ITO vs. Superline Construction Pvt. Ltd. ITAT “A” Bench, Mumbai Before Shailendra Kumar Yadav (J. M.) and Rajesh Kumar (A. M.) ITA No. 3645/Mum/2014 A. Y. : 2007-08. Date of Order: 30.11.2015 Counsel for Assessee / Revenue: A. Ramachandran / P. Danial

Facts
This appeal, along with six others, by the Revenue is directed against respective orders of the CIT(A) in respect of seven different assessees. Since the appeals involve common issues, the same were heard together and disposed of by the Tribunal, by a consolidated order.

The assessee was a builder and a developer. The assessment was completed u/s. 143(3) r.w.s. 147. During the year, the assessee had received share application money to the tune of Rs.85 lakh from eight companies. After completing the assessment, the Assessing Officer received detailed report from the investigation wing alongwith copies of statement recorded from the concerned officials of the company. Based thereon, the assessment was re-opened and an addition of Rs.40 lakh was made on account of bogus share application money received from three different corporate entities, u/s. 68. On appeal, the CIT(A) deleted the addition.

Before the Tribunal, the revenue contended that the CIT(A) erred in deleting the addition without appreciating the fact that addition was made based on specific information provided by Investigation Wing of Income Tax Department. According to it, the investors had issued cheques towards alleged share application money in return of cash. It was submitted that the assessee had failed to discharge the onus cast upon it to prove the credit entries of share application money as required under the statute.

In reply, the assessee contended that it had fully discharged the burden of proof by establishing the identity, creditworthiness and genuineness of the transactions. It produced banking instruments as the documentary evidence and further substantiated the details regarding the investors with the documentary evidences as extracted from the website of the Ministry of Corporate Affairs. Further, the assessee relied on the Supreme court decision in the case of CIT vs. Lovely Exports (Pvt) Ltd., reported in [2008] 216 CTR 195 (SC) and few other tribunal decisions.

Held
The Tribunal noted that on similar issue of receipt of share application money, the Supreme Court had in the case relied on by the assessee, held that such receipt cannot be regarded as the undisclosed income of the assessee company and in case the department has information about the alleged bogus shareholders, then the department should proceed to reopen the individual assessments of the investors. Further, taking into account the facts and circumstances of the case and other decisions of the tribunals on a similar issue, the Tribunal upheld the order of the CIT(A) and the appeal filed by the Revenue was dismissed.