Section 68 share capital scrutiny turns on factual proof of investor creditworthiness, genuineness, and supporting documents.

Section 68 treatment of share capital and share allotment depends on the assessee's production of supporting documents and the Tribunal's factual findings on the investors' creditworthiness and genuineness. The Tribunal found that the relevant paper book and records had been placed before the Assessing Officer, that the subscribing entities were active companies, and that the investments came from their own resources. It also noted that addition had already been made in the hands of the subscribing company and that, for the relevant assessment year, the assessee was not required to prove the source of source. On that basis, no substantial question of law arose and the addition was not interfered with.

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Issues: Whether the Tribunal erred in deleting the addition made under section 68 of the Income-tax Act, 1961 on account of share capital / share allotment by holding that the assessee had established the creditworthiness and genuineness of the investors.

Analysis: The Tribunal had undertaken a detailed appreciation of the materials placed on record, including the paper book filed by the assessee, and recorded findings of fact that the requisite documents had been produced before the Assessing Officer, the investors were active companies, and the investments had been made from their own resources. It also noted that addition had already been made in the hands of the subscribing company and that, for the assessment year in question, the assessee was not required to establish source of source.

Conclusion: No substantial question of law arose for consideration and the addition under section 68 was not liable to be interfered with.

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