh Gupta, CA attended on behalf of Sh. Ajay Gupta and sought adjournment for23rd Jan., 1995, but on this date i.e. on23rd Jan., 1995, there was no complia....