ITO v. High Growth Exports (P) Ltd.

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Share application money and share premium--AO made addition of share capital and share capital premium received by assessee from different share applicants as unexplained cash credit under section 68. Assessee-company issued equity shares at a premium. During assessment proceedings, assessee filed details of share applicants, i.e., identity of the applicants, share application money was received through account payee cheques and all the share applicants were private limited companies. Assessee claimed that in such circumstances, the transaction was genuine for the reason that applicants have received the share application money through banking channels. Held: Assessee had received share application money through account payee cheques i.e., through normal banking channels. It was not the case of the Revenue that the share application was not made from the bank account of the applicant companies and the share applicants were also produced before AO. It was also not the case of the Revenue that the shares were allotted to the subscribers were matter of records of ROC and confirmed by annual return and return of allotment as filed with ROC but AO had not made any verification with respect to bank vis-a-vis respective companies nor had been called for any records of the respective companies. Even AO had accepted the genuineness of these companies and receipt of share application money as well as share premium. In such circumstances, this was genuine share application money.