Madhya Pradesh High Court
Commissioner Of Income Tax vs Dhar Ispat (P) Ltd. on 7 August, 2002
Equivalent citations: (2003)180CTR(MP)491
Author: Deepak Verma
Bench: Deepak Verma
JUDGMENT
1. This reference is made by the Tribunal, Indore Bench, Indore, at the instance of the Revenue for resolution of the following question, said to be the question of law :
"Whether the learned Tribunal was justified in holding that CIT(A) rightly deleted the addition made under Section 68 of the IT Act following the Delhi High Court's decision in CIT v. Steller Investments Ltd.. stating that provisions of Section 68 is not applicable in respect of share application money ?"
2. The judgments of the CIT(A) and that of the Tribunal were obviously based on a Division Bench of the Delhi High Court in CIT v. Steller Investment Ltd. wherein it was held that in no circumstance the share application money can be regarded as undisclosed income of the assessee. However, this Division Bench decision of the Delhi High Court has been overruled by the Full Bench of the same High Court in CIT v. Sophia Finance Ltd., (1994) 205 ITR 98 (Del)(FB). In the subsequent decision it is clearly held that Section 68 of the IT Act is applicable in respect of share application money although it will be a question of fact to be decided whether the entries in the account books in this regard are genuine or not. The prima facie burden to prove them genuine will also be with the assessee.
3. In view of the aforesaid legal position the question referred to us has to be answered in negative i.e., against the assessee and in favour of the Revenue. It may, however, be clarified that the question of genuineness of the entries regarding share application money shall be again a question of fact to be decided by the assessing authority on the basis of evidence available on record,
4. This reference is answered accordingly, but with no orders as to costs.