Unexplained share subscription cash credits: burden shifts to revenue once subscriber companies' existence is proved; assessee succeeds.

Unexplained cash credits arising from share subscriptions require the assessee to prove identity, creditworthiness and financials of subscriber companies; once documentary evidence establishes their existence, the burden shifts to revenue to disprove genuineness, and mere nonappearance of subscriber directors to AO summons does not justify an adverse inference. The AO failed to identify specific discrepancies or explain why further inquiry (including recording directors' statements) was necessary, and the appellate order was found nonspeaking and mechanically upheld; appeal decided in favour of the assessee.

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Issues: Whether the impugned addition of share capital and share premium under section 68 of the Income-tax Act, 1961, treating the receipts as unexplained cash credit, was justified.

Analysis: The assessing authority acknowledged receipt of documentary evidence from the assessee and the subscriber companies, including incorporation details, PAN, financial statements, income-tax return acknowledgements and bank statements showing payments by banking channels. The assessing authority nonetheless insisted on personal attendance of directors of subscriber companies without identifying any specific discrepancies in the documents or stating what further inquiries were necessary from such personal attendance. The appellate authority below upheld the addition in a mechanical manner without discussing defects in the documentary evidence. Documentary proof of existence and creditworthiness of subscriber companies shifts the onus to revenue to show insufficiency or discrepancy. Adverse inference cannot be drawn solely because directors did not appear personally where such attendance was not within the control of the assessee and no specific deficiencies in the submitted evidence were pointed out.

Conclusion: The addition under section 68 treating the share capital and share premium as unexplained cash credit is not justified and is deleted; outcome is in favour of the assessee.

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