High Court Of Madras
CIT vs. Electro Polychem Ltd.
Section 68, 260A
Asst. Year 1998-99, 1999-2000
P.D. Dinakaran & P.P.S. Janarthana Raja, JJ.
Tax Case (Appeal) Nos. 782 & 783 of 2007
21st June, 2007
Counsel Appeared :
J. Narayanasamy, for the Appellant
JUDGMENT
P.D. DINAKARAN, J. :
The above tax case appeals are directed against the order of the Tribunal in ITA Nos. 1182 and 1714/Mad/2002 dt. 24th March, 2006 for the asst. yrs. 1998-99 and 1999-2000 respectively, raising the following substantial questions of law :
“(a) Whether in the facts and circumstances of the case, the Tribunal was right in holding that share application money in fictitious names cannot be treated as undisclosed income of the assessee ?
(b) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the enquiries can be conducted in the hands of the shareholders only, when the entire addition is because the shareholders have been found to be non existent/fictitious persons ?”
2. The brief facts led to the filing of the above appeals are as under : The assessee filed its returns for the asst. yrs. 1998-99 and 1999-2000. The AO made additions in respect of the share application money under s. 68 of the Act, finding that the assessee had brought the undisclosed income by way of share applications in fictitious name and passed order accordingly. Hence, the assessee preferred appeals to the CIT(A). The CIT(A) deleted the addition made by the AO for the asst. yr. 1998-99 and upheld the addition made for the asst. yr. 19992000. Against the said order, the Revenue as well as the assessee preferred appeals before the Tribunal. The Tribunal allowed the appeal preferred by the assessee and dismissed the appeal preferred by the Revenue. Hence, the above appeals.
3. In CIT vs. Stellar Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del), where the increase in subscribed capital of the respondent company, accepted by the ITO and rejected by the CIT on the ground that a detailed investigation was required regarding the genuineness of subscribers to share capital, as there was a device of converting black money by issuing shares, with the help of formation of an investment, which was reversed by the Tribunal, the Delhi High Court held that even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company.
4. The view taken by the Delhi High Court in CIT vs. Stellar Investment Ltd. cited supra, was confirmed by the apex Court and the same was reported in CIT vs. Stellar Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC).
5. Applying the ratio laid down in the decision cited supra, we do not find any substantial question of law arises for our consideration. Accordingly, these appeals are dismissed. Consequently, MP No. 1 of 2007 is also dismissed.
[Citation : 294 ITR 661]
