INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Unexplained share application money - Assessee failed discharge initial onus cast in him

Assessee received share application money. AO examined source of receipt and held that the share application money was nothing but the assessee's unexplained cash credit. Therefore, the AO made addition under section 68, which was confirmed by CIT(A) as well as Tribunal. Held: The assessee was given ample opportunities to produce the share investors which the assessee failed to do. The assessee had carried out no business during the entire period, except for collection of share application money. Further that, director of the assessee admitted that the entire investment was bogus. Blank receipts were obtained from shareholders. Their signatures were obtained on blank transfer forms. There was no evidence to show that such share certificates were issued. The director also admitted that the share subscription was nothing but the book entries obtained from various persons against cash payments. Such a statement was never retracted. The assessee failed to discharge the initial burden envisaged under section 68. Thus, the addition under section 68 in respect of share application money was rightly made.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2007-08

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