TMI Blog2005 (8) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... also could not have been sustained. Appeal is allowed. The additions made on account of increase in the share capital of the company on account of investment by Westbury Invest Trade P. Ltd. amounting to Rs. 2 lakhs and by Mr. Umesh Kumar amounting to Rs. 1 lakh are deleted - - - - - Dated:- 2-8-2005 - Judge(s) : RAJESH BALIA., R. S. CHAUHAN. JUDGMENT This appeal is preferred by the assessee against the order of the Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur, dated November 28, 2001, relating to the assessment year 1997-98. Against the very same judgment of the Tribunal, the Revenue had also preferred an Income-tax Appeal No. 09/2003 which has been decided on May 1, 2003 (CIT v. Shree Barkha Synthetics Ltd. [2004] 270 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuineness of those transactions. However, the Tribunal found that the genuineness of the transactions with the Westbury Invest Trade P. Ltd. viz., receipt of Rs. 2 lakhs by way of share application money was not established by the assessee because no confirmation from Westbury Invest Trade P. Ltd. was produced by the assessee and, therefore, the additions of the said Rs. 2 lakhs received from share application money from the company were sustained. Amongst individuals, the share application money alleged to have been received from one Umesh Kumar amounting to Rs. 1 lakh was found to be not genuine, inter alia, on the ground that on enquiry, the said Umesh Kumar has denied to have made any such investment in the shares of the company. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 affirmed on appeal by the Supreme Court in CIT v. Steller Investment Ltd. [2001] 251 ITR 263. In CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 (Delhi) the principle which was enunciated by the Delhi High Court and affirmed by the Supreme Court, reads as under: "It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would indeed be his duty, to enquire whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the Income-tax Officer finds that the alleged shareholders 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 Division Bench of this court in appeal filed on behalf of the Revenue in CIT v. Shree Barkha Synthetics Ltd. [2004] 270 ITR 477, referred to above arising out of the same judgment had followed the aforesaid principle by pointing out the distinction between investment made by persons whose existence have been shown and in a case where existence ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence of the said investors but on other grounds. So far as Westbury's case is concerned, the Income-tax Officer rejected the confirmation submitted by Westbury Invest Trade P. Ltd. on the ground that "otherwise also it is an outside company not having business dealing with the assessee-company which should invest like this. In the absence of complete particulars regarding the availability of funds with the investor and the fact that the identity of the investor company is not established as original letter sent on February 7, 2000, is received back unserved, this investment in share application money is not being considered as genuine and as such being treated as representing the assessee's own money in the shape of share application m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted because the confirmation letters were submitted by the assessee. Apparently the ground for sustaining the additions made in respect of share application money received from Westbury Invest Trade P. Ltd. is contrary to the record. The Assessing Officer has himself referred to the confirmation letter received from the said company, viz., Westbury Invest Trade P. Ltd. This finding is contrary to the narration of the facts recorded by the Tribunal itself in the earlier stage of its order. Once the receipt of the confirmation letter is received and the identity of the existence of the company has not been disputed, the increase in share capital on account of share application of Westbury Invest Trade P. Ltd. could not have been sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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