Section 68 addition over alleged share-sale proceeds was set aside for fresh adjudication due to incomplete inquiry.

An addition under section 68 in respect of alleged share-sale proceeds was challenged on the basis that the genuineness of the transaction had not been established with certainty. The adverse inference rested on non-response to notices issued to the broker, uncertainty over service of summons, and stock exchange information that was said to be inconclusive, but the inquiry was found to be incomplete and undertaken at the end of the assessment proceedings. Because effective compliance and further verification were not adequately possible on the record, the matter was restored to the Assessing Officer for fresh adjudication and the addition was not finally sustained.

---

---

Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 in respect of the alleged sale proceeds of shares was sustainable, and whether the matter required remand because the inquiry was incomplete.

Analysis: The addition was founded on doubts about the genuineness of the share transaction, including non-response to notices issued to the broker, uncertainty about service of summons, and information from the stock exchange said to be inconclusive. The assessment, however, was made on incomplete material, and the adverse inference was drawn without establishing the transaction with certainty. The record showed that the inquiry was carried out at the end of the assessment proceedings, leaving inadequate opportunity for effective compliance and further verification.

Conclusion: The addition was not finally sustained and the matter was restored to the Assessing Officer for fresh adjudication.

---