(Per : HONOURABLE MR.JUSTICE N.V. ANJARIA)
1. The Revenue has preferred the present appeal under section 260A of the Income Tax Act, 1961 (for sake of brevity, hereinafter referred to as 'the Act') to challenge the order dated 06.08.2010 of the Income Tax Appellate Tribunal Ahmedabad Bench in ITA No.552/Ahd/2008, by proposing the following question formulated in the memorandum of appeal as substantial question of law.
"" Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition made under section 68 of the Act without appreciating that with respect the sum credited to the books of the assessee company as share application money, they had failed to discharge the onus of establishing the prime conditions of identity of the creditors, the capacity of such creditor to advance the money and lastly, the genuineness of the transaction?"
2. We have heard learned advocate Ms. Mauna Bhatt for the appellant. We have also gone through the impugned order and the relevant material on record.
3. The issue involved relates to the addition of Rs.20,48,500/- made by the Assessing Officer in the income of the assessee company in its returned income for the Assessment Year 2003-04. The assessee company, engaged in business of manufacturing of glass frit and glazed mixture, accounted the aforesaid amount in its return of income as share application money received from 15 different persons, who were shown to be the agriculturists. The Assessing Officer held a view that the assessee had failed to furnish the confirmation of identity of those persons from whom the share application money was received, and further that only two of them had remained present before him. As in his view the only evidence produced by the assessee being revenue record in the nature of 7/12 extracts to show the holding of the agricultural lands by those persons, was not sufficient material, he invoked provisions of section 68 of the Act to order the addition of the amount treating it as income of the assessee chargeable to income-tax.
3.1 The Commissioner (Appeals) dismissed the appeal of the assessee holding that the assessee had not discharged its burden to prove the identity of the share applicants. The assessee filed appeal before the Income Tax Appellate Tribunal who took a contrary view and accepted the ground of the assessee allowing the appeal in that regard, which is the order impugned here.
4. On consideration of facts and the order of the Tribunal, it is seen that while reversing the order of the Commissioner (Appeals), the Tribunal took view that once the applicants admit to have made the payment of share application money, no further inquiry was necessary into the creditworthiness and genuineness of the transactions in case of the assessee company. It took such view on the basis of various judicial pronouncements of the High Courts in which the issue of share application money was considered, and mainly relied on the decision of the apex court in CIT Vs. Lovely Exports Pvt. Ltd. [(2010) 14 SCC 761].
4.1 In the facts of the case, it is not disputed that the assessee had furnished to the Assessing Officer the names of 15 persons from whom the share application money was received. The assessee had also produced in respect of each of them the copies of revenue record in form of 7/12 extracts showing that they were holders of agricultural land. In Lovely Exports (supra), the Supreme Court considered the issue of share application money regarded as undisclosed income under section 68 of the Act and observed that if share application money was received by assessee-company from the alleged bogus share holders, whose names were given to the Assessing Officer, then the Department was free to proceed to reopen their individual assessments in accordance with law. In that light, the impugned order of the Tribunal was proper and justified, and it could not be said that it committed any error in passing the order.
5. In the above view, no substantial question of law arises for consideration of this court in the present tax appeal. The appeal, therefore, cannot be entertained and is accordingly dismissed.
[V.
M. SAHAI, J.] [N.
V. ANJARIA, J.] Amit Top