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Share Application Money

(Querist) 14 September 2009 This query is : Resolved 
A private company as received share application money in cash in bulk amount and the case is in scrutini another thing that the amount which as received in cash as been return in the next financial year through bearer cheques so please sugges me how i can keep this case in front of ITO.
KUMAR JAGADEESAN (Expert) 14 September 2009
Dear Mr.Hussain

Please refer to Section 269 SS and 269 T, Even though the amount was shown as share application money, the fact that the same has been refunded may lead to presumption that it was only a deposit. IN this case penalty is attracted which may equal the amount of deposit.

However if you can provide the details of the payee and the person who applied for the shares ( both being one) and it was genuine transaction you may get away. However the payee might have to explain his sources if called for

Rajesh Thakker (Expert) 16 September 2009
As regarding the case of Pvt Ltd or Ltd company, when share application money received by company, the company has to provide full identy proof before the IT authority to discharge the liability.

Thenafter, the IT authority will asked to the applicant for the source of investment seprately. Sec. 269SS or 269T will not applicaable according to me.

Please referred commentry for sec. 68 of the Income-tax Act, you will get enough material for represent your case.riven

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