COMMISSIONER OF INCOME TAX Vs. BHAVAL SYNTHETICS.

JUDGEMENT

(1.) THIS appeal by the revenue under Section 260-A of the Income Tax Act, 1961 ['the Act'], directed against the order dated 16.11.2007 as passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['the Tribunal'] in ITA No.249/JU/2007 in relation to assessment year 1997-1998, has been admitted on the following substantial question of law:-

(2.) WHILE passing the assessment order dated 28.02.2003 under Section 143(3)/263 of the Act, the Assessing Officer ['the AO'] ordered the addition which forms the subject matter of this appeal under Section 68 of the Act, treating an amount of Rs.58.40 lakhs, received by the assessee on account of share application money, to be the unexplained share capital on the ground that the assessee failed to furnish confirmation from the allottees/share holders. The Commissioner of Income Tax (Appeals), Udaipur ['the CIT(A)'], in his order dated 15.01.2007, considered the appeal of the assessee against the aforesaid assessment order dated 28.02.2003; and, as regards the addition under Section 68 of the Act, while referring to the decision of this Court in the case of Shree Barkha Synthetics Pvt. Ltd: [2006] 283 ITR 377 held that if the transactions were made through banking channel and existence of persons in whose names shares had been issued was shown, the assessee-company could not be held responsible to prove as to whether the person himself invested the money or some other person did so and the burden shifted on the revenue to establish that the investment came from the assessee- company itself. It was also observed that if at all the investment made by the shareholders is to be added, the assessment has to be carried out in their case and not in the hands of the appellant- company. The CIT(A), thus, deleted the additions made under Section 68 of the Act in the hands of the assessee-company.

(3.) THE learned counsel for the respondent-assessee submits that the question as formulated does not even arise in this case because it remains settled with the consistent decisions of the Courts that even in case of doubt about subscribers to the increased share capital, the amount of share capital cannot be regarded as undisclosed income of the company. The learned counsel has referred to the decision in the case of Shree Barkha Synthetics Pvt. Ltd (supra) wherein this Court has noticed that in Steller's case [(2001) 251 ITR 263], the Hon'ble Supreme Court has affirmed the view of Delhi High Court in the case of CIT Vs. Stellar Investment Limited : (1991) 192 ITR 287 (Del.) that reads as under :-