Law:

Section:

Section 158B of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed Income - Block periods 1989-90 to 1999-2000 - Where assessee-company had issued shares and amounts were collected in terms of applications made to assessee and except three persons, all other persons had admitted that they were proposed shareholders who had paid amounts on shares that were to be allotted to them, addition made in assessee's hands on account of such share application money treating it as undisclosed income of assessee was not justified [In favour of assessee] The assessee was a hotel group running various hotels. A search was conducted at the assessee's premises and during the course of search, certain material and documents were seized. On scrutiny of the same, the Assessing Officer found that the assessee had undisclosed income for the block period. The Assessing Officer by his order under section 158BC, read with section 143(3) determined the undisclosed income for the said block period on account of unexplained investment in share capital in the names of employees of the assessee-group and their relatives as sources not explained. The Tribunal deleted the addition holding that share application money found during search could not be treated as undisclosed income of the assessee on the ground that the share applicants had been identified and some of them had admitted to have made the said payment. Held that the assessee had issued shares, amounts were collected in terms of applications made to assessee and in the evidence which had been let in, except three persons, all other persons had admitted that they were proposed shareholders who had paid amounts on shares that were to be allotted to them, pursuant to the applications which they had received. It, therefore, could not be held that there had been no explanation with regard to the investment received by way of share capital, taking into account the fact that the persons had admitted the payment of the share subscription money except three persons. Under the circumstance, the Tribunal's order was justified. CASE REVIEW CIT v. Lovely Exports (P.) Ltd. [2009] 319 ITR (St.) 5 (SC) and CIT v. Steller…

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