Section 68 addition for share capital failed where the company was genuine and no routing of funds by the assessee was shown.

Share capital and share premium received by a duly incorporated assessee company could not be added under section 68 merely because the investor's source of funds or alleged control by others was doubted. The authorities had recorded that the assessee was a genuine incorporated entity, and there was no evidence that it had routed or passed on the money. In these circumstances, the Tribunal's affirmation of the first appellate order showed no perversity or legal error, and the Revenue's challenge failed.

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Issues: Whether addition under section 68 of the Income-tax Act, 1961 could be sustained in respect of share capital and share premium received by a duly incorporated assessee company from a third party.

Analysis: The assessee was found to be a genuine incorporated entity and the authorities below recorded categorical findings to that effect. The share investment was received from a third party, and any doubt about the source of funds in the hands of the investor, or about alleged control of that investor by other persons, did not by itself justify addition in the hands of the recipient assessee in the absence of evidence that the assessee itself had routed or passed on the money. The reasoning of the Tribunal, affirming the order of the first appellate authority, disclosed no perversity or serious error warranting interference.

Conclusion: The addition was not sustained against the assessee, and the challenge raised by the Revenue failed.

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