Legal Analysis: Scrutiny of Share Capital and Premium Under Section 68 of the Income Tax Act

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..... 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 established. Analysis of .....

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..... he 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 provide evidence contrary to the submission .....

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..... t'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 observed that the share applicants had sufficient net worth .....

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