Section 68 share capital additions fail where investor identity, net worth and transaction genuineness are established.

Share capital and share premium could not be added under income-tax anti-abuse principles where the assessee, after Rule 46A evidence was admitted for lack of adequate assessment-stage opportunity, filed material showing the subscribers' identity, bank statements, return particulars and net worth. The tribunal treated identity as undisputed and held that creditworthiness must be judged on overall financial capacity and accumulated net worth, not only on a single year's income. It also reiterated that the assessee was not required to prove the source of source for the relevant year. The section 68 addition was deleted.

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Issues: Whether the addition made under section 68 on account of share capital and share premium received from three subscribers was sustainable, and whether the additional evidence admitted under Rule 46A established the subscribers' identity, creditworthiness, and genuineness of the transaction.

Analysis: The additional evidence was admitted as the assessee had not been given adequate opportunity at the assessment stage. The material placed before the first appellate authority showed the net worth, bank statements, and return particulars of the share subscribers, and the Revenue's objection rested mainly on the low income reflected in the returns for the relevant year. The record showed that identity of the investors was not in dispute, the subscription to shares was genuine, and creditworthiness had to be judged from the overall financial capacity and accumulated net worth rather than by a narrow comparison with income of a single year. The assessee was not required, for the relevant year, to prove the source of source.

Conclusion: The addition under section 68 was rightly deleted, and the Revenue's challenge failed.

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