TMI Blog2013 (7) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... f the share capital represented company's own income from undisclosed sources - Following decisions of Commissioner of Income Tax vs. Lovely Exports (P) Ltd [2008 (1) TMI 575 - SUPREME COURT OF INDIA] and Commissioner of Income Tax vs. Divine Leasing & Finance Ltd. [2006 (11) TMI 121 - DELHI HIGH COURT] - Decided against Revenue. - M.A.I.T. No.27/2008, I.T.A. No.89/2011, I.T.A. No.90/2011 - - - Dated:- 27-6-2013 - Shri Justice Krishn Kumar Lahoti And Acting Chief Justice Hon'ble Shri Justice M.A. Siddiqui,JJ. For the Petitioner : Shri Sanjay Lal, Advocate For the Respondent : Shri C. S. Agrawal, Senior Advocate with Shri A.P. Shrivastava, Shri Sumit Nema, Shri A.P. Shroti and Shri Sapan Usrethe, Advocates ORDER Per Krishn Kumar Lahoti, Acting Chief Justice This order shall decide all the aforesaid appeals involving similar questions of law, based on similar set of facts. 2. M.A.I.T. No.27/2008 was admitted on 03.07.2008 on the following substantial questions of law:- "(i) Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in affirming the decision of the CIT(A) deleting the addition made under section 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .21,27,50,403/- and assessed the income of the respondent at Rs.21,27,50,403/-. The aforesaid addition was made on the ground that one M/s Alliance Industries Limited, Sharjah had made share subscription to the capital of respondent. The assessing officer doubted creditworthiness of M/s Alliance Industries Limited, Sharjah and directed addition of the amount of share subscription provided by the aforesaid Company to the assessee. In all the three years, the amount of subscription was directed to be made addition in the income of the respondent. 7. Against the order passed by the assessing officer, an appeal was preferred before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) allowed the appeal and directed deletion of the addition. However, in I.T.A. No.90/2011, such addition was sustained by the CIT(A). 8. Against these orders, appeals were filed before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal dismissed the appeals of the Revenue in M.A.I.T. No.27/2008, I.T.A. No.89/2011, however, in I.T.A. No.90/2011 the ITAT directed deletion of the addition and similar order was passed in all the three cases, which are under cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of the assessee Company. It is further submitted that in the present case, the identity of the Company which had provided share subscription was not in dispute but the Assessing Officer had doubted the creditworthiness of the said Company and only on this ground, without disputing the identity of the said Company, had directed addition against the respondent, which in the light of the judgment of Apex Court in Lovely Exports (supra) is not sustainable. It is also submitted that the similar question has been decided by the other High Courts relying on the judgment of Apex Court in Lovely Exports. 11. In this case, before proceeding further it would be appropriate if the findings recorded by the Assessing Officer are looked into, which are identical in all the matters. The Assessing Officer held thus:- "On going through the above details furnished by the assessee, it is clear that although they indicate the identity of the NRI Company and the mode of transfer of money to the assessee but evidently lack in proving creditworthiness of the NRI Company. The transactions show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in making addition of Rs.21,27,50,403/- on the ground that financial capacity of the NRI company was not proved/established by the appellant for making the investment. I have also very carefully perused the reasons given by the Assessing Officer for justifying his action for making addition of Rs.21,27,50,403/- u/s 68 of the Income-tax Act, 1961. I have also given due considerations to the report of the Assessing Officer as submitted by him on fresh evidence placed before me during the course of appellant proceedings by the Ld. counsel for the appellant. After due consideration of the matter, I hold that Assessing Officer was not justified in making an addition of Rs.21,27,50,403/- u/s 68 of the Income-tax Act, 1961 because appellant had fully discharged the burden cast upon it u/s 68 for explaining the deposit/investment receipt from M/s Alliance Industries Limited. I find that M/s Alliance Industries Limited is a NRI company having its Registered Office at Gibraltar and Management Head Office at Sharjah, UAE and this fact is not disputed by the Assessing Officer. Therefore, identity of the foreign investor is established beyond any doubt." "From the above, it is very muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit having been accepted as genuine in the earlier year, the same explanation ought to have been accepted in the subsequent year". I also place reliance on the decisions of Hon'ble Bombay High Court in case of H.A. Saha company vs. CIT reported at 30 ITR 618 and also on the observation of Hon'ble Calcutta High Court in case of CIT Vs. Hindustan Motors reported at 92 ITR 619 on this issue." 13. By recording aforesaid findings, the Commissioner of Income Tax (Appeals) reversed the order of the Assessing Officer and directed deletion of additions made in the matter. The ITAT affirmed the order of CIT(A) with similar reasoning. 14. In the light of the aforesaid factual position, the legal position may be looked into because the aforesaid factual position has not been disputed by the parties. 15. In Lovely Exports (supra) the Apex Court considering the question held thus:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the ..... 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