Share application money addition under section 68 deleted where investor identity and documentary trail were duly proved.

Share application money was examined under section 68 of the Income-tax Act, where the assessee supported the investor's identity and transaction with audited financials, return filings, bank statements, board resolution, allotment records, and confirmation. The investor also complied directly with the section 133(6) notice and explained the source of funds, which supported the genuineness of the investment and left no doubt about the investor's identity. On those facts, the Tribunal treated the Revenue's contrary precedent as distinguishable because it involved non-existent or unverifiable investors, and the addition under section 68 was deleted.

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Issues: Whether the addition of share application money under section 68 of the Income-tax Act, 1961 was justified when the investor company furnished confirmations, financial documents, and complied with notice under section 133(6).

Analysis: The assessee produced the investor's audited financials, return of income, confirmation, bank statements, board resolution, and allotment documents. The investor also responded directly to the Assessing Officer's notice under section 133(6) and explained the source of funds. The materials showed that the investor was an assessed entity and the identity of the investor was not in doubt. The Tribunal held that the facts were closer to the situation where documentary evidence and direct compliance with enquiry notices established the transaction, and the contrary precedent relied on by the Revenue was factually distinguishable because that case involved non-existent or unverifiable investors.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the issue.

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