Section 68 share capital additions fail when identity, creditworthiness and genuineness are proved through primary evidence.

Section 68 cannot be applied to share capital and share premium merely because the subscribers' directors did not personally appear, where the assessee has produced primary evidence of identity, creditworthiness and genuineness. Documentary material such as confirmations, financial statements, bank details and source-of-funds records, together with subscriber responses to notices and demonstrated net worth, was treated as sufficient to discharge the initial onus. In the absence of any specific discrepancy or adverse material gathered by the Assessing Officer, the burden shifted to the Revenue to make meaningful enquiry. On that basis, the addition was not sustainable and was deleted.

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Issues: Whether the addition made under section 68 on account of share capital and share premium received from corporate subscribers was sustainable in the absence of personal appearance of the subscribers' directors and whether the assessee had discharged the primary onus to prove identity, creditworthiness and genuineness.

Analysis: The assessee had filed documentary evidence regarding each subscriber, including confirmations, financial statements, bank details and source of funds. The subscribers responded to notices and the material on record showed sufficient net worth and routing of investments through banking channels. The mere non-appearance of directors in response to summons, without any specific discrepancy in the evidence or any adverse material gathered by the Assessing Officer, was held insufficient to dislodge the assessee's explanation. The reasoning also applied the settled principle that once the assessee produces primary material establishing identity, creditworthiness and genuineness, the burden shifts to the Revenue to make meaningful enquiry before invoking section 68.

Conclusion: The addition under section 68 was not justified and had to be deleted.

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