Brief of the case:
In the case of ITO Vs. M/S JAGDAMBA OPTICS PVT. LTD. Delhi Bench of ITAT have held that there was existence of correct information which prompted to the AO to proceed to issue notice u/s. 148 of and hence, the reassessment proceedings could not be declared as null and void. After conducting the detailed investigation to prove that the income has escaped assessment in the hands of the assessee, the reassessment proceedings have been initiated by the AO. In an another issue ITAT have held that Once the identity of the shareholders was established it also stands established that the shareholders have invested money in the purchase of shares and hence the onus, on the part of the assessee company, is discharged and there cannot be any addition in the hands of the assessee company on account of share application money.
Facts of the case:
- Assessee filed the return of income declaring loss of Rs. 5,78,075/- on 07.10.2004.
- Subsequently case was reopened u/s 148 on the basis of information gathered from Investigation Wing of the Income Tax Department that the assessee has indulged in receiving accommodation entry in the garb of Share Application money during the year.
- During the year under consideration assessee has received share capital of Rs. 13,70,000/- from 6 companies.
- Assessee was asked to file the details of share applicant and submit copies of their IT returns, confirmations and bank statements in order to prove the identity and creditworthiness of the share applicant and genuineness of the transaction.
- In response to the questionnaire, assessee filed the copy of ITR of the above mentioned parties to verify the same.
- For 3 firms the AO also issued notice to the concerned Bank which also received back from the post authorities with the remarks that “no such Bank at Nai Sarak”.
- Finally AO has held that assessee has given its unaccounted cash to the entry provider and the same had been received by the assessee and made addition of Rs. 13,70,000/-
Contention of the assessee:
