COMMISSIONER OF INCOME TAX Vs. DOLPHIN CANPACK LTD.

JUDGEMENT

(1.) IN its return for the asst. yr. 1998 -99, the assessee claimed to have received share application money of Rs. 62 lakhs. Confirmations of the persons in whose favour the shares were issued were also filed apart from evidence to show that the share capital was paid by cheques in all the cases. The AO, all the same, asked for certain further information and called upon the assessee to explain why the amount mentioned above be not added back under s. 68 of the IT Act, 1961 (for short "the Act"). The assessee submitted a reply, which did not find favour with the AO, resulting in the addition of the amount indicated earlier to the taxable income of the assessee. In an appeal preferred by the assessee against the said order, the CIT(A) relied upon judicial pronouncements to hold that the burden to prove the identity of the creditors and the genuineness of the transactions lay upon the assessee. Having said so, the CIT(A) affirmed the view taken by the AO that the burden had not been discharged by the assessee in the instant case. The addition of the amount was, on that reasoning, upheld.

(2.) IN a further appeal filed before the Tribunal by the assessee, the view taken by the AO and the CIT(A) was reversed relying upon the decision of a Division Bench of this Court in CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del). The Tribunal held that the assessee had furnished complete details to the AO regarding the transactions in question, which included confirmation details of bank account and the PAN of the parties in whose favour the share capital was subscribed. The Tribunal also noted that all the payments were received by the assessee by cheques and that the assessee had, in the process, fully discharged the onus that lay upon it for proving the identity of the subscribers and the genuineness of the transactions. It has, on that basis, deleted the addition made by the authorities below. The present appeal assails the correctness of the above order passed by the Tribunal.

(3.) MR . Jolly, learned counsel for the Revenue, strenuously argued that the Tribunal was in error in placing reliance upon the Division Bench decision of this Court in Steller Investment's case (supra). He submitted that the view taken in the said case no longer held the field having been varied by a Full Bench decision of this Court in CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB). He urged that the AO was entitled to hold an inquiry to determine the genuineness of the transactions or the truthfulness of the explanation offered by the assessee and resort to s. 68 in case the same was found to be unsatisfactory. The facts, in the instant case, according to learned counsel, did not establish the genuineness of the transactions, no matter that the genuineness of the persons, in whose favour the shares were alleged to have been issued, had been established and the payments received by the assessee were by way of cheques.