High Court · Rajasthan2024§68 · §132
Rajasthan High Court on §68 share application money: a statement alone, later retracted, cannot sustain the addition
Can an addition survive on an admission alone, without corroborative evidence?
No. An admission alone is not conclusive; without corroborative material, the addition of Rs. 3 crore share application money fails.
Reviewed by Sri P. Soma Shekar Reddy, IRS (R), Commissioner of Income Tax (Retd. / VRS) · Published 2026-07-07
Facts in brief
- During verification of seized soft data, the search team suspected Rs. 3 crore received as share application money was bogus, based on a broker's statement.
- The person who introduced the money initially accepted, then retracted; the company provided all information sought.
- The AO made the addition solely on the statement; CIT(A) deleted it and ITAT affirmed.
Issue before the bench
Whether an uncorroborated (and retracted) statement sustains a §68 addition.
Held
The High Court dismissed the departmental appeal, applying the Supreme Court in Andaman Timber Industries and Pullangode Rubber Produce Co.: admission alone is not conclusive without corroboration.
Practitioner takeaway
Where the only evidence is a statement, especially a retracted one, cite Andaman Timber and demand the corroborative material; the addition should not survive appeal.
More on this topic: Sections 68 & 69: Unexplained credits and investments · Need this drafted? Scrutiny Assessment Support for CA Firms