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TMI Blog2008 (6) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... e any concept of protective assessment arising out of a search under the present provisions of Chapter XIV-B. (iii)The CIT(A) erred in deleting the addition being unexplained credit towards share application, the source of which has neither been proved before the Assessing Officer nor before the CIT(A). (iv)The CIT(A) erred in not considering the assessee's non- cooperation before the Assessing Officer to prove the credit-worthiness of the parties in respect of whom there are credits in the books of the assessee and, hence, the Assessing Officer was justified in treating the same as unexplained investment. (v)The CIT(A) erred in holding that the decision of the Supreme Court in the case of Stellar Investments [251 ITR 263] is applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble as unexplained cash credit under section 68 of the Income-tax Act in the hands of the assessee-company. Since the outcome of the appeal filed by Mr. G.P. Goyal before the ITAT is not known and to protect the interest of the revenue, the Assessing Officer issued a notice under section 148 on 27-7-1998. Reasons were recorded that income has escaped assessment in the hands of the assessee-company. The Assessing Officer in his order in para 1.3 has mentioned that one of the employees of Mr. G.P. Goyal confirmed that he was receiving cash from Mr. G.P. Goyal for investing the same in different benami names in the share capital of the assessee-company. The Assessing Officer has mentioned that such statements were elaborately repro- duced in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed profit and loss account and balance sheet. In the balance sheet, the assessee-company introduced share capital to the extent of Rs. 10,60,000. The learned DR submitted that in view of the fact that the Assessing Officer has two opinions, firstly, that investment in share capital in the name of benamies were detected during the course of search and seizure action and secondly, the assessee-company disclosed in its balance sheet for year ending 31-3-1995. At the time of initiation of block assessment proceedings in the case of Shri G.P. Goyal, there was no clarity regarding the undisclosed income/unexplained income detected during the course of search as to whether it should be assessable in block assessment or regular assess- ment. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial was collected during the course of search that such investment belonged to Shri G.P. Goyal. If such income was to be assessed in the hands of a person other than Shri G.P. Goyal, then revenue should have taken recourse under section 158BD. If the revenue was not sure as on which hands the assessment is to be made, then the revenue could have initiated proceedings against both the assessees. In the instant case, assessment in the case of Shri G.P. Goyal was completed on 31-7-1997. Notice under section 148 had been issued to the assessee-company on 27-7-1998. Once the revenue had taken its stand that such investment in the share capital belong to Shri G.P. Goyal and the assessment order was passed, then it cannot be said that the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is that the Assessing Officer should have reason to believe that income has escaped assessment, is not satisfied in this case. Hence, we are satisfied that the learned CIT(A) was justified in holding that assessment cannot be reopened for making protective addition. 2.7 The Hon'ble Delhi High Court in the case of CIT v. Divine Leasing & Finance Ltd. (2007) 158 Taxman 440 held that if Assessing Officer treats share application money as undisclosed income under section 68 and the revenue believe that shareholders are bogus, then the Assessing Officer is free to reopen the assessment of the shareholders. The Delhi High Court held that share application money cannot be added in the hands of the company. 2.8 In view of the above dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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