TMI Blog2010 (4) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment proceedings asked the assessee to explain the share application money of ₹ 1,08,50,000 received during the year by the company which was given by Mr. Mayank Parekh. According to the Assessing Officer since the income of Mr. Mayank Parekh was ₹ 85,500 only during the A.Y. 2005-06 therefore, he has no creditworthiness to invest in the share capital. From the Balance Sheet of Shri Mayank Parekh filed by the assessee, the Assessing Officer observed that he has given the share application money by taking loan of ₹ 1,08,50,000 from Mr. Sanjay Agarwal. From the various details furnished by the assessee, the Assessing Officer noted that the money taken by Mr. Mayank Parekh from Shri Sanjay Agarwal and inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the shareholders. However, the assessee has proved the case by giving all the necessary evidences .According to him if the Assessing Officer was not satisfied and required further information, he could have demanded the same from the assessee well in time before the finalisation of the assessment which he failed to do. He observed that the existence of the shareholder viz., Mr. Mayank Parekh is not in doubt who has obtained loan from one Mr. Sanjay Agarwal. The copy of return of income of Shri Mayank Parekh who has invested in the share application money was furnished before the Assessing Officer which means identification and genuineness of the transaction is proved. The observation of the Assessing Officer that the income of Mr. May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restored. 6. The learned counsel for the assessee, on the other hand, referred to the decision of Hon ble Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd. reported in 216 CTR 195 and submitted that if the share application money is received by the assessee company from alleged bogus shareholders whose names are 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 treated as undisclosed income of the assessee company. He also relied on the following decisions: 1. CIT vs. Achal Investments Ltd., 268 ITR 211 (Del) 2. CIT vs. Antarctica Investments Pvt. Ltd., 262 ITR 493 (Del) 3. Nemichand Kothari vs. CIT Anr., 264 ITR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders whose names are 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. Since in the instant case the name of the director who has given the share application money was provided to the Assessing Officer and since the director also has given the source of the fund, therefore, in our opinion, no addition u/s. 68 of the Act can be made in the hands of the assessee company. In this view of the matter the order of the CIT(A) is upheld and the ground raised by the Revenue is dismissed. 9. In grounds of appeal No. 2, the Revenue has challenged the order of the CIT(A) in deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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