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“share application money”

Cash Credits & Unexplained ItemsSection 68Section 682,489 judgments

The decision most relied on for share application money is CIT v. Lovely Exports (P) Ltd. (216 CTR 195), cited in 854 judgments on BharatTax.

Leading authorities on share application money

CIT v. Lovely Exports (P) Ltd.
216 CTR 195 · 2008 · Supreme Court
854
citing judgments

If an assessee company receives share application money from alleged bogus shareholders and provides their details to the Assessing Officer, no addition can be made under Section 68 in the company's hands; the Department must proceed against the shareholders by reopening their individual assessments.

(Central)-1 v. NRA Iron & Steel (P) Ltd.
103 Taxmann.com 48 · 2019 · Supreme Court
696
citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.
342 ITR 169 · 2012 · High Court
658
citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

Nemi Chand Kothari v. CIT
264 ITR 254 · 2003 · High Court
340
citing judgments

For a cash credit, merely transacting by cheque is insufficient to discharge the assessee's burden of proof. The assessee must prove the identity of the creditors, the genuineness of the transaction, and the creditworthiness of the creditors; upon which, the burden shifts to the revenue.

CIT v. Kamdhenu Steel & Alloys Ltd.
361 ITR 220 · 2014 · High Court
328
citing judgments

When making an addition under section 68, the creditworthiness or financial strength of an investor contributing share capital or share application money can be proved by producing their bank statements showing sufficient balance for the investment. The Supreme Court dismissed the SLP against this decision.

CIT v. Sophia Finance Ltd.
205 ITR 98 · 1994 · High Court
295
citing judgments

To discharge the burden of proof under Section 68 for share capital or share application money, an assessee must establish the identity of the shareholders and the genuineness of the transaction, confirming that the payment was truly made by them.

CIT v. Oasis Hospitalities P. Ltd.
333 ITR 119 · 2011 · High Court
292
citing judgments

When explaining cash credits under Section 68, the assessee must establish the identity of the creditor, their creditworthiness or financial capacity, and the genuineness of the transaction. Merely proving identity does not discharge this initial onus, which shifts to the Assessing Officer once these three elements are prima facie proven.

CIT v. Nipun Builders & Developers
350 ITR 407 · 2013 · High Court
264
citing judgments

For any sum credited in an assessee's books, including share application money, the assessee must prove the identity and creditworthiness of the creditor and the genuineness of the transaction. Failure to discharge this onus under Section 68 renders the amount taxable.

Judgments citing share application money

Megapix Vanijya Pvt. Ltd., Kolkata vs. I.T.O., Ward - 9(1), Kolkata

The appeal of the assessee is allowed

ITA 1151/KOL/2024[2012-2013]Status: DisposedITAT Kolkata18 Nov 2024AY 2012-2013

Bench: Dr. Manish Borad & Shri Sonjoy Sarmai.T.A. No.1151/Kol/2024 Assessment Year: 2012-13 Megapix Vanijya Pvt. Ltd……………………………………………..…..……Appellant C/O Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2Nd Floor, Kolkata – 700069. [Pan: Aahcm6624J] Vs. Ito, Ward-9(1), Kolkata............…....….…..….........……........……...…..…..Respondent Appearances By: Shri Siddharth Agarwal, Advocate, Appeared On Behalf Of The Appellant. Shri Pradip Biswas, Addl. Cit- Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : August 27, 2024 Date Of Pronouncing The Order : November 18, 2024 Order Per Sonjoy Sarma: The Present Appeal Is Filed By The Assessee Against The Order Dated 13.05.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’) For Assessment Year 2012-13. 2. The Brief Facts Of The Case Are That The Assessee Filed Its Return Of Income On 26.09.2012 By Declaring A Total Loss Of Rs.4,540/-. The Case Of The Assessee Was Selected For Scrutiny Due To Large Share Premium Received By The Assessee During The Relevant Financial Year. Consequently, The Assessing Officer Issued Notices U/S 142(1) & 142(2) Of The Act Requesting For Furnishing Requisite Information. In Response To The Notices, The Ld. Ar Of The Assessee Appeared Before The Assessing Officer & Provided Primary Details Including An Explanation That The Assessee Company Was Engaged In The Business Of Share Trading. Upon

Section 131Section 142(1)Section 143(3)Section 250Section 68

creditworthiness of these shareholders. Non-appearance of the directors of the company could not be the sole ground to justify for treating the share application money as undisclosed income in the hands of the assessee. Reliance in this respect has been placed on the following decisions: 1. Decision ... Samarpan Merchants (P) Ltd. 6.. Final Accounts, Share Application Form in connection with the following share applicants to whom the share application money refunded in the subsequent year - a) Kerbs Vyapaar (P) Ltd. b) Amit Stock & Commodities (P) Ltd. 7. Bank Statement of the assessee reflecting the money refunded