Section 68 share capital additions fail when identity, creditworthiness and genuineness are supported by documents.

Share capital and share premium additions under section 68 were unsustainable where the assessee produced PAN, bank statements, audited accounts, share application forms, confirmations and other supporting records. The documentary evidence established the identity, creditworthiness and genuineness of the share applicants, so the initial burden stood discharged. Once that burden was met, the Revenue had to dislodge the material through meaningful enquiry, and mere non-appearance of directors or suspicion based on conjecture was insufficient. The addition was therefore deleted.

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Issues: Whether additions made under section 68 of the Income-tax Act, 1961 on account of share capital and share premium were justified where the assessee produced PAN, bank statements, audited accounts, share application forms, confirmations and other supporting material from the share applicants.

Analysis: The assessee had furnished documentary evidence establishing the identity of the share subscribers, the movement of funds through banking channels and the financial capacity reflected in their balance sheets and returns. For five subscribers, the subsequent year's scrutiny assessment had already accepted the transactions, and for the remaining three subscribers the records showed confirmations in response to notices, bank statements, audited accounts and sufficient own funds. In these circumstances, the initial burden stood discharged. Once the assessee proved the basic ingredients of identity, creditworthiness and genuineness, the burden shifted to the Revenue to dislodge the material or to carry out meaningful enquiry, including examination of the subscribers' assessing officers where appropriate. Mere non-appearance of directors or suspicion based on conjectures was held insufficient to sustain the addition.

Conclusion: The additions under section 68 were not sustainable and were deleted.

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