Section 68 burden on share capital receipts shifts after identity, genuineness and creditworthiness are proved; addition deleted.

In the context of share capital and share premium receipts, the primary burden under section 68 of the Income-tax Act was treated as discharged where the assessee produced names, addresses, PAN details, returns, bank statements, share application forms, allotment letters and audited financials of the subscribers. Payments through account payee cheques, coupled with sufficient funds in the subscribers' accounts and no immediate cash deposits, supported identity, genuineness and creditworthiness. Once those elements were shown, the onus shifted to the Revenue, and mere non-appearance of some subscribers or lack of further enquiry by the tax authorities was insufficient to sustain the addition. The addition was therefore held unsustainable and 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 sustainable.

Analysis: The assessee furnished the names, addresses, PAN details, income-tax returns, bank statements, share application forms, allotment letters, and audited financial statements of the share subscribers. The payments were made through account payee cheques and the record showed sufficient funds in the hands of the subscribers, with no cash deposits immediately preceding the transfers. The legal burden under section 68 stood discharged by proving the identity of the subscribers, the genuineness of the transactions, and their creditworthiness. Once that primary burden was satisfied, the onus shifted to the Revenue, and mere non-appearance of some subscribers or failure to conduct further enquiry from their assessing officers could not justify the addition.

Conclusion: The addition under section 68 was not sustainable and was rightly deleted; the issue was decided in favour of the assessee.

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