TMI Blog2012 (10) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... rthiness was not established. It is not the case that no opportunity was provided to the claimed share applicant. Right from the assessment stage, first appellate stage and even before the Tribunal, no effort was made by the assessee to prove the required ingredients of section 68, therefore, order of CIT(A) in upholding addition is affirmed – Decided in favor of Revenue - ITA No.230/Ind/2012 - - - Dated:- 16-7-2012 - SHRI JOGINDER SINGH And SHRI R.C. SHARMA, JJ. Appellant by Shri C.P. Rawka Respondent by Shri R.A. Verma ORDER PER JOGINDER SINGH, judicial member The assessee is aggrieved by the impugned order dated29th February, 2012 on the ground that the learned CIT(A) erred in confirming the addition made on account of share application money received from Optimates Textiles Industries Limited on account of unexplained income u/s 68 of the Act amounting to Rs.5 lacs and Rs. 8 lacs from M/s Money Panny Finance Limited. 2. During hearing of this appeal, we have heard Shri C.P. Rawka, ld. Counsel for the assessee and Shri R.A. Verma, learned Senior DR. At the outset, the learned Senior DR pointed out that the impugned issue is covered against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found that these companies are fictitious and a circuitous route was opted by the beneficiaries and these companies were found to be a device to give the colour of own money as genuine in the form of issuing cheques. The relevant portion from the order dated 31.10.2011 in the case of M/s Agrawal Coal Corporation P. Ltd. and others is reproduced hereunder :- 2. During hearing of these appeals, we have heard Shri P.M. Chaudhary and Shri Ajay Tulsiyan, the learned counsels for the assessee and S/Shri Keshav Saxena, Shri R.K.Chaudhary, Shri K.K. Singh, learned Commissioners of Income Tax along with Shri Arun Dewan, learned Senior DR. The learned representatives from both the sides contended that the facts and the issue regarding share application money involved in these appeals is identical as the share capital and share premium was alleged to be received from Hindustan Continental Limited and Optimates Textile Industries Limited and other concerns as applicable to the respective appeals. 3. Since the facts are identical, therefore, these appeals can be disposed of by a common and consolidated order. We would like to deal with ITA No. 151/Ind/2009 first. The facts, in brief, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interested. Thus as per section 68 onus was upon the assessee to establish depositor s identity, creditworthiness and genuineness of transaction. Assessee in its written submission stated that company has received share application money of Rs. 40,00,000/- from Hindustan Continental Ltd. 19, Shubh Kamna Apartment, Gul Bazar, Jabalpur. As per the report of the ACIT 5(1), Indore, it is clear that no such company exist at the given address. The creditworthiness of the company has also not been established in view of the fact that there is huge inflow and outflow of fund in the Bank account without any logic. There is huge cash deposit in the Bank account of Hindustan Continental Ltd. maintained UTI Bank Ltd. copy of which is filed by the assessee in support of its contention. The company is not existing in real sense the genuineness of transaction is also doubtful. Since assessee failed established identity, creditworthiness and genuineness of transaction, credit in the account of the assessee on account of share application money from Hindustan Continental Ltd. Rs. 4,00,000/- and share premium amount of Rs. 36,00,000/- are being treated as unexplained credit u/s 68 and added back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to know the whereabouts of these companies who also reported that no such companies were in existence at the given address. Before coming to any conclusion, we are reproducing hereunder the relevant provisions of section 68 of the Act which deals with cash credits :- 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 6. Before us, the Ld. Counsel for assessee submitted in regard to the correctness and validity of the addition made by AO u/s 68 credits in respect of share capital and share premium received from two companies viz M/s Hindustan Continental Ltd (Rs 40 Lacs) From M/s Optimat Textile Industries Ltd ( Rs 10 Lacs), that the present appeal relates to AY 2005-06 , in respect of which the assessee has filed its return of income on 31/10/05 declaring total income at Rs 83,46,090/- (copy of computation Acknowledgment of return at Page 1 to 3 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fresh share capital received during the year along with names and address of the share holders and PAN again given along with reply dated 17/12/07 on demand from AO . Copies of Board resolution and share application Forms of all share holders including the above two companies also filed along with the reply. The Ld. Counsel for assessee submitted that various documents for above two companies were filed before the Assessing Officer to prove the identity, capacity and genuineness of the transactions but the Assessing Officer has brushed aside the same and merely relying upon the report of another authorities held that the companies in question are paper companies and not existing in real sense and has made the aforesaid addition u/s 68 of the IT Act, without application of mind. 7. So far as the legal position in respect of applicability of section 68 to the credits in respect of share application money/ share capital credits towards share application money/ share capital is concerned, the Ld. Counsel for assessee submitted that it has taken different turns. He submitted that various decisions have two aspects i.e. (i) Regarding applicability of section 68 to such credits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two implications. Firstly , the statement of law contained in the order is declaration of law by Supreme Court within the meaning of Article 141 which will obviously be binding on all courts and Tribunals in India and certainly the parties thereto . Secondly other then declaration of law , whatever is stated in the order are findings recorded by Supreme Court which would be binding on the parties and the courts, Tribunal or authorities whose orders was under challenge . 2. S Shanmugavel Nadar vs State of Tamilnadu reported in 263 ITR 658. Their Lordships have held that a summary dismissal by Supreme Court without laying down any law is not a declaration of law envisaged under article 141 but when reasons are given, the decision of the Supreme Court would be binding on all courts within the territory of India 3. Snowcem India Ltd vs DCIT reported 313 ITR 170(Bom) where their Lordships have held that once the appeal against the judgment of the High Court is dismissed , it can be said that the decision of the High Court has been affirmed by the Supreme Court 10. The Ld. Counsel for assessee, submitted that in view of the legal position settled by the Hon'ble Supreme Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Full Bench of the Delhi High Court, if the share holders exists then, possibly no further enquiry needs to be made. He, therefore, submitted that as to the existence of the share holders, of course, the assessee is required to place the primary evidence and discharge the primary burden, for which reliance was placed on the following decisions . 1. CIT Vs Divine Leasing Financing Ltd reported in 158 Taxmann 440 (Del), wherein their Lordships have held that a distillation of the precedents yields following propositions of law in the context of section 68. The assessee has to prima facie prove (i) the identity of the creditor/ subscriber (ii) the Genuineness of the transaction ,viz, whether it has been transmitted through banking or other indisputable channels (iii) the credit worthiness or financial strength of the creditor/subscriber (iv) if relevant details of address or PAN Identity are furnished to the department along with the copies of share holder register, share application Form , share transfer register etc , it would constitute acceptable proof or acceptable explanation by assessee . Further ,(i) the department would not be justified in drawing an advers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company to probe as to the source . It was for AO to enquire into the affairs of the investor company Their Lordships have applied the ratio of the decision in case of Lovely Exports Pvt Ltd (supra) . 6. CIT Vs Dolphine Canpack Ltd 283 ITR 190 ( Del) ---- share application money Tribunal while observing details including confirmation details of bank account, PAN of subscriber and that payments made by cheque justified in deleting addition u/s 68. Although the Lordships applied decision in Sophia Finance Ltd , they came to the conclusion that the scope is limited to examining the existence of share holders and since the assessee has furnished sufficient material to discharge the onus , deletion of addition was correct . 7. CIT vs Down Town Hospitals Pvt Ltd reported in 267 ITR 489 (Gauhati) held that the assessee filed details regarding source of funds of the party and their IT File Numbers etc no addition u/s 68 is permissible where share holders are identified and it is established that they had invested the money in purchase of shares . (Page 127 to 131 of judgment compilation). 8. CIT Vs ILLAC Investment Pvt Ltd reported in 287 ITR 135 held that assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Sophia Finance Ltd (supra) is to be applied then even in such case also, the assessee is only required to prove the existence of the share holders and the fact that the money has been invested by share holding company and not by the assessee company. It was submitted that since various documents were submitted by the assessee, primary burden which lay upon the assessee, has been discharged. It was strongly contended that the Tribunal in the case of Kalani Industries Limited (2007) 8 ITJ 165 has accepted the existence and identity of these companies, apart from the question of discharge of primary onus and shifting of burden to the department, which has miserably failed to discharge its onus. He further submitted that there is another fact that both these companies viz M/s Hindustan Continental Ltd. M/s Optimat Textiles Industries Ltd have been held to be existing companies on the basis of the similar evidence by the earlier Bench of this Tribunal. It was also submitted that the decision of the higher Forums has to be followed for which reliance was placed upon the following decisions :- 1. Kamalakshi Finance Corporation Ltd; 55 ELT 433 2. M/s Agrawal Warehousing Leasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in discharge of its burden to prove the identity and existence of the company, the Learned CIT instead of applying and following the decision of this ITAT in the case of Kalani Industries Ltd (supra) has tried to find faults with the system of registration of companies, issuing PAN or about the opening of bank account etc . He submitted that the approach of the CIT (A) to say the least appears to be perverse in the matter. As to the duty of the AO to make enquiries by pursuing the matter and by making independent enquiries, the Ld. Counsel for assessee relied upon the decision of Supreme Court in the case of CIT Vs Orissa Corporation Pvt Ltd reported in 159 ITR 78, wherein their Lordships have held that when it is in the knowledge of the revenue that the creditors are Income Tax assessees, their Index Numbers are in the file of revenue, no addition could be made. The Ld. Counsel for assessee contended that the department apart from issuing notices u/s 131 of the Act, did not pursue the matter further and no effort was made to pursue the alleged creditors. He further submitted that the AO has made no effort on his part to even issue the summons u/s 131 to the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Companies Act i.e by liquidation under the Company Law, which takes place only through High Court. In this respect the Ld. Counsel for assessee referred to the provisions of sections 13 17 of the Indian Companies Act, which deal with requirements with respect to Memorandum and Article of Association, change of Memorandum, change of registered office etc., section 21 of the Companies Act prescribing procedures for change of name. He further submitted that it would also be useful to refer to section 34 regarding effect of registration of Memorandum according to which on registration of Memorandum, the Registrar is required to certify that company is incorporated. Sub section (2) provides that on and from date of incorporation the subscribers of Memorandum and other persons, as may from time to time the members of the company, shall be a body corporate having perpetual succession and common seal. Similarly sections 72 , 73 75 etc. which deal with the procedure for application, allotment of share etc. also throw light on the corporate existence of the company. It was submitted that even the provision regarding appointment and change of auditors etc throw light on the corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of such credits. Reliance was placed upon the decision in Kale Khan Mohd. Hanif (1963) 50 ITR 1 (SC). Our attention was invited to the paper book dated 4.5.2010 by specifically pointing out that huge cash was deposited in number of bank accounts, namely, Sahayata Marketing, Yash Associate, G.R. Investment and V.S. Traders, etc. from where the amounts were transferred to creditors account and from there to the assessee. It was strongly asserted that unaccounted cash was flown back in the accounts of the assessee and the source of such cash remained unexplained as the parties in whose accounts the cash was introduced were found non-existent because even summons could not be served upon them at their known addresses. Reliance was placed upon the decision of Sumati Dayal; 214 ITR 801 (SC). A plea was also raised that the onus/burden still remained fastened to the assessee for which reliance was placed on the decision in the case of Nivendan Vanijya Niyojay Limited; 182 CTR (Cal) 605 and Hindustan Tea Trading Company; 182 CTR (Cal) 585. The decision in the case of M/s Rathi Finlease (2008) 215 CTR (MP) 429 was time and again reiterated by the learned CIT DR along with the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the rival submissions and perused the material available on file. Brief facts of the case are that the assessee (M/s Agrawal Coal Corporation Private Limited) is a private limited company engaged in the trading business. In the year under consideration the company entered in the field of power generation with installation of two wind mills and declared income of Rs.83,46,090/- in its return filed on 30.10.2005 for assessment year 2005-06. The case was selected for scrutiny. The learned Assessing Officer, during the assessment proceedings, noted that M/s Hindustan Continental Limited, applied for 40,000 shares of the assessee company of the countenance value of Rs.10/- each at a premium of Rs.90/- per share. Similarly, Optimates Textile Industries Limited also applied for 10,000 shares of the assessee company of the same value and premium per share. The learned Additional CIT, Indore (Assessing Officer), has referred the report of ACIT 5(1), Indore, wherein it was found that on the basis of investigation carried out by him in some other cases, M/s Hindustan Continental Limited and Optimates Textiles Limited are not the genuine companies. The report of ACIT 5(1) has been reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of share application money from Hindustan Continental Ltd. Rs. 4,00,000/- and share premium amount of Rs. 36,00,000/- are being treated as unexplained credit u/s 68 and added back to taxable income. Similarly, assessee has tried to establish identity of M/s Optimates Textile Industries Ltd., but it is evident from the report of the ACIT 5(1), Indore that company is also a paper company used to providing accommodation entries only. Enquiries revealed that no such company exists at the address as provided by the assessee. ACIT 5(1), Indore reported that the Assistant Director of Income Tax investigation IX(3), Mumbai had confirmed in his report that M/s Optimates Textile Industries Ltd. does not exist at the given address and seems to be bogus. Assessee has given the address of the company as to Dev Karan Mension IInd floor 63B princes estate Mumbai whereas the Bank account of the company has been mentioned in Indore in which the address of the company was given as 13, South Hati Pala, Indore. This company is also not existing in real sense and only accommodation entries are being given to the beneficiaries in the form of share application money or unsecured loans. Since asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department by the assessee. Thereafter, commission was issued to ADIT(Inv.) Unit-IX-3, Mumbai, to verify the existence/genuineness of these companies, who also reported that the said companies did not exist at the given addresses. The whole issue for adjudication is whether the identity of these companies was established ? During hearing, the Ld. Counsel for assessee claimed that identity of both these companies has been established as both these companies were registered with Registrar of Companies and their income tax returns were filed and both are having PANs/bank accounts. We are not agreeing with this proposition because at the time of registration, these companies may be existing either on papers or in real sense but thereafter were specifically found non-existent as the summons/ notices issued were returned back unserved and the commission issued with this purpose also found that these companies were nonexistent. At the same time, none of the certificates, claimed to be issued by various authorities, does not establish the identity of the share applicants as the certificates were issued without physically verifying the existence of applicants, such as income tax departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is able to establish identity of these companies which the assessee has grossly failed not only before the Assessing Officer but also before learned Commissioner of Income Tax (Appeals) and the Tribunal. Under these facts and circumstances, there is no question of apply the proposition of law as suggested by the Ld. Counsel for assessee. 24. On the issue of discharge of onus/burden, the assertion of the Ld. Counsel for the assessee is that the onus shifted to the department when copy of share application form, PAN, name and addresses and ROC registration, etc. were filed by the assessee. We are not agreeing with the submission of the assessee in view of the fact that at the addresses (4 places) given to the department, these companies were found to be non-existent. Even the Inspector was deputed to verify the addresses who also reported that these companies were not available at the given addresses. It is not possible that the companies making huge investment in the form of share application are not found at the given addresses. There is a possibility that there may be a change of address but till the stage of the Tribunal, not to talk of the Assessing Officer or the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited; 205 ITR 98 observed as under :- The ITO would be entitled to engage and it would indeed be his duty to do so whether the alleged shareholders do in fact exist or not. If the shareholders exist then possibly no further enquiry need to be made. But if the ITO finds that the share holders do not exist, then in effect it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of words may be charged in section 68 clearly indicates that the ITO would then have the jurisdiction if the facts so warrants to treat such credit to be the income of the assessee. The Hon'ble Calcutta High Court in Precision Finance Private Limited; 208 ITR 465 held that inquiry of ITO revealed that either the assessee was not traceable or there was no such file and accordinbgly the first ingredient as to the identity of the creditors has not been established. If the identity of the creditor has not been established, consequently, the question of establishment of the genuineness of the transaction or the credit worthiness of the creditors did not and could not arise. During hearing reliance was placed upon the decision in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation about the nature and source of such credit or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income tax as income of the assessee of that previous year. We are aware that the opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. In the present appeals, the Assessing Officer was never satisfied and the notices/summons issued to the subscribing companies, were found to be fictitious or non-existent, therefore, one fact oozing out that the assessee has not fulfilled the requirement of section 68. A close reading of section 68 makes it clear that in case of section 68 there should be credit entry in the books of account. This is a fundamental difference between these two provisions. The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him where the nature and source of a receipt whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be same. A delicate balance must be maintained while walking the tight rope of section 68 and 69. The burden of proof can seldom be discharged to the hilt by the assessee. However, if the Assessing Officer harbours doubts of the legitimacy of any subscription, he is empowered rather duty bound to carry out investigations. The assessee merely wants to take shelter of the decision of the Hon'ble Apex Court in the case of Lovely Exports Private Limited wherein it was held that even the share applicants are bogus, it cannot be added in the hands of the assessee. In that case the Tribunal clearly noted that the assessee was a public limited company and subscriptions were received from public at large through banking channel and the shares were allotted in consonance with the provisions of the securities contract (Regulation) Act, 1956 as also the rules and regulations of Delhi Stock Exchange and in para 12 the Hon'ble Delhi High Court has clearly differentiated the cases of share capital of private limited company from public limited company by saying in the case of private placement, the legal regime will not be the same . Therefore, the facts of that case are not applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning thereby their identity is not proved, therefore, how the department can proceed to reopen their individual assessments. 28. The Hon'ble Madhya Pradesh High Court affirmed the decision of M/s Rathi Finlease Limited (supra) in the case of M/s STL Extrusion Private Limited (2011) 333 ITR 269, relied upon by both the sides before us. We find that the facts in STL Extrusion are materially different from both the assessees, namely, M/s Agrawal Coal Corporation as well as from M/s Rathi Finlease Limited. In the case of M/s STL Extrusion on receipt of confirmation of share applicants, except observing discrepancies in confirmation, the Assessing Officer neither asked anything from the assessee nor made any inquiry to arrive at the conclusion that share applicants were bogus. However, in the present appeal, detailed inquiries were made, notices received unserved, commission also returned empty handed as the share subscribing companies were found nonexistent. In that situation, the Hon'ble High Court concluded that once existence of an investor/share holder is proved, onus shifts to the revenue to establish that either the share applicants are bogus or impugned money belongs to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi) 9. CIT v. Lovely Exports P. Ltd. (2009) 319 ITR (St.) 5 (HC) 10.CIT v. Mohankala (P) (2007) 291 ITR 278 (SC) 11.CIT v. Sophia Finance Ltd. (1994) 205 ITR 98 (Del) 12.CIT v. Steller Investment Ltd. (1991) 192 ITR 287 (Del) 13.CIT V. Steller Investment Ltd. (2001) 251 ITR 263 (S.C.) 14.CIT v. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Del) 15. Madhuri Investment Pvt. Ltd. v. ACIT(ITA No. 110 of 2004 dated 18.2.2006 (Karn.) 16. Shree Barkha Synthetics Ltd. vs. ACIT; (2006) 283 ITR 377 (Raj.) 29. As per the provisions of section 68 of the Act, in case the assessee has not been able to give satisfactory explanation in respect of nature and source of any sum or if in the opinion of the Assessing Officer such explanation is not satisfactory, the Assessing Officer may treat the same as undisclosed income and add it to the income of the assessee meaning thereby the assessee is required to give satisfactory explanation about the nature and source of such sums found credited in the books of account. What kind of proof is to be furnished by the assessee is a question. It has come up for discussion in various judgments rendered by various Hon'ble Courts including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without more, against the assessee and The Assessing Officer is duty bound to investigate the credit worthiness of the creditor/subscriber, the genuineness of the transaction and the veracity of the repudiation. 30. If the totality of facts and the judicial pronouncements discussed hereinabove are kept in juxtaposition, it is clear that the initial burden is upon the assessee to explain the nature and source of share application money received by the assessee. In order to discharge its burden, the assessee is required to prove The identity of the share holder The genuine of transaction The credit worthiness of the share holder During hearing, Shri R.K. Chaudhary and Shri K.K. Singh the learned Commissioners of Income Tax contended that Hindustan Continent Pvt. Ltd.; Agrawal Road Carriers Pvt. Ltd. and Suni Shares and Stock Limited (inter-connected with each other), are paper concerns. These companies provided accommodation entry to various parties of Indore, Bhopal, Gwalior, Nagpur, Surat, Mumbai, Ahmedabad, Vadodara, and in various other cities through their bank accounts maintained AXIS Bank, Indore, during the period 1.4.2002 to 31.3.2005. The modus operandi op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (page 125) it has been held that Sunil Shares Stocks Private Limited failed to provide necessary information to the investigating authority of SEBI and penalty of Rs. 2 lacs was imposed in terms of provisions of section 15A(a) of SEBI Act, 1992 for failure to provide necessary information to SEBI. 31. The Hon'ble Apex Court in the case of Vijay Kumar Talwar v. CIT (2011) 330 ITR 1 (S.C.) on the issue u/s 68 read with section 260A decided in favour of the revenue . Identical ratio was laid down by the Hon'ble Supreme Court in case of CIT v. Biju Patnaik; 160 ITR 674. 32. So far as the contention of the Ld. Counsel for assessee to the effect that the issue is squarely covered by the decision of the coordinate Bench in the case of Kalani Industries is concerned, we do not find any substance in the same in view of the fact that the addition made in the cases before us was after passing of the order by the Tribunal and the inquiry conducted by the Department thereafter. The enquiry so conducted by the Department after the relevant assessment years involved in the case of Kalani Industry, it was found that neither the share applicants were found existing at the address given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Hon ble High Court and death of the company is known to the process of law and also that the company is still available on the website of the Company Law Board is concerned, we are not agreeing with this proposition of the assessee because here it is not a case of winding process rather it is a case of admissibility of claim of the assessee u/s 68 of the Act. Since the share applicants /share subscribers identity is not proved, therefore, the assessee cannot be permitted to take shelter of technicalities. Even otherwise, website existence on the Company Law Board is not a sole proof that in fact the share applicants are in existence especially when right from the assessment stage to the stage of the Tribunal (three stages) the assessee did not prove the identity of the share applicants. Technicalities also help those who are with clean hands. However, we are in agreement with the argument of the assessee that the winding up powers of a company lies with the Hon ble High Court but this issue is not before us, therefore, we are refraining ourselves to comment further. It was fairly accepted by the ld. Counsel for the assessee that in the present appeals merely the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such share holdings and once it is established, the assessee is not required to prove anything further. Therefore, these judicial pronouncements are in favour of the revenue and may not help the assessee because the assessee has not proved the identity of such share applicants. 37. The contention of the Ld. Counsel for assessee to the effect that the decision of Rathi Finlease by the jurisdictional High Court was rendered much prior to the decision of the Supreme Court in the case of Lovely Exports (supra) therefore, the proposition laid down by the jurisdictional High Court in Rathi Finlease cannot be applied after the decision of the Hon'ble Supreme Court in the case of Lovely Exports, have no legs to stand insofar as the jurisdictional High Court in the case of STL Extrusion wherein case of Lovely Export was relied on, duly approved its previous proposition laid down in case of Rathi Finlease. He further submitted that jurisdictional High Court in the case of ACIT vs. Shree Kela Prakashan Private Limited affirmed the decision of the Tribunal reported at (2010) 14 ITJ 539 dated 8.10.2009, therefore, the later decision has to be followed. As per our considered view, the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be proved by the assessee. However, in the present appeals the identity itself is in dispute, therefore, the aforesaid decision clearly supports the case of the revenue. 38. Likewise in the case of CIT v. ASK Brothers (2011) 333 ITR 111 (Karn.) the shareholders admitted the payment of amount for shares to be allotted. In these circumstances, Hon'ble Court held that the amounts of share capital cannot be added in the assessee s hands. However, in the present appeals, the share applicants itself are non-existent, consequently, there is no question of admitting by the share holders regarding money invested by them and then shares allotted to them. This judicial pronouncement also goes against the assessee. Hon'ble Delhi High Court in a later decision in Vijay Power Generators Limited v. Director of Income Tax and others (ITA No. 514 of 2007) (2011) 333 ITR 119 (Del) at page 136 the appeal was admitted on the following question of law :- Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in law in sustaining the addition of Rs. 25,23,500/- on account of receipt of share application money ? 37. The facts leading to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not quoted on the stock exchange and it was subscribed by the persons who were known to the assessee but during the course of hearing despite various opportunities the assessee could not produce them for verification nor was any evidence filed with regard to their financial status. Out of 15 subscribers, 5 subscribers were produced before the Assessing Officer and during the course of the examination it was admitted that they were small agriculturists and were cultivating the agricultural land after taking it on lease from other agriculturists. No evidence regarding the agricultural holdings were produced before the Assessing Officer nor have they filed any evidence with regard to their financial soundness whereas the investment in shares were made between Rs. 1 lakh to Rs. 2.5 lakhs. Copy of the statement are (sic. Is) placed on record and from its perusal one would find that all these 5 persons are of ordinary status and they have no means to invest a huge sum in shares with the assessee. 16. So far as the legal position and the judgment of the apex court in the case of Steller Investment Ltd. (2001) 251 ITR 263 is concerned, we are of the view that the ratio laid down in Ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulturists and had not produced a single document to support their version. This is a finding of fact and there is no reason to interfere with the same. Learned counsel for the revenue had drawn our attention to view all these statements. One Mr. Sukh Lal Singh in his statement had stated that he had purchased the shares of Rs. 1,90,000. Out of the share money, he had paid Rs. 70,000 out of his own source and Rs. 1,20,000 was received by him from his friends and was paid in many instalments. Likewise one Mr. Vijay Kumar who also purportedly purchased the shares of Rs. 1.90 lakhs stated that the payments were made by him in cash in many instalments. He also stated that he personally knew the directors of the company and had very old relation with him. On the basis of such statement without an iota of documentary evidence to support, we are of the opinion that the findings of the authorities below cannot be treated as perverse. It is on proper analysis of the statements of these persons which were recorded by the Assessing Officer. When we keep in mind the principle of law laid down in the ratio in the aforesaid decisions and apply the same to the facts of this case, it is difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45. The order of the Commissioner of Income tax (Appeals) clearly demonstrates that this remand report was sent to the assessee who had submitted his reply dated February 10, 2004 which is even reproduced in the order and thereafter the learned Commissioner of Income Tax (Appeals) discussed the same in the light of certain decisions cited before him and came to the conclusion that the assessee had not given satisfactory evidence to discharge the onus. It had merely given names of the parties without anything more. That would not be sufficient compliance. Even the bank statement of the assessee which was submitted has not been proved. 46. For all these reasons, we are of the view that the assessee had not been able to discharge the onus probandi and addition was rightly made. We, therefore, answer the question in the negative and dismiss this appeal of the assessee. 40. If the aforesaid conclusion drawn by the Hon'ble High Court is kept in juxtaposition with the facts of the present appeal, one fact is clearly oozing out that the assessee has not discharged its onus to the satisfaction of the Assessing Officer and even did not prove the identity of the share applicants. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient compliance, therefore, the decision from Hon'ble Supreme Court in the case of Lovely Exports may not help the assessee. In a later decision dated 25th October, 2010 the Hon'ble jurisdictional High Court in the case of CIT v. STL Extrusion (P) Limited; (2011) 17 ITJ 648 (MP) even considered various decisions including the off-quoted decision of Divine Leasing Finance Limited, Rathi Finlease Limited, Steller Investment Limited and of course Lovely Exports Private Limited wherein the assessee filed list of all subscribers and gave affidavits of all subscribers in the form of confirmations and in that situation the Hon'ble Court held that the assessee is required to establish the identity and source of credits and further held that if the confirmation is given, no addition could be made against the assessee whereas in the case of the assessee the share applicants were found to be nonexistent, therefore, this judicial pronouncement from the Hon'ble jurisdictional High Court clearly goes against the assessee. 4. If the totality of facts mentioned in the assessment order, impugned order, conclusion drawn in the order of the Tribunal in the case of M/s Agrawal Coal Corporation ..... 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