Section 68 Not Applicable If Share Capital is Received From Non-Resident

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The issue of shares at premium by private limited company is the root of money laundering by black money holders.Thus , it is usual for the assessing officer to suspect receipt of share capital . It has now become almost routine to raise questions about receipt of new share capital by a company assessee. The reasons is simple. Section 68 of the Income Tax Act gives them power to ask an assessee company to explain if it receives share application money or share capital during the assessment year. The restricted issue for this post is whether the AO can consider the receipt of share capital from a non-resident person as unexplained cash credit if the assessee company did not explain creditworthiness of the said non-resident company?

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