Section 68 addition on share capital failed after investor identity, creditworthiness and genuineness were verified.

Share capital and share premium could not be added under section 68 where the assessee furnished confirmations, PAN, income-tax acknowledgements, balance sheets, bank statements and allotment records of the share applicants. The remand report, after verification, found the investors' identity, creditworthiness and genuineness to be in order, and the capital receipt including premium to be legally proper. Once the primary burden was discharged, the assessee was not required to prove the source of source. The addition under section 68 was therefore not sustainable and was deleted.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961, in respect of share capital and share premium received by the assessee was justified.

Analysis: The assessee produced the details of the share applicants, including confirmations, PAN, income-tax acknowledgements, balance sheets, bank statements, allotment records and other supporting material. The Assessing Officer's remand report, after verification, recorded that the identity, creditworthiness and genuineness of the investors were found in order and that the impugned capital receipt including premium was legally in order. In these circumstances, the foundational requirements for an addition under section 68 were not established, and the assessee could not be asked to prove the source of source once the primary burden was discharged.

Conclusion: The addition under section 68 was not sustainable and was rightly deleted.

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