ITA NO.6070/DEL/201
29TH MAY, 2015

Core Fact of the Case : ………Assessee has filed this Appeal against the impugned order dated 01.8.2013 passed by the Ld. CIT(A)-XVII, New Delhi relevant to assessment year 2002-03 on the following grounds…………. That the Ld. CIT(A) has erred in upholding the addition of Rs. 30,00,000/- made u/s. 68 of the Act by the AO on the allegation of unexplained credits of share application money……. That the Ld. CIT(A) has erred in holding that the assessee has not been able to prove the identity or creditworthiness of the creditor and the genuineness f the transaction…………..

The brief facts of the case are that on receiving information from Investigation Wing that assessee company has received accommodation entries in the shape of share application money. AO issued a notice u/s. 148 dated 30.3.2009 to the assessee to file its return of income for the above mentioned assessment year within 30 days from receipt of the notice…………Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the ITAT……….The AO in the Assessment Order has simply relied upon the information received from the Investigation Wing of the Department without making any effort to verify the facts stated therein. It has also been held by the various courts that AO must bring on record some positive material or evidence to indicate that the share holders were benamidars fictitious persons or that any part or the share capital money represented the company's own income from undisclosed sources. The appellant has cited various case laws in the its submissions wherein it has been held that the Share Capital issued cannot be treated as undisclosed income of the appellant and cannot be added u/s 68 of the Income Tax Act………………..

The appellant in its submissions relied upon by the case law of CIT vs. Samir Biotech Pvt. Ltd. `ITA No415/I2008 of Delhi High Court, wherein it is held that if subscribers are having bank accounts, issuing account payee cheque, assessed to income- tax showing investment in the balance sheet, balance sheet were audited by the statutory auditors, their credit worthiness, identity and genuineness of the transactions are well established.

The appellant further stated that in the case of Paras Infotech Pvt. Ltd., it has submitted the copy of the income-tax return, confirmations and affidavit of the director of the company who has given share application money. All these documents establish the identity and creditworthiness of M/s Paras Infotech Pvt. Ltd. "In respect of the share application money received from investors, the assessee company has only to prove that the existence of the persons in whose name share application is received. No further burden is cast upon the assessee to prove whether that person himself has invested the said money or some other person made investment in his name."

Summarised Judgment: …………..Keeping in view all the facts and circumstances, we are of the c onsidered view that the Ld. First Appellate Authority has passed the impugned order under the law and according to the facts of the present case and has rightly deleted the addition in dispute. We find no infirmity in the impugned order and upheld the impugned order by dismissing the appeal filed by the revenue. In the result, appeal filed by the Revenue is dismissed."

Analysis: The onus to prove the identity is on the assessee. This can be confirmed by submission of various documents. In the case of JSM also the requisite documents were submitted in respect of share applicant companies.

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