For the reasons stated in the application which are supported by an affidavit, we condone the delay in refiling the appeal.

2. CM is disposed of. ITA 225 of 2005

3. The challenge in this appeal under s. 260A of the (hereinafter referred to as Act) is to the order passed by the Tribunal, dt. 26th Feb., 2002, in relation to asst. yr. 1997-98, inter alia, on the following grounds:

(a) That the AO had no jurisdiction and power to look into and investigate the source. In other words, investigate the identity of the shareholders.

(b) The onus was on the assessee to establish that the transaction of the share application money was a genuine transaction.

4. As far as first proposition of law is concerned, the judgments of this Court as well as the Supreme Court are clear and there cannot be a dispute that the identity of shareholder can be looked into by the AO. However, this aspect of the matter would primarily be a finding of fact and not a question of law.

5. The assessee had produced all relevant evidence to establish that the share application money received by the company was as a result of the genuine transactions. It has been noticed even in the impugned order that evidence was produced by the assessee including affidavits, copies of the share application forms, copies of the confirmation from the applicant-company, copies of the board of directors resolution approving such transactions as well as cheque number, branch and address of the bank through which the investment was made. Based upon this, the Tribunal recorded its finding as under:

"From: various documents mentioned above, it is clear that all the 7 share applicants were companies incorporated under the Companies Act and incorporation, of a. company under the Companies Act requires certain documentary formalities. These formalities were gone through which warranted the incorporation of. above share subscribers companies by the Registrar of Companies. Thus, there should be no dispute about their identities. The affidavits from the directors of all the share applicant companies had also been filed. The share applicant companies are being assessed to tax, In the affidavits we also find that the directors have taken the delivery of shares allotted to each share applicant. This meets the query of the AO regarding the allotment of share. On the basis of above evidences, if the identity of each share applicant was established then perhaps there was no need for making further investigation as has been held by the Honble Delhi High Court in the case of Sofia Finance (supra). But looking to the facts that the income-tax Inspector in his report to AO has reported the non-availability of the above share applicants on the given address, we have verified the credit worthiness of the shareholders as well as genuineness of the transaction. In the affidavits, the cheque numbers, the addresses of the bank, the account number in the bank has also been mentioned. In case the AO had any doubt about the creditworthiness/identity of such share applicant, he was free to make inquiries through the bank. This was not done. Merely because the Inspector reported that the share applicants were not found on the given address was not enough for holding that shareholders neither existed nor their creditworthiness was established. The overwhelming evidence mentioned above clearly proved not only the identity of the share applicants but their creditworthiness as well as genuineness of the transaction. We, therefore, hold that the addition in respect of share application money received from the above 7 companies was a genuine share application money and the addition sustained by the CIT(A) in this respect is not justified and the same is deleted."

6. We may also notice that the AO himself has noticed in the order that the applicant-shareholders were income-tax payers. In such circumstances, it cannot be presumed that the shareholder who is assessed to tax is not in existence. This would tantamount to contradiction in the stand of the Department itself.

7. In view of the above circumstances, no questions of law much less the substantial question of law arise in the present case Dismissed.