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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

G.J. Holding Pvt. Ltd., Ludhiana vs. ACIT, C-2, Ludhiana

In the result, the appeal of the assessee stands allowed

ITA 1171/CHANDI/2019[2011-12]Status: DisposedITAT Chandigarh30 Jan 2024AY 2011-12

Bench: Shri Sanjay Garg & Shri Vikram Singh Yadavआयकर अपील सं./ Ita No.1171/Chandi/2019 िनधा"रण वष" / Assessment Year : 2011-12 G.J. Holding Pvt. Ltd. बनाम Acit, Central Circle-Ii, Ludhiana C/O G.S. Auto International Limited, G.S. Estate, G.T. Road, Ludhiana. "थायी लेखा सं./Pan No: Aaacg6664K अपीलाथ"/Appellant ""यथ"/Respondent िनधा"रती क" ओर से/Assessee By : Shri P.K. Goel & Sunil Arora, C.As राज"व क" ओर से/ Revenue By : Smt. Amanpreet Kaur, Sr. Dr सुनवाई क" तारीख/Date Of Hearing : 18.12.2023 उदघोषणा क" तारीख/Date Of Pronouncement : 30.01.2024 आदेश/Order Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 04.07.2019 Of The Commissioner Of Income Tax (Appeals)-5, Ludhiana[Hereinafter Referred To As The ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). The Assessee In This Appeal Has Taken The Following 2. Grounds Of Appeal:

For Appellant: Shri P.K. Goel & Sunil Arora, C.AsFor Respondent: Smt. Amanpreet Kaur, Sr. DR
Section 132Section 133ASection 139Section 143(1)Section 147Section 148Section 250

perusal of the above grounds of appeal would reveal that the assessee apart from challenging the addition of Rs.2,00,90,000/- of share application money treated by the Assessing Officer as unexplained income of the assessee, has also assailed the validity of the reopening of the assessment ... noticed there is no trading transaction that is of purchase and sale, no accumulated profits in the capital reserved to justify such huge share application money. It is also noticed the said share application increased to Rs. 5,57,26,000/- during the F.Y. 2010-11 relevant