Case Law Details
VEL Software Limited Vs DCIT (ITAT Pune)
Facts- The AO found during the year under consideration, share capital of the company was increased from Rs.3,25,80,000/- to 12,55,80,000/- showing an increase of Rs.9,30,00,000/-. On being asked to explain, it was contended that the increase in share capital was contributed by ten shareholders in amounts ranging from Rs.60,00,000/- to Rs.1,25,00,000/-. Various enquiries have been conducted by the department which have been detailed in the assessment order. One pertinent point which has been brought out is that all the ten shareholders who subscribed to the share capital of Rs.9,30,00,000/-, in-turn have received respective amounts from a concern M/s. Portal India and it is further explained that the shares held by such shareholders have been pledged with M/s. Portal India against the loans raised.
In the course of assessment proceedings, assessee furnished affidavits of the shareholders supporting contribution in the share capital, copies of bank accounts of the socalled shareholders to the assessee company. That in the first round, the ld. CIT(A) had observed that, the shares owned by the shareholders have been pledged by the shareholders in favour of M/s. Portal India and the same accordingly shows that it is M/s. Portal India that has acquired shares of Rs.9,30,00,000/- of the assessee company and inturn it had sold a software portal to the assessee company for a sum of Rs.9,30,00,000/-. Be that as it may, the CIT(A) has been guided by the fact that the identity of M/s. Portal India stood established as it was found to be maintaining a bank account at the relevant time with Western Cooperative Bank Ltd. in Andheri (E). Secondly, the CIT(A) also observed that the shareholders of the assessee company did not contribute any amount which was entirely loaned to them by M/s. Portal India and the source of funds stood proved, no addition was warranted u/s.68 of the Act. In this background, the matter travelled upto the Tribunal.
Conclusion- We find also the Hon’ble Supreme Court in the case of Roshan Di. Hatti Vs. CIT, 107 ITR 938 has held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. Where the nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that income is from any particular source.
Similar proposition has been laid down by the Hon’ble Supreme Court in the case of Kale Khan Mohammad Hanif Vs. CIT, 50 ITR 1, wherein it was held that “it is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provision of Income Tax Act. In the absence of such proof, the ITO is entitled to treat it as taxable income.
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