TMI Blog2017 (3) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements before issuing demand drafts in question. We accordingly restore Assessing Officer’s findings as narrated in preceding paragraphs to reverse CIT(A)’s conclusion forming subject matter of our instant adjudication pertaining to both assessment years raising sole substantive issue of validity of Section 68 addition in question. The Revenue’s sole substantive ground as identically pleaded in the instant appeals succeeds. - ITA Nos. 1303 & 1304/Ahd/2012 - - - Dated:- 7-3-2017 - S. S. Godara (Judicial Member) And Manish Borad (Accountant Member) For the Revenue : James Kurian, Sr. D.R. For the Assessee : Y. K. Batra, A.R. ORDER S. S. Godara (Judicial Member) These two Revenue s appeals for assessment years 1996-97 1997- 98, arise against the CIT(A)-VIII, Ahmedabad s common order dated 26.03.2012, passed in appeal nos. CIT(A)-VIII/ITO 4(1)/766 767/09-10, reversing Assessing Officer s action making Section 68 addition of unexplained share application money of ₹ 46,82,981/- ₹ 2,80,17,600/-; respectively, in proceedings u/s.143(3) r.w.s. 254 of the Income Tax Act, 1961, in short the Act . 2. Both the learned representatives stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herva, Tal. Patadi SNR 06 B;aldevbhai P.Patel 689707 5.5.95 25000 At Kherva, Tal. Patadi SNR 07 Chamanlal V.Patel 689708 5.5.95 25000 At Kherva, Tal. Patadi SNR 08 Raaanbhai V.Patel 689709 5.5.95 25000 At Nana Ankevaliya, SNR 09 aasasatbhai H.Paftel 689710 5.5.95 25000 At Nana Ankevaliya, SNR 10 Hadhavji J Patel 689711 5.5.95 25000 At Nana Ankevaliya, SNR 11 GhanshyaKi K.Patel 689712 5.5.95 25000 At Nana Ankevaliya, SNR 12 Manajfbhai R.Patel 689713 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manshukh A Patel 689771 28.6.95 25000 At Nana Ankevaliya, SNR Mahadevbhai M. Patel 689772 28.6.95 25000 At Nana Ankevaliya, SNR Popatbhai M. Patel 689773 28.6.95 25000 At Nana Ankevaliya, SNR Ghanpatbhai Patel 689774 28.6.95 25000 At Nana Ankevaliya, SNR Prahladbhai M. Patel 689775 28.6.95 25000 At Nana Ankevaliya, SNR Baldevbhai G. Patel 689776 28.6.95 25000 At Nana Ankevaliya, SNR Hargovindbhai C. Patel 689777 28.6.95 25000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 242757 12.12.95 45000 At. Vakrapur TA Pratij Dist. SK shrath N Raval 452984 20.10.95 17000 rf. Sr. 11- alsingh Magansinh Rathod 452985 20.10.95 15000 rf. Sr. 11- hrath N Raval 452986 20.10.95 8000 rf. Sr. 11- ipsingh J. Makwana 452987 20.10.95 15000 At Talodgam TA Pratij Dist. S.K. nkumar R Patel 452988 20.10.95 17000 rf. Sr. 11- ansingh Magansingh Rathod 452990 20.10.95 18000 rf. Sr. 11- nbhai Patel 452991 20.10.95 18000 C/o. Shriji Engg. Works At Ahindra T.A. Kalol, Dist. Panchmahal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer took cognizance of the fact that the said 32 applications had also not been submitted. He thus inferred that only one person had handed over total amount to the above stated banker for preparing demand drafts in different names. He further noticed the fact that the assessee s above applicant had been residing in different parts of state whereas they had got prepared their demand drafts at Wadhawan city branch of the Surendranagar District Cooperative bank only on specific day and time well in order to submit share applications in question. 5. The Assessing Officer thereafter prepared three categories of assessee s 189 share applicants. First one pertained to 18 share applicants involving a sum of ₹ 60.43lacs hereinabove whose all the relevant details stood duly filed. He accepted assessee s explanation since supported by relevant PAN and income tax assessment details. He however invoked Section 68 of the Act qua the remaining two categories of 171 share applicants i.e. the second category of 26 parties wherein the assessee had filed their confirmations only without any evidence or genuineness/creditworthiness. This followed the third category of the remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT vs. Stellar Investment Ltd. (supra). In which it has been held by the hon ble Supreme Court while affirming the decision of the Delhi High Court in the case of same assessee that, inter-alia, even if the subscribers to the share capital of the company are not found to be genuine, the amount could not be regarded as undisclosed income of the assessee company. Accordingly, the additions of ₹ 46,92,900/- and ₹ 2,80,17,600/- made u/s. 68 of Income-tax Act, 1961 for assessment years 1996-97 and 1997-98 respectively on account of unexplained share capital is deleted. 8. The Revenue filed its appeals ITA Nos. 1557 1559/Ahd/2001 before this tribunal. A co-ordinate bench in its common order dated 15.02.2008 restored the issue back to the Assessing Officer on the ground that the assessee had submitted the relevant details only in course of proceedings before the CIT(A) for the first time so far as its paper book involving pages 1 to 178 was concerned. It accordingly directed the Assessing Officer to finalize afresh consequential assessments. 9. The assessee appears to have filed Tax Appeals nos. 2522 2523/2009 before hon ble jurisdictional high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to adjudicate the issues, in the interest of justice and fair play to both the parties, the assessment orders were set aside and direction was given to the Assessing Officer to make fresh assessments after considering all the submissions as well as the documents which the assessee may submit before him. 5. The very premises or foundation on the basis of which the Tribunal has passed the order, seems to be erroneous, as the list of shareholders up to allotment appearing at pages 1 to 178 of the paper book was filed before the AO and it was not filed before the CIT(A) for the first time. These details were very much before the AO and he has passed the order considering the said details. Hence the Tribunal has erred in making this observation and after making such observations, set aside the assessment. Normally the Court would not have interfered in the order setting aside the assessment. However, looking to the facts of the present case the order passed by the Tribunal is required to be set aside and the Tribunal is required to be directed to decide it afresh. However, looking to the subsequent development that has taken place after the Tribunal has passed the impugned order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax v. M/S. Lovely Export (Pvt.) Limited passed by the Apex Court on 11-1-2008 in Special Leave to Appeal (C) No. 11993 of 2007. 11.1. It is seen that CIT(A) I, Ahmadabad deciding the original appeal has held in his order dated 3-4-2001 as under- It is seen from the records available that the identity and existence of the various shareholders are proved and is also not disputed by the Assessing officer. The assessing officer has not made out any case to support the addition except observing that the appellant has not proved the genuineness of the shareholders and their capacity to bring the amount for applying in the shares of the company. It is a/so not the A.O.'s case that the appellant has earned such huge income during the year in question to enable the company to invest such funds in the share capital in name of benamidars especially considering the fact that no business activity has been carried out by the company during the year. I am of the confirmed view that once the existence and identity of the shareholders is not in doubt, no addition on account of unexplained share capital could be made in the hands of a company. This view of mine is amply fortified by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe side' on the part of the A.O. 11.3. Although the assessments were set aside by the ITAT in the year 2008, it would appear from the assessment order that the hearing in this case was taken up only in the second half of 2009 and the assessments were to be finalized before 31- 12-2009. Against this background, the following remarks of the A.O. about the socalled random verification of the shareholders are not justifiable in the facts and circumstances of the case. It is seen that the AO has not made his case of bogus creditors as he has not enquired the creditors and come to the conclusion without any concrete findings. It can be- said that the AO has. not made the desired effort to enquire the creditors as directed by the higher appellate authorities. The AO has also not discussed and also not applied/discussed the decision of Apex Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195, which has held that Can the amount of share application money be regarded as undisclosed income under section 68 of the IT Act, 1961? We find no merits in the Special Leave Petition for the simple reason that if the share application money is received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus observe that the consequential assessment in question stand very well validated even in hon ble jurisdictional high court s order. 13. The next contention raised between the parties is on merits. Learned counsel representing assessee strongly supports CIT(A) s common order under challenge deleting the addition in question of unexplained share application money. We deem it appropriate to re-assimilate relevant facts. The assessee has declared to have received share application money in question from total 189 applicants in former assessment year. There is no dispute about 18 of them qua share application amount of ₹ 60.43 lacs as all the relevant details of these 18 parties in the nature of PAN nos. and assessment records stood very well proved. The dispute in the instant case rather pertains to the remaining 171 share applicants. It has come on record that the assessee has failed to file their relevant details in both rounds of assessments. Learned counsel representing assessee vehemently contends that the assessee had filed all relevant particulars before the assessing authority so as to discharge initial onus in order to prove identity and genuineness of its claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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