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Issues: Whether the share capital and share premium credited in the assessee's books were genuine or represented a sham transaction liable to addition under section 68.
Analysis: The assessee did not appear or substantively assist in the appeal, and the Tribunal examined the matter on the basis of the record. Although documentary particulars such as PAN, return details, bank statements and financial statements were produced, the surrounding circumstances showed that the shares were issued at a very high premium, transferred shortly thereafter at a much lower value, and involved entities controlled by the same person. The Tribunal held that section 68 is not satisfied merely by producing papers if the surrounding facts indicate that the apparent transaction is not real. Applying the principles that taxing authorities may look beyond documents to the reality of the transaction and assess matters on the test of human probabilities, the Tribunal found the transaction to be a colourable device to introduce unaccounted money in accounting form.
Conclusion: The addition under section 68 was upheld and the assessee's challenge failed.
Ratio Decidendi: Where surrounding circumstances and human probabilities that a credit entry is a sham, the assessee does not discharge the burden under section 68 by producing documentary evidence alone.
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