Section 68 share capital additions fail where identity, genuineness and creditworthiness are proved by documents and confirmations.

Share capital and share premium receipts were held to satisfy section 68 because the assessee produced complete particulars of the share applicants, including identity, bank records, tax details and audited accounts, and the applicants responded to notices and summons confirming the investments. The Tribunal found that the three statutory ingredients of identity, genuineness and creditworthiness stood established through account payee cheque and RTGS receipts. It further applied the settled rule that once the assessee discharges the primary burden, any deeper enquiry into the source of the creditors' funds shifts to the Revenue, and the assessee is not required to prove the source of source beyond the record. The addition was therefore deleted and the CIT(A)'s order was upheld.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 on account of share capital and share premium was justified.

Analysis: The assessee furnished complete particulars of the share applicants, including names, addresses, PAN, bank statements, income-tax particulars, audited accounts and the source of funds. The share applicants responded to notices under section 133(6) and their directors also appeared and confirmed the investments in response to summons under section 131. The receipts were through account payee cheques or RTGS. On these facts, the three ingredients required under section 68, namely identity, genuineness and creditworthiness, stood established. The Tribunal also applied the settled principle that once the assessee discharges the primary burden, any further enquiry into the source of funds of the creditors lies with the Revenue, and the assessee is not required to prove the source of source beyond what was shown on record.

Conclusion: The addition under section 68 was not sustainable and the deletion made by the CIT(A) was upheld.

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