TMI Blog2007 (5) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... as been filed. In most of the cases details of the employer, nature of profession or business has not been given. The amount invested in the share capital during the year is almost the same as the total income of the investor during the year. Hence, the Assessing Officer treated the said investment in share capital as the undisclosed income of the assessee under section 68 of the Act and added the same to the income of the assessee. On appeal, the CIT(A), after having considered the submissions of the assessee, remand report of the Assessing Officer has held thus : 3.1 I have gone through the rival submissions on the issue carefully. I have also gone through the report of the Assessing Officer submitted on the paper book and written submissions of the Ld. AR. After considering all the relevant material on the record, I am of the considered opinion that the contentions of the Ld. Counsel of the appellant company has considerable force. There is a difference in cash credit and share application money where the shares have actually been allotted. Loan and deposits cannot be accepted in cash. This condition, however, does not apply to the share money paid by applicants to the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 493 (Delhi) has upheld the proposition of law that where the amounts having been paid by the shareholder are confirmed by them and are duly disclosed in the books, then the same does not call for any addition. The Hon ble Supreme Court in the case of 263 ITR 300 has held that the company which genuinely exists and the confirmation of the shareholders has been filed along with the disclosure of the identity then the same does not call for any addition. 3.3 In view of the above-mentioned facts, discussion and the judicial pronouncements on the issue the Assessing Officer was not justified in making the addition for cash credit as the persons whose balances were appearing with the appellant company for the year ending 31-3-2000 have further paid various amounts for the purchase of shares during the assessment year under consideration whereas for the previous year, the genuineness of the transactions and the bona fides of the persons are not in dispute. Hence the addition for the present year is bad in law. The appellant company has also placed reliance on the following decisions. These decisions in my view support the appellant s claim. ( i )Supreme Court 4 SCC [1999] 350 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permanent residence address, their PAN, their income-tax assessment wards where they are assessed to tax and other necessary details placed on record. The questionnaire issued to the assessee was duly complied with and all the details asked for were furnished to the Assessing Officer. The ld. counsel has submitted that Assessing Officer has made the additions on the ground that share application money has been received in cash. In this regard the Ld. counsel has submitted that it is not the requirement of law to deposit the share application money by cheque or by banking channel. The applicant can deposit the share application money in cash. The addition made by the Assessing Officer is devoid of merits and against the facts inasmuch as all the shareholders are identifiable and verifiable with the permanent address and all of them are Income-tax assessees and persons of means. That the amount having been advanced by the said shareholders have been received by the assessee company and duly recorded and disclosed in the relevant books of account, duly vouched an audited by the auditors. The ld. counsel has further submitted that as per the decision of Full Bench in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6] 283 ITR 190 (Delhi) as observed in para 21 of the judgment: "But we hasten to clarify that the statement of law made by the ITAT to the effect that in case of share capital no additions could be made if it is established that the shareholders exists is not completely correct, and has not been so enunciated by this Court in Sophia Finance Ltd. s case ( supra )." Thus, the decision in the case of Stellar Investment Ltd. ( supra ) have to be restricted to the facts of the said case only. It may further be mentioned that the Hon ble High Court in para 11 of the order further observed as under : "It seems clear to us that where moneys have been received in cash or even Demand Drafts, the standard of proof would be much more rigorous and stringent than where the transactions is by cheque where the date and source of the investment cannot be manipulated." 6. The Hon ble High Court has further observed that in the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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