In PCIT v. Shipra Enclave (P.) Ltd., the Calcutta High Court dismissed the Revenue’s appeal, holding that share capital additions cannot be based on mere suspicion or non-appearance of directors when documentary evidence exists.
The assessee raised ₹6.22 crore from 15 corporate investors. The AO treated the amount as unexplained cash credit, citing non-appearance of directors and branding the investors as “shell entities”. However, the assessee furnished PAN, ITRs, audited financials, and banking confirmations.
The High Court ruled that credible documentation, banking channels, and investor confirmations prevail over subjective assumptions. Non-appearance of directors alone does not vitiate genuine transactions. Suspicion, however strong, cannot replace concrete evidence.
The decision reinforces an evidence-driven approach, offering clarity and reassurance to taxpayers facing similar scrutiny under section 68
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