TMI Blog2003 (8) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly initiated proceedings, under s. 158BC r/w s. 158BD and issued notice calling for the block return on 23rd March, 2001. The assessee-company filed a return in prescribed Form No. 2B showing the undisclosed income at nil figure. AO, however, proceeded to make the block assessment computing the undisclosed income at Rs. 1,38,000 which is being assailed in the present appeal before us. 3. Ground Nos. 1 to 3 challenging the legality of the impugned block assessment have not been pressed by the learned counsel before us and the same are, therefore, dismissed. The only ground pressed by the learned counsel is against the addition of Rs. 1,38,000 on account of share application money, being ground No. 4, which reads as under: "That on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an existing assessee and has filed returns showing the investment before the IT authorities. AO recorded his statement and proceeded to treat the investment of Rs. 1 lac as unexplained on the ground that creditworthiness of Shri Alok Goel has not been proved. 6. Learned counsel assailing the aforesaid additions, filed written submissions before us and also invited our attention to the paper book earlier filed along with the stay application. Learned counsel submitted that the entire share capital of the assessee-company has been duly recorded in the regular books of account of the company which have been duly audited. On the basis of such books of account, no part of the share capital can be assessed as undisclosed income by invoking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Even on merits, learned counsel submitted that all the three shareholders, namely, S/Shri Govind Mishra, Jaipal Sharma and Alok Goel are genuine parties assessed to tax and have disclosed the investment in the share capital of the assessee-company in the IT returns. He invited our attention to p. 68 of the paper book wherein there is a confirmation from Shri Jaipal Sharma wherein it has been stated that amount of Rs. 18,000 has been invested for acquiring shares of the assessee-company out of saving account maintained with State Bank of India, G.T. Karnal Road, Delhi. At p. 49, application filed by the said Shri Jaipal Sharma for allotment of Permanent Account Number has been filed. At pp. 50 to 63 of the paper book, copies of IT retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT vs. Sophia Finance Ltd. 11. We have carefully considered the rival submissions and gone through the paper book as well as other compilation of papers filed by the learned counsel before us. Chapter XIV-B of the IT Act, 1961, lays down a special procedure for assessment of search cases and provides for assessment of undisclosed income as a result of search. Block assessment made under the said chapter is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. The assessment for the block period can only be done on the basis of evidence found as a result of search and such other materials or information as are available with the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 314 (Ker) are no longer good law. The decision of Delhi High Court in CIT vs. Ravi Kant Jain cited by the learned counsel further supports the proposition enunciated by us above. 13. At this juncture, it would be relevant to take note of the basis on which the AO has proceeded to make the impugned addition of Rs. 1,38,000 as undisclosed income. AO has proceeded on the basis that with regard to the share capital introduced in the names of S/Shri Jaipal Sharma, Alok Goel and Govind Mishra aggregating to Rs. 1,38,000 in the books of the company, the assessee has not discharged the onus under s. 68 of the IT Act. A bare perusal of the assessment order would indicate that the AO was proceeding as if he was exercising the jurisdiction of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to Shri Govind Mishra, no material or information or evidence has been found during the search which may support the conclusion that the share application money of Rs. 20,000 introduced in the books in his name represents fictitious capital. Thus, in the absence of the vital ingredient for treating any amount as undisclosed income, namely, evidence, material or information found during search, we feel that the impugned addition made by the AO in the block assessment deserves to be deleted. 14. Learned counsel has referred to the two decisions rendered by jurisdictional High Court, i.e., Delhi High Court in CIT vs. Steller Investment as well as CIT vs. Sophia Finance Ltd., wherein issue concerning genuineness of share capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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