The brief facts of the case are that on receiving information from Investigation
Wing that assessee company has received accommodation entries in the shape of
share application money. AO issued a notice u/s. 148 dated 30.3.2009 to the
assessee to file its return of income for the above mentioned assessment year
within 30 days from receipt of the notice…………Aggrieved with the order of the Ld.
CIT(A), Assessee is in appeal before the ITAT……….The AO in the Assessment Order
has simply relied upon the information received from the Investigation Wing of
the Department without making any effort to verify the facts stated therein. It
has also been held by the various courts that AO must bring on record some
positive material or evidence to indicate that the share holders were benamidars
fictitious persons or that any part or the share capital money represented the
company’s own income from undisclosed sources. The appellant has cited various
case laws in the its submissions wherein it has been held that the Share Capital
issued cannot be treated as undisclosed income of the appellant and cannot be
added u/s 68 of the Income Tax Act………………..

The appellant in its submissions relied upon by the case law of CIT vs. Samir
Biotech Pvt. Ltd. `ITA No415/I2008 of Delhi High Court, wherein it is held that
if subscribers are having bank accounts, issuing account payee cheque, assessed
to income- tax showing investment in the balance sheet, balance sheet were
audited by the statutory auditors, their credit worthiness, identity and
genuineness of the transactions are well established.

The appellant further stated that in the case of Paras Infotech Pvt. Ltd., it
has submitted the copy of the income-tax return, confirmations and affidavit of
the director of the company who has given share application money. All these
documents establish the identity and creditworthiness of M/s Paras Infotech Pvt.
Ltd. “In respect of the share application money received from investors, the
assessee company has only to prove that the existence of the persons in whose
name share application is received. No further burden is cast upon the assessee
to prove whether that person himself has invested the said money or some other
person made investment in his name.”

Summarised Judgment: …………..Keeping in view all the facts and circumstances, we
are of the c onsidered view that the Ld. First Appellate Authority has passed
the impugned order under the law and according to the facts of the present case
and has rightly deleted the addition in dispute. We find no infirmity in the
impugned order and upheld the impugned order by dismissing the appeal filed by
the revenue. In the result, appeal filed by the Revenue is dismissed.”

Analysis: The onus to prove the identity is on the assessee. This can be
confirmed by submission of various documents. In the case of JSM also the
requisite documents were submitted in respect of share applicant companies.