Commissioner Of Income Tax vs. M/S Astha Credit & Securities Pvt. Ltd.

I.T.A.No.187/2010 1 Commissioner of Income Tax Vs. M/s Astha Credit & Securities Pvt. Ltd. 03/04/2014 Shri Sanjay Lal, learned counsel for the appellant. This is a revenue's appeal under Section 260-A of the Income Tax Act, 1061 calling in question the concurrent orders passed by the Commissioner, Appeals and the Income Tax Appellate Tribunal in the matter of disallowing an addition of ` 57 Lacs made by the Assessing Officer in the income of the respondent/company under Section 68 of the Income Tax Act on the ground that the amount is the unexplained share capital invested in the company. The company in question filed it's return of income for the assessment year 2005-06 and in the same had shown receipt of share capitals from various investors to the tune of ` 57 Lacs. The assessee gave name, address and particulars of the investments made by each of the investors, particularly the name of the invester, address of the investor, the amount invested along with particulars of the cheque and the bank details etc. The learned Assessing Officer took note of each of the investments made in this regard and held that the source of the investor is not established and holding that the investor may not be in a position to invest the amount, had added the amount in the income of the company. However, when the matter was called in question by the Assessee before the Commissioner, Appeals, the Commissioner found that once the assessee has disclosed the particulars of the investors along with their mode of investment and bank particulars, merely on the basis of presumptions and assumptions, I.T.A.No.187/2010 2 Commissioner of Income Tax Vs. M/s Astha Credit & Securities Pvt. Ltd. the amount could not be added to the income of the company. That apart, it was found that if the invester has not explained the source of amount, which is invested, then the same may be added in the income of the invester and taxed for and the Tribunal also took note of the same and after evaluating the legal principle laid down in various cases, which is reproduced in Paragraph 6 of the impugned judgment, upheld the order of the appellate authority mainly by holding that the Supreme Court in the case of CIT Vs. Lovely Exports Private Limited reported in 216 CTR 195, the tribunal accordingly, held that if the department is having any doubt in the matter of investment of share application money or share capitals subscribed by various persons alleged to be bogus by the Department then it is for the Department to reopen their case and take action. The appellate tribunal apart from relying upon the judgment of the Supreme Court in this regard has also relied upon the judgment rendered by the High Court of MP to say that the Commissioner, Appeals has not committed any error. These concurrent orders passed by the Commissioner, Appeals and the Tribunal are challenged in this appeal and the question of law proposed is that the tribunal and the appellate authority were not justified in disallowing the addition and it is stated that it's a perverse finding. In support of the same, a judgment of the Delhi High court in the case of Bhav Shakti Steel Miner (P) Ltd. 18 DTR (Del.) 194 is relied upon. We have heard learned counsel for the appellant and gone through the records. The Supreme Court in the case of Lovely I.T.A.No.187/2010 3 Commissioner of Income Tax Vs. M/s Astha Credit & Securities Pvt. Ltd. Exports Private Limited (Supra) has dealt with the matter in the following manner : “If the Department was having any doubt as regard to the share application money/ share capitals subscribed by various persons alleged to be bogus by the Department, the Department could reopen their case. Even otherwise, on merits also, the assessee has submitted various documentary evidences to justify its claim” Once the Supreme Court has laid down the principle to the effect that if the share application of money is received by a company and it is said to be from a bogus share holder but if the name and other particulars of the share holder is given to the Assessing Officer, then the department is free to reopen their individual assessment in accordance with law. Once the assessee has discharged the burden of indicating as to the source from where, the share amount has been received, keeping in view the law laid down by the Supreme Court as indicated hereinabove, we are of the considered view that the appellate authority and the tribunal have not committed any error in rejecting the contention of the department. In the facts and circumstances of the case, no substantial question of law arises for consideration. The appeal is, therefore, dismissed. (Rajendra Menon) (Anil Sharma) Judge Judge nd