TMI Blog2010 (5) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... He accordingly added the Share Application Money as unexplained cash credit under Section 68 of the Act. – CIT(A) and ITAT decided in favor of assessee and deleted the addition Held that: in the context of Section 68 of the Income Tax Act, the assessee has to prima facie establish (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; and (3) the creditworthiness or financial strength of the creditor/subscriber. It was observed that (a) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany filed return of income tax declaring total income of Rs.8,67,334/- for the Assessment Year 2002-03. The assessment, initially framed under Section 143(3) of Income Tax Act (hereinafter referred to as 'the Act'), was re-opened by issuing notice under Section 148 of the Act. During the course of assessment, it was noticed by the Assessing Officer that the assessee had received Share Application Money, amounting to Rs.27 lakhs from four private limited companies. On being called upon to prove the genuineness of the receipts, the assessee furnished documents such as Share Application Money, copies of resolution by the Board of Directors of the applicant companies, as well as the bank statements, Memorandums Articles of Association and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditworthiness or financial strength of the creditor/subscriber. It was observed that (a) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc., it would constitute acceptable proof or acceptable explanation by the assessee; (b) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (c) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue that the shares were not actually allotted to the companies. 8. The assessee filed copies of resolution passed by the Board of Directors of applicant companies, besides their bank statements and Income Tax Returns. The addresses of the applicant companies are recorded in these documents. It is not the case of the Revenue that the copies of Board Resolutions, Income Tax Returns and Bank Statements were not genuine documents. The Assessing Officer did not make any verification in this regard either from the internal record of the Department or from the concerned banks. If he so wanted, he could have called for the Income Tax Returns of the share applicants to ascertain whether the investment made in the assessee company was reflected i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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