Section 68 share capital requires proof of identity, creditworthiness and genuineness; banking entries alone are not enough.

Share capital can be treated as unexplained income where the assessee fails to establish the identity of the share applicants, their creditworthiness, and the genuineness of the transaction. In proceedings under section 68, these three ingredients must be proved cumulatively on a prima facie basis; failure of any one permits the credit to be added as unexplained. Here, the applicants could not satisfactorily explain the source of funds, one denied the transaction, the alleged financier and portal seller were not proved genuine, and the assessee did not produce the relevant parties despite opportunities. Mere routing through bank accounts was insufficient, so the addition was sustained.

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Issues: Whether the share capital received by the assessee was liable to be treated as unexplained cash credit under section 68 on the ground that the assessee failed to establish the identity of the shareholders, their creditworthiness, and the genuineness of the transaction.

Analysis: The material on record showed that the ten share applicants were unable to satisfactorily explain the source of funds, one shareholder denied the transaction, the alleged financier and portal seller were not proved to be genuine, and the assessee did not produce the relevant parties despite repeated opportunities. The surrounding circumstances and bank movements indicated that the transaction was not bona fide. In proceedings under section 68, the assessee must prima facie establish all three ingredients: identity of the creditor or applicant, creditworthiness, and genuineness of the transaction. Mere routing of amounts through banking channels is not sufficient where the explanation remains unreliable.

Conclusion: The addition under section 68 was rightly sustained and the share capital was treated as unexplained income.

Ratio Decidendi: For section 68, the assessee must cumulatively prove identity, creditworthiness, and genuineness of the transaction, and failure to establish any one of these essentials permits the credit to be taxed as unexplained income.

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