COMMISSIONER OF INCOME TAX vs. VALUE CAPITAL SERVICES P.LTD.

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 348/2008 . COMMISSIONER OF INCOME TAX ..... Appellant Through Mrs. P.L. Bansal, Adv. . versus . VALUE CAPITAL SERVICES P.LTD. ..... Respondent Through Ms. Poonam Ahuja, Adv. CORAM: HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE MANMOHAN SINGH . O R D E R 25.04.2008 . The Revenue is aggrieved by an order dated 13th June, 2007 passed by the Income Tax Appellate Tribunal, Delhi Bench ?C?, New Delhi (the Tribunal) in ITA No.229/Del/2005 relevant for the Assessment Year 2001-02. The Assessee had received an amount of Rs.51 lakhs as share application money from 33 persons. The Assessing Officer required the Assessee to produce all these persons. It appears that some of them did appear. The Assessing Officer accepted the explanation and the statement given by three of these persons but found that the response from the others was either not available or was inadequate. On this basis, the Assessing . ITA 348/2008 Page 1 of 3 . Officer added an amount of Rs.46 lakhs pertaining to 30 of the persons to the income to the Assessee. In appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the view taken by the Assessing Officer. In further appeal, the Tribunal noted that the CIT(A) had noted the fact that the Assessee had produced the income tax returns, share application forms, confirmation, PAN letter, ration card and/or bank statement in respect of all the share applicants. The CIT(A) had accepted the existence of the applicants . . but did not accept the genuineness of the transaction, subject matter of the inquiry. While setting aside the order of the CIT(A), the Tribunal relied upon two decisions of this Court, namely, Commissioner of Income Tax v. Stellar Investment Ltd., [1991] 192 ITR 287 and a Full Bench decision in Commissioner of Income Tax v. Sophia Finance Ltd., [1994] 205 ITR 98. Several other decisions have been rendered by this Court following the above two decisions. The principle that has been laid down by the various decisions rendered by this Court from time to time is that if the existence of the applicant is proved, normally no further inquiry is necessary. Learned counsel for the Revenue submits that the creditworthiness of . ITA 348/2008 Page 2 of 3 the applicants can nevertheless be examined by the Assessing Officer. It is quite obvious that is very difficult for the Assessee to show the creditworthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be re-opened by the department. In any case, what is clinching is the additional burden on the Revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the Assessee so as to enable it to be treated as the undisclosed income of the Assessee. This has not been down insofar as the present case is concerned and that has been noted by the Tribunal also. Under the circumstances, we are of the view that the Tribunal has not committed any error in deleting the addition. No substantial question of law arises. Dismissed. . MADAN B. LOKUR, J . . . APRIL 25, 2008 MANMOHAN SINGH, J vk . . ITA 348/2008 Page 3 of 3