Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessee had received share application money from shareholders - In order to prove genuineness of said transactions, assessee-company had given names and addresses of shareholders etc. - Assessing Officer rejected assessee's explanation and added amount so received to its taxable income - Tribunal, however, set aside addition made by Assessing Officer holding that if share application money was received by assessee-company from alleged bogus shareholders, whose names were given to Assessing Officer, then department could always proceed against them and if necessary reopen their individual assessments - Whether on facts, Assessing Officer should have found out details of shareholders through PAN cards, bank account, etc., so as to reach them because all relevant details and particulars were given by assessee to Assessing Officer - Held, yes - Whether, therefore, impugned order passed by Tribunal was to be upheld - Held, yes [In favour of assessee] FACTS The assessee-company had received share application money from the shareholders. In order to prove genuineness of said transaction, the assessee had given the names and addresses of shareholders etc. The Assessing Officer rejected the assessee's explanation and added the amount so received to its taxable income. On second appeal, the Tribunal set aside the addition made by the Assessing Officer holding that if the share application money was received by the assessee-company from alleged bogus shareholders, whose names were given to the Assessing Officer, then the department could always proceed against them and if necessary reopen their individual assessments. On revenue's appeal: HELD In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. The Assessing Officer ought to have found…

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