TMI Blog2016 (4) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee company from alleged bogus shareholders whose names are given to the AO. Further the Hon’ble Supreme Court has categorically held that the Revenue is free to proceed to reopen the individual assessments of such alleged bogus shareholders. In these circumstances, respectfully following the decision of the Hon’ble jurisdictional High Court as also Hon’ble Supreme Court referred to supra, the addition made by the AO and deleted by the learned CIT (A) represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. - Decided in favour of assessee - ITA No. 2515/Del/2010 - - - Dated:- 31-3-2016 - Shri J. Sudhakar Reddy, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Shri Ved Jain, CA For the Respondent : Shri P. Damkanunjna, Sr. DR ORDER Per Sudhanshu Srivastava, Judicial Member This appeal is filed by the Department against the order dated 4.3.2010 passed by the Ld. CIT(A)-XVI, New Delhi for Assessment Year 2006-07. 2. The return of income for the year under consideration was filed declaring income at ₹ 46,968/-. The return was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly added back the entire sum received u/s 68 of the Act because, as per him, the assessee had failed to discharge the onus. 5. The Ld. CIT (A), on appeal, however observed that the assessee had filed the following documents in the course of assessment proceedings to prove the transactions: a) Name and address of the shareholders b) Income Tax particulars of the shareholders c) Share application forms d) Confirmation of shareholders with regard to share capital subscribed by them 6. The Ld. CIT(A) has observed that the Assessing Officer could not prove with certainty that the investors/entities were entry providers and that the transactions entered into by the assessee were bogus. He has observed that the Assessing Officer has not effected any inquiries to bring out any fact which could suggest that the parties have given accommodation entries to the assessee and that the money received from these parties was assessee s own undisclosed income routed back to the assessee in the guise of share application money. The Ld. CIT(A) also pointed out that the Assessing Officer had simply relied on the information provided by the information wing of the Department and had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e walking the tightrope of section 68 and 69 of the Income Tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. Further, a distillation of the precedents yields the following proposition of law in the context of section 68 of the Income Tax Act. The Assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely : whether it has been transmitted through banking or other indisputable channels; (3) the credit worthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address of PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The Income-tax Appellate Tribunal concurred with the views taken by the Commissioner of Income-tax (Appeals). 12. In the case of Anu Industries Ltd. vs ACIT (2009) 19 DTR (Del), Delhi ITAT observed as under:- We have considered the rival contentions and found that identity of the share applicants are not in dispute. The Hon ble Supreme Court in case of Divine Leasing Finance Ltd. (supra) has held that if the share application money is received by the assessee company even from the bogus shareholders whose names are given to the AO then the Department is free to proceed to, reopen their individual assessments in accordance with law. Accordingly, addition made under s. 68 which was deleted by the Hon ble High Court was upheld by Hon ble Supreme Court. A perusal of the orders of the Hon ble Supreme Court in the case of Divine Leasing Finance Ltd. referred to supra is in regard to SLP filed by the Revenue against the order of the Hon ble jurisdictional High Court. The Hon ble Supreme Court has specifically with a speaking order dismissed the SLP. The Hon ble Supreme Court in the various decisions referred to by the learned Authorized Representative has categori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically held that the Revenue is free to proceed to reopen the individual assessments of such alleged bogus shareholders. In these circumstances, respectfully following the decision of the Hon ble jurisdictional High Court as also Hon ble Supreme Court referred to supra, the addition made by the AO and deleted by the learned CIT (A) represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. We have no hesitation to conclude that the assessee has provided necessary details including the ward/circle where the share applicants were assessed to income tax and discharged the onus cast on it. The AO has not brought anything on record to dispute the facts/details furnished by the assessee. The AO has not found any discrepancy in the books of account and bank accounts maintained by the assessee. Thus, in our considered opinion, in views of facts as narrated above and the judicial pronouncements, the share capital to the extent of ₹ 76.00 lacs stands explained. Hence, the order of the Ld. CIT (A) does not call for any interference. The grounds of appeal are dismissed. 14. In the result, the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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