TMI Blog2010 (2) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount the fact that the persons had admitted that payment of the share subscription money except three persons - Decided in the favour of the assessee. - 2907 of 2005 - - - Dated:- 18-2-2010 - MANJUNATH K. L., NAGARATHNA B. V. MRS. JJ JUDGMENT Mrs. B. V. Nagarathna J.- This appeal is filed by the Revenue challenging the order dated March 31, 2005 passed by the Tribunal in I. T. A. No. 25/Bang/2004. 2. The respondent-assessee is a hotel group running hotels in Bangalore. A search was conducted at the respondent's premises on July 22, 1998 and a seizure mahazar was drawn on October 21, 1998. During the course of search, certain material and documents were seized. On scrutiny of the same, the Assessing Officer found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was Rs. 29,07,983 and on the basis of the details submitted by the assessee and on going through various trial balances, the cash available as per books on the date of search should be Rs. 23,28,812 and concluded that the said amount of Rs. 14,19,583 only was found and that there was a difference of Rs. 5,79,170 which was excess unexplained cash and brought the same to tax as undisclosed income. As far as the unexplained trade advances are concerned, according to the Assessing Officer, the assessee had explained that it had collected a sum of Rs. 29,15,586 relating to expenditure-tax and luxury tax from various customers of the assessee, viz., the occupants of the hotel. But the said amounts had been noted differently in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the bank accounts opened by them only transacted the share application money by introduction of cash and issue of cheques and consequently recorded a perverse finding ? (iii) Whether the Tribunal was correct in holding that, a number of share applicants has been examined and they admitted to have contributed for purchase of shares without taking into consideration the fact that these persons did not have any funds to invest in purchase of these shares as the Assessing Officer had not only taken into account the income received by each of them, the expenditure incurred by them as well as the rental accommodation in which all of them were residing and consequently recorded a perverse finding ? (iv) Whether the Tribunal was corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was allowable under section 43B of the Act ?" 5. It is submitted on behalf of the appellant that as far as these three items are concerned, the Assessing Officer was justified in bringing the same to tax on the basis of considering the same as undisclosed income which order was rightly upheld by the Commissioner of Income-tax (Appeals), but the Tribunal has not given any reason as to why the orders passed by the authorities below had to be reversed and thus, the orders of the Tribunal have to be set aside. He further submits that the explanations offered by the assessee with regard to each of the items, were untenable and the Assessing Officer had rightly brought the income to tax and therefore, the order of the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent and even in the evidence which had been let in, except three persons, all other persons had admitted that they were proposed shareholders who had paid the amounts on the shares that were to be allotted to them pursuant to the applications which they had received. In this context, it would be relevant to refer to the decision of the apex court referred to supra, wherein it has been stated that if the share application money is received by the assessee-company from the alleged bogus shareholders whose names have been given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of the assessee-company. To the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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