Mere furnishing Shareholders ID not sufficient to discharge onus u/s 68

Section 68 of the Income Tax Act is a provision that enables the assessment of any sum found credited in the books of an assessee where no satisfactory explanation is offered by the assessee to explain the same. Courts have consistently held that the three guiding principles in the context of Section 68 would be the establishment of the identity and credit worthiness of the creditor and the genuineness of the transaction. In the present case, only the first of the three conditions has been established by the assessee. Neither the credit worthiness nor the genuineness stand explained. The stand of the assessee to the effect that any transaction styled as a contribution to share capital would stand excluded from the purview of Section 68 is too wide to be accepted. The language of Section 68 does not admit of such an interpretation.

Result of inquiries carried out by the department should reveal and satisfy transparently all parameters of section 68, concurrently. In the present case, the finding of fact is to the effect that neither the credit worthiness nor the genuineness of the parties has been established by the assessee. The detailed investigations carried out by the assessing officer establish the position that the contributors to share capital were persons of insignificant means and their credit worthiness to have made the contributions has not been established. The assessing authority had put the result of his inquiries to the assessee granting him opportunity to offer its explanations. The appellant however failed to establish the genuineness of the cash contributions as well as the capacity of the persons to have made such contributions in the first place. The findings of the fact arrived at by the tribunal are accepted and nothing has been placed on record to show that they are perverse.