Law:

Section:

Section 68, read with section 69, of the Income-tax Act, 1961 - Cash Credits - Assessment years 1984-85 to 1986-87 - Whether if Assessing Officer harbours doubts of legitimacy of any subscription he is empowered, nay duty- bound, to carry out thorough investigations, but if Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat subscribed capital as undisclosed income of assessee - Held, yes - Assessee-company commenced its business of extending finance to industrial enterprises in January, 1984 - Assessee received subscription to public issue through banking channels and thereafter allotted shares to subscribers - Assessing Officer made additions on account of amount received by way of share capital by assessee under section 68 - Tribunal noted that assessee was a public limited company which had received subscriptions to public issue through banking channels and shares were allotted in consonance with provisions of Securities Contracts (Regulation) Act, 1956, as also rules and regulations of Delhi Stock Exchange and complete details had been furnished by assessee - Tribunal further recorded that Assessing Officer had not brought any positive material or evidence which would indicate that shareholders were (a) benamidars or (b) fictitious persons or (c) that any part of share capital represented company's own income from undisclosed sources - Tribunal, accordingly, deleted additions - Whether Tribunal was justified in doing so - Held, yes FACTS The assessee-company commenced its business of extending finance to the industrial enterprises in January, 1984. The assessee received subscription to public issue in the assessment years 1984-85 to 1986-87 from the directors/promoters and also by way of a public issue through the banking channels and thereafter allotted the shares to the subscribers. The Assessing Officer made certain additions on account of amount received by way of share capital by the assessee under section 68. The Commissioner (Appeals) deleted the impugned additions. The Tribunal upheld the order of the Commissioner (Appeals) on the ground that the Assessing Officer had not brought…

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