M/s Cap Vanijya (P) Ltd. is admittedly a shell/paper company as the director and the controlling person has accepted. As regards Cap Vanijya (P) Ltd. we find that undoubtedly assessee has submitted necessary evidences and details at the primary stage but the Revenue came with a counter to disprove the evidences of assessee with the help of report of Dy. Director of Income-Tax (Inv), Kolkata as well as the statement on oath u/s 131 of the Act of the Director of Cap Vanijya (P) Ltd. and the controlling person Mr. Manoharlal Bangalia clearly accepting this company as a paper/shell company.
Revenue is believed to prove that the activities undertaken by the alleged company are not meeting commercial prudence and the working of this company is merely to provide accommodation entries. Against the counter evidence of the Department proving the company to be a paper company, assessee miserably failed to bring any strong evidence to justify its plea of genuineness and creditworthiness of the alleged cash credit of Rs.18,00,000/-. We are, therefore, of the firm view that ld. Commissioner of Income Tax(A) has rightly confirmed the addition u/s 68 of the Act of Rs.1 8,00,000/- received as share capital and premium from Cap Vanijya (P) Ltd. which is a shell/paper company.
NO ADDITION ON MERE INDICATION ABOUT SOMETHING HAPPENING ABNORMAL
In the given case the alleged two companies which have responded to the Department’s notices, all details have been filed then it was on the part of Revenue to further deeply examine the modus operandi of the companies with the help of investigation. In the given case the report of Investigation Wing, Kolkata, heavily relied on by the Revenue authorities is having no mention of the alleged two companies. Undoubtedly to a great extent the picture evolving out of the financial statements of the alleged two companies gives an indication about something happening abnormal in their working but that merely cannot be basis to doubt the genuineness and creditworthiness because in various investment companies also one can find that there are no fixed assets and investments are regularly made in other companies. Duty is heavily casted on the Revenue in such type of cases where the burden of proving has been shifted by the assessee to the Revenue by way of furnishing all requisite documents and evidences. It is on the Revenue to further dig out some material information including the statements of persons at helm of affairs of such companies. When the Assessing Officer while confirming the addition has merely taken the information of Cap Vanijya (P) Ltd. being shell/paper company and by comparing the financial patter has confirmed the addition but nowhere any further investigation was carried out even when necessary details were available with him.
RELEVANT EXTRACT OF THE ITAT ORDER
6. We have heard the rival contentions and perused the record placed before us and also gone through the judgments/decisions quoted by both the parties. Though several grounds have been raised but the only issue involved in this appeal revolves round the alleged unexplained cash credit of Rs.61 lacs added to the income of the assessee u/s 68 of the Act by ld. Assessing Officer and duly confirmed by ld. Commissioner of Income Tax(A). We observe that during the course of assessment proceedings ld. Assessing Officer wanted to verify the identity, genuineness and creditworthiness of the following three parties which have subscribed to the assessee’s share capital:-
