TMI BlogLegal Analysis: Scrutiny of Share Capital and Premium Under Section 68 of the Income Tax ActX X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961 . This section deals with unexplained cash credits in the books of an assessee. The core question is whether the investments received by a company in the form of share capital and premium can be deemed as unexplained cash credit under Section 68 , particularly when the identity, creditworthiness of the shareholders, and the genuineness of the transactions are establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the transactions. The assessee typically discharges this burden through documents like PAN details, audited financial statements, bank statements, and proof of filing of income tax returns by the share applicants. 3. Shift of Burden Once the assessee discharges its initial burden, the onus shifts to the Income Tax Department to prove otherwise. If the department fails to provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Department's Stance The department's main contention was the non-compliance of summons by the assessee and the suspicion regarding the high share premium received by the assessee from companies with meager incomes. 3. Tribunal's Observation The Tribunal noted that the assessee had satisfactorily discharged the burden of proof laid down under Section 68 . It was ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar cases, emphasizing the need for a balanced approach between curbing tax evasion and protecting genuine business transactions from unnecessary tax burdens. It also highlights the importance of maintaining detailed and accurate documentation by companies to substantiate their financial transactions and withstand scrutiny from tax authorities. Full Text : 2024 (1) TMI 359 - ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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