Judgment:
1. This appeal under Section 260A of the Income-tax Act, 1961 (in short 'the Act'), has been admitted on the following substantial questions of law:
1.1 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) and whether it was justified in confirming his views in deleting the addition made by the Assessing Officer on account of unexplained investment in share capital in spite of the respondent's failure to discharge the onus cast upon it as per the provisions of the law.
1.2 Whether on the facts in the circumstances of the case, the Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) in respect of the share capital ignoring the fact that no verification pertaining to its source was ever carried out in the year in which it was introduced.
1.3 Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming the order of the Commissioner of Income-tax (Appeals) deleting the addition of ignoring the fact that the said addition are backed by specific provisions of the Income-tax Act.
2. The short question for consideration of this appeal is - whether the Tribunal as well as the Commissioner of Income-tax (Appeals) were justified in deleting the addition made by the Assessing Officer (in short 'AO') on account of unexplained investment in share capital in spite of the respondent's failure to discharge the onus cast upon it as per the provisions of law.
3. Briefly stated, the facts of the case are that the assessee-company filed its return for the assessment year 1989-90. In the assessment proceedings, the Assessing Officer called upon the assessee to establish the identity and creditworthiness of the share applicants as the balance-sheet reflected the capital amount of Rs. 26,45,200. In order to confirm the investment, notices were issued to the shareholders in their given addresses and in 29 cases, the letters sent were returned unserved with the remark that the address is not complete or other similar reason. The Assessing Officer, not satisfied with the explanation of the assessee, added Rs. 13,36,000 towards holdings of the shareholders, whose confirmation could not be adduced.
4. Before the Commissioner of Income-tax (Appeals), the assessee sought permission for adducing additional evidence under rule 46A of the Income-tax Rules, 1962, which was accepted and appeal of the assessee was allowed on the basis of additional evidence adduced by the assessee as also keeping in view of the fact that for subsequent assessment year, the shareholders investment was confirmed during the assessment proceedings.
5. The appeal preferred by the Revenue was further dismissed by the impugned order.
6. Mr. Dubey, learned senior advocate appearing for the respondent submits that apart from the reasons assigned by the respondent, the Tribunal, wherein it has been held that the investment has been verified on the basis of the additional evidence adduced by the assessee, in view of the latest judgment of the hon'ble Supreme Court in the matter of CIT v. Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 : [2008] 216 ITR (St.) 195, investment by the alleged bogus shareholders in a company cannot be regarded as the undisclosed income of the assessee-company, though individual investors can be proceeded against by the Department.
7. Mr. Rajeshwar Rao, learned Counsel for the appellant, does not dispute their ratio of law laid down by the hon'ble Supreme Court in the aforesaid judgment.
8. We have heard learned Counsel for the parties and perused the impugned order.
9. In the matter of Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5, the question before the hon'ble Supreme Court was-whether the amount of share money can be regarded as undisclosed income under Section 68 of the Act Answering the above question, the hon'ble Supreme Court has held that if the share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of the assessee-company.
10. Thus, in view of the binding judgment of the hon'ble Supreme Court as also the findings recorded by the Commissioner of Income-tax (Appeals), which have been subsequently confirmed in appeal by the Appellate Tribunal, we are of the opinion that there is no question of law, much less a substantial question of law, arising for adjudication of this appeal. The appeal is, accordingly, dismissed.