Accommodation entry share capital and related commission were sustained as unexplained income on surrounding circumstances and investigation material.

Share capital and share premium were treated as unexplained income under section 68 because the assessee failed to rebut the Assessing Officer's findings that the receipts were accommodation entries routed through entry providers. Mere banking channels and supporting documents were held insufficient where surrounding circumstances, investigation material, and human probability showed the transactions were not genuine. On that basis, the related commission expenditure was also treated as unexplained under section 69C. The additions were therefore sustained.

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Issues: Whether the addition of share capital and share premium as unexplained income under section 68, along with the commission addition under section 69C, was justified where the receipts were treated as accommodation entries.

Analysis: The assessee did not appear and produced no material to dislodge the findings recorded by the Assessing Officer and the first appellate authority. The record showed that the alleged share capital and premium were routed through accommodation entry providers from the S.K. Jain group. In such circumstances, mere banking entries and documentary form were insufficient to establish genuineness. The surrounding circumstances, the investigation material, and the test of human probability supported the conclusion that the apparent transactions were not real. Once the transaction was found to be an arranged entry, the related commission expenditure was also liable to be treated as unexplained.

Conclusion: The additions under section 68 and section 69C were rightly sustained, and the challenge to the assessment failed.

Ratio Decidendi: Where share capital is found, on the basis of surrounding circumstances and investigation material, to be an accommodation entry lacking genuineness, the amount is taxable as unexplained income and the attendant commission expenditure is also assessable as unexplained outgo.

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