TMI Blog2011 (8) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit Accounts in the names of persons who were found not traceable. 2. The facts, in brief, relating to the above issue are that during the previous year relevant to assessment year under appeal, the assessee-company claimed to have received share application money of ₹ 25,00,000/- against issue of 2,50,000 shares @ ₹ 10/- per share from the following parties through banking channel, the details of which are as under :- Sl. No. Name Address of share applicants PAN No. Shares applied for Rate per share(Rs.) Amount received with application (Rs.) 1. Signet Merchandise (P) Ltd. 71, Raj Kr. Mukherjee Road, Kolkata-700 035. AADCS7277F 50000 10 5,00,000 2. Novoflex Cable Care System P.Ltd.71, 52, Weston Street, Kolkata-700 012. AAACN9315J 50000 10 5,00,000 3. Maheshwari Merchants (P) Ltd. 32, Ezra Street, Kolkata-700001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, therefore, submitted to delete the entire addition made by the A.O. The ld. C.I.T.(A) after considering the submissions of the assessee and reasoning given by the A.O. as also material placed before him deleted the addition by observing as under :- I have considered and weighed both the arguments of the Ld. AR as well as that of the A.O. By furnishing details of share capital raised during the year along with the annual accounts, relevant bank statement, acknowledgements of filing of Income Tax Return of the investing parties the appellant had primarily discharged the onus on it. Further, in view of the court cases quoted by the Ld. A/R, the share capital raised by the appellant cannot be treated on the basis of the A.O. s order, as the undisclosed money of the assessee u/s 68 of the Income tax Act, 1961. Reliance is placed on M/s Offshore Finvest Ltd. Vs. ITO I.T.A.No. 1272/Kol/2009, I.T.A.T. B Bench, Kolkata Order dated 09-04-2010. In this case the Tribunal had allowed the appeal by relying on the decision of the Apex Court in CIT vs. Lovely Exports (P) Ltd. 216 CTR 195 (SC). In conclusion and in the light of the above etc. the appeal goes in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 33 iii) M/s. Maheshwari Merchants (P) Ltd. 34 to 43 iv) M/s. Stardox Vinimay (P) Ltd. 44 to 53 (e) Copies of share allotment letters with distinctive Nos. 54 to 57 (f) Copy of Form No.2 (Return of allotment) submitted to ROC intimating allotment of shares details of Share applicants. 58 to 60 The ld. A/R further submitted that the assessee furnished necessary papers before the A.O. in relation to receipt of share application money from the share applicants by discharging its onus which will prove the identity, genuineness and creditworthiness of the transactions. Further, the assessee cannot be required to enquire from the share applicants about the sources of money for investments made towards share application. All the procedures before launching share application have been duly complied with by the assessee and in such circumstances, treatment of share application money received by the assessee from share applicants as assessee s undisclosed cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also purchased shares of several other companies in the assessment year under consideration. The initial burden is upon the assessee to explain the nature and source of the share application money received by it. In order to discharge this burden, the assessee is required to prove (i) the identity of the share-holder, (ii) the genuineness of the transaction, and (c) the creditworthiness of the shareholders. In case the investor/shareholder is an individual, some documents will have to be filed or the shareholder will have to be produced before the A.O. to prove his identity. If the creditor/subscriber is a company, then the details in the form of registered address or PAN identity, etc., can be furnished. When the money is received by cheque and is transmitted through banking or other indisputable channels, the genuineness of the transaction would be proved. Other documents showing the genuineness of the transaction could be copies of the share allotment advice, intimation to ROC in prescribed return form, etc. So far as the present case before us is concerned, as discussed above, all these documents were furnished before the lower authorities and also filed in the paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he primary onus was discharged by the assessee. Even the bank statements revealed that the assessee had received cheques from the share applicants. Further, the receipt of share application money has been duly recorded in the books of the assessee-company and the payment of share application money was also duly recorded in the audited accounts of each of the share applicants. Considering the above evidence on record, we are of the considered view that the assessee has not only proved the identity of share applicants but has also established the creditworthiness of share applicants and genuineness of the transactions. Therefore, when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application, more so when no evidence could be brought on record by the department to the contrary. In this connection, we feel it pertinent to reproduce the observation of their Lordships of Hon ble Delhi High Court in the case of CIT vs. Oasis Hospitalities P. Ltd. [(2011) 333 ITR 119 (Del)] as under :- Held, dismissing the appeal, that the addition was rightly deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so. Therefore, the onus is on the department to prove that the share application money subscribed to the share capital of the assessee-company by the above named share applicants is not the money of the share applicants but of the assessee-company, is on the department. However, the department has not brought any material on record to establish the same. In view of the above, we are of the considered view that the A.O. doubted the genuineness of the share application money on surmises and conjecture and has not brought any cogent material on record to establish his such doubt that the assessee s own unaccounted money came back to it by way of fake introduction of share capital. 6.3. Third Member decision of I.T.A.T., Jodhpur Bench in the case of Polymers (P) Ltd. vs. DCIT [111 TTJ 112] has held that in respect of share application money, assessee-company has to prove existence of persons in whose name share application is received. No burden is cast on the assessee to prove whether that person himself has invested or some other person has made investment in his name. The burden to prove that the money did not belong to him but to some body else is on the revenue. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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