Consequential assessment limits prevent Section 68 share-premium additions beyond DCF valuation directions and require lender-specific loan-credit review.
Consequential assessments following revision must remain confined to the matters specified for verification. Where revision requires examination of DCF valuation and projections supporting share premium, an unexplained-cash-credit addition for the entire premium under Section 68 exceeds that scope; any excess over fair market value is addressed, subject to statutory conditions, under Section 56(2)(viib). For AY 2014-15, loan credits require lender-specific proof of identity, transaction genuineness and creditworthiness. The later proviso requiring proof of a lender's source of funds does not apply, and evidence relating to each lender must be cumulatively evaluated.
Issues: (i) Whether share premium could be assessed as unexplained cash credit under Section 68 in a consequential assessment pursuant to a revision direction limited to verification of DCF share valuation; and (ii) whether the unsecured-loan addition under Section 68 could be sustained without lender-wise evaluation of evidence and by requiring proof of the lenders' source of funds for AY 2014-15.
Issue (i): Whether share premium could be assessed as unexplained cash credit under Section 68 in a consequential assessment pursuant to a revision direction limited to verification of DCF share valuation.
Analysis: The revision direction required verification of the correctness of the DCF valuation and the projections underlying it; it did not direct that the share premium be treated as unexplained money. Where shares are found to have been issued above fair market value, the applicable statutory provision, subject to fulfilment of its conditions, is Section 56(2)(viib). Treating the entire share premium as an unexplained cash credit under Section 68 travelled beyond the scope of the consequential assessment.
Conclusion: The share-premium addition under Section 68 was unsustainable and was deleted, in favour of the assessee.
Issue (ii): Whether the unsecured-loan addition under Section 68 could be sustained without lender-wise evaluation of evidence and by requiring proof of the lenders' source of funds for AY 2014-15.
Analysis: For AY 2014-15, the assessee was required to establish the identity of each lender, genuineness of the transaction, and lender's creditworthiness. The substituted first proviso to Section 68, effective from 01.04.2023, could not impose an additional statutory obligation to prove the source from which a lender obtained the funds. The documentary material relating to 52 lenders, including confirmations, income-tax particulars, bank statements, ledger accounts, TDS details and repayment evidence, required cumulative lender-wise examination. Generalised rejection without addressing the evidence relating to individual lenders was insufficient.
Conclusion: The unsecured-loan addition was set aside for limited lender-wise fresh adjudication under the law applicable to AY 2014-15, with the assessee succeeding to that limited extent.
Final Conclusion: A consequential assessment must remain within the confines of the revision directions, and the disputed loan credits must be examined individually under the pre-substitution requirements of Section 68.
Ratio Decidendi: In a consequential assessment following revision, an addition cannot travel beyond the matters directed for verification; for a pre-substitution assessment year, Section 68 requires proof of identity, genuineness and creditworthiness, but does not statutorily require proof of the creditor's source of funds.