Section 68 share application money addition fails where identity, creditworthiness and genuineness are duly supported by records.

Share application money was held to be outside section 68 where the assessee produced confirmations, PAN details, bank statements, income-tax returns, allotment records and ledger entries, and the applicants also replied directly to notices under section 133(6). On those facts, the assessee had discharged the primary onus by proving identity, creditworthiness and genuineness of the share applicants. Any residual doubt had to be pursued by the Revenue against the applicants, not by making an addition in the assessee's hands, especially where production of the applicants was beyond the assessee's control. The addition was therefore treated as unsustainable and directed to be deleted.

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Issues: Whether the addition under section 68 on account of share application money of Rs. 18,25,000 was justified when the assessee furnished confirmations, PAN details, bank statements, income-tax returns, allotment details, and the applicants responded directly to notices under section 133(6).

Analysis: The assessee produced material to establish the identity, creditworthiness, and genuineness of the share applicants, including confirmations, PAN, bank statements, return acknowledgements, and ledger records. The applicants replied directly to the Assessing Officer under section 133(6), and three of the four applicants were allotted shares in subsequent years, while the fourth was reflected in the balance sheet as pending share application money. In these circumstances, the assessee had discharged the primary onus under section 68. If any further doubt remained, the proper course was for the Revenue to proceed against the applicants, rather than make an addition in the assessee's hands. The reliance on the principle that the assessee is not required to do the impossible also supported the assessee, since production of the applicants was beyond its control after their direct replies to the notices.

Conclusion: The addition under section 68 was not sustainable and was directed to be deleted, in favour of the assessee.

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