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TMI Blog2017 (1) TMI 1621X X X X Extracts X X X X X X X X Extracts X X X X ..... d as 'the Act') were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished books of accounts and other details called for. During the course of assessment proceedings, the A.O. noticed that the assessee has received share application money from various persons through private placement. To ascertain the correctness of share application money received by the assessee, the A.O. issued a show cause notice and asked to furnish complete name and address of the subscriber to the share application money and their PAN Nos. along with confirmation letters to prove the identity, genuineness of the transactions and creditworthiness of the creditors. In response to show cause notice, the assessee has filed a list of subscribers to the share application money along with Xerox copies of share application forms. The assessee further submitted that share application forms contains the details of name and address of the subscribers, PAN no. of subscribers in case they are assessee's, mode of receipt, etc. and requested that these applications may be considered as confirmation letters. 3. The A.O., on perusal of the details fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the jurisdictional assessing officers and the Assessing Officer caused enquiry and found that in one case, the assessee has denied having made any investment in share application money of the company. Based on the analysis of the information given by the assessee and also based on the enquiries caused during the course of assessment proceedings, the A.O. came to the conclusion that the assessee has failed to prove the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor, which is the essential ingredients of section 68 of the Act to prove the share application money. Therefore, the A.O. opined that the assessee has failed to discharge the initial burden cast upon it by furnishing identity, genuineness of the transaction and creditworthiness of the parties and accordingly made additions of Rs. 86,20,000/- as unexplained cash credits u/s 68 of the Act. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that there is neither any scope nor any reason or basis for even if assuming but not concedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company has failed to establish the identity of share holder, genuineness of the transaction and capacity of person giving such credit. The Ld. CIT(A) failed to note that except in 4 cases, the persons have not responded to summons and most of investment was made in cash and no evidence was submitted in support of investment. The Ld. CIT(A) ought not have relied upon the decision of apex court, in the case of M/s. Lovely Exports Pvt. Ltd. Vs. CIT (supra) since, the principle laid down in that case and the facts in the present case are distinguishable. In this case, the A.O. has conducted enquiries and after considering the fact that most of the subscribers failed to respond to the summons, came to the conclusion that the assessee failed to prove the identity of the credit, therefore, the A.O. was rightly made additions towards share application money u/s 68 of the Act and his order should be upheld. 8. The Ld. D.R. referring to the decision of Hon'ble High Court of Delhi, in the case of CIT vs Lovely Exports Pvt. Ltd. in ITA. no.953/2006, submitted that the facts of the case before the Delhi High Court are entirely different from the facts of the present case, therefore, the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribers, but additions cannot be made in the hands of the company towards alleged share application money. In support of his arguments, relied upon the decision of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Lovely Exports Pvt. Ltd. (supra) and also filed copy of the order of jurisdictional ITAT, Visakhapatnam in assessee's own case for the assessment year 2005-06 in ITA No.505/Vizag/2008 dated 12.11.2009. 10. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. made additions towards alleged bogus share application money on the ground that the assessee has failed to prove the identity, genuineness of the transaction and creditworthiness of the parties. The A.O. further observed that though assessee has furnished Xerox copies of share application forms, the information provided in the share application form is insufficient. The particulars given in the share application form is incorrect and in few cases, the assessee has not furnished PAN nos. of the subscribers. The A.O. has caused necessary enquiries before coming to the conclusion that the assessee has failed to discharge initial onus cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction is not proved. In 6 cases, subscribers are not responded to summons, however investment is made by cheque, therefore, opined that although investment is made by cheque, the subscribers are failed to prove capacity of the creditor to make the investment in share application money. The A.O., based on the analysis of the information furnished by the assessee and also considering the enquiries caused during the course of assessment proceedings, came to the conclusion that the assessee has failed to discharge the initial burden cast upon it to prove the creditors u/s 68 of the Act. 12. We do not find any merits in the findings of the A.O., for the reason that once the assessee proved the identity of the creditors by filing name and address along with their PAN nos./income tax ward or circle details where they have assessed, additions cannot be made towards alleged bogus application money, merely because the assessee failed to prove the genuineness of the transactions and capacity of the creditors. The Hon'ble Supreme Court, in the case of CIT Vs. Lovely Exports Pvt. Ltd. (supra), held that if the share application money is received by the assessee company from alleged bogus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied transaction with assessee, the A.O. was right in making additions u/s 68 of the Act, towards alleged bogus share application money. 14. Coming to the case laws relied upon by the assessee. The assessee has relied upon the decision of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Lovely Exports Pvt. Ltd. (supra) and submitted that once the identity of the creditor is proved, then no additions can be made towards alleged bogus share application money, whose names are given to the assessing officer and the department is free to proceed to re-open the individual assessment in accordance with law, but this amount of share money cannot be regarded as undisclosed income u/s 68 of the Act. We have gone through the case laws relied upon by the Ld. A.R. for the assessee and also the case law relied upon by the Ld. D.R. in the case of CIT Vs. M/s. Lovely Exports Pvt. Ltd. (supra) and find that the Hon'ble High Court of Delhi, had given a categorical finding that the assessee has furnished complete name and address of the creditors along with their PAN nos./income tax ward/GIR no. where the subscribers to the share application money have assessed to income tax. The share applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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