Income Tax Appellate Tribunal - Mumbai
Nishita Infrastructure Private ... vs Principal Commissioner Of Income Tax - ... on 27 February, 2019
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ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11
M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" Bench, Mumbai
Before Shri G.S.Pannu, Vice President
and Shri Ravish Sood, Judicial Member
ITA Nos. 2752 - 2754/Mum/2018
(Assessment Years: 2010-11, 2011-12 & 2012-13)
M/s Nishita Infrastructure Pvt. Principal Commissioner Income
Ltd., 145-C, Sangam, 4th Floor, Tax (Central)-4,
Vs.
Dr. Vigas Street, Kalbadevi Mumbai
Mumbai-400002
PAN - AACCN6922D
(Appellant) (Respondent)
Appellant by: Shri Rakesh Joshi, A.R
Respondent by: Shri Jasbir Chouhan, D.R
Date of Hearing: 12.02.2019
Date of Pronouncement: 27.02.2019
ORDER
PER RAVISH SOOD, JM
The present appeals filed by the assessee are directed against the respective orders passed by the Principal Commissioner of Income Tax (Central)-IV, Mumbai (hereinafter referred to as Pr. CIT) under Sec. 263 of the Income Tax Act, 1961 (for short 'IT Act') for A.Y. 2010-11, AY. 2011-12 and A.Y. 2012-13, each dated 28.02.2018. As common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. We shall first advert to the appeal filed by the assessee for A.Y. 2010-11. The assessee assailing the order of the Pr. CIT has raised before us the following grounds of appeal:
P a g e |2 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax "The following grounds of Appeal are without prejudice to each other: -
1. The Learned PCIT has erred in law as well as on f acts while passing Revision Order u/s.263 of the Income Tax Act, 1961 for the assessment order uls.143(3) r.w.s 153A of the Act, 1961, passed by the Learned Assessing Off icer af ter making adequate enquiries and application of mind.
2. The Learned PCIT has erred in law as well as on facts while considering the order passed by the Learned Assessing Officer u/s.
143(3) r.w.s 153A of the Income Tax Act, 1961 as erroneous and prejudicial to the interest of the revenue, without appreciating the facts and circumstances of the case.
3. In the f acts and in the circumstances of the case and in law, the Ld. PCIT has erred in exercising his revisionary powers u/s.263 in relation to completed assessment made u/s.153A despite the f act that the same was duly approved by AddI. Commissioner of Income Tax u/s.153D of the Income Tax Act, 1961.
4. In the f acts and in the circumstances of the case and in law, the Ld. PC IT has erre d in exercis ing his revis ion ary po wers u/s. 263 of the In c o me T ax A c t, 19 61, with o u t ap pre c ia tin g th e f ac t th a t th e o rde r which is subjec t matter of revision, itself is nullity in law, hence any further proceedings thereon cannot be a valid proceedings.
5. On the facts and the circumstances of the case and in law, the Learned PCIT erred in passing order under Section 263 of the Income Tax Act, 1961 in violation of the principle of natural justice by passing order u/s 263 of the Income Tax Act, 1961, on the issues which were not part of show cause notice.
6. The Learned PCIT has erred in law as well as on f acts white passing order u/s 263 of the Income Tax Act, 1961 on the plea that there is no n e x u s b e t w e e n t h e c a p i t a l a s s e t s p u r c h a s e s a n d s h a r e c a p i t a l i n t r o d u c t i o n w i t h o u t p o i n t e d o u t a n y d ef e c t i n t h e r e c o n c i l i a t i o n submitted before the AO as well as before investigation wing based on which order U/s 143(3) r.w.s. 153A was passed.
7. The Learned PCIT has erred in Law as well as on facts while passing order u/s 263 of the Income Tax Act, 1961 without considering the fact that the issue of share capital has already being approved by the order of Hon'ble ITAT in the case of M/s Wellknown Technology Pvt. Ltd. for A Y 2009-10.
8. The appellant craves leave to add, amend, alter or delete the said ground of appeal.
2. Briefly stated, the assessee is a company belonging to the Wellknown group of companies. Search and seizure action under Sec. 132(1) of the IT Act was carried out in the case of Wellknown group of companies on 23.05.2013 and on subsequent dates by the DDIT (Inv.), P a g e |3 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax Unit-III (2), Mumbai. Subsequently, assessment in the case of the assessee company viz. M/s Nishita Infrastructure Pvt. Ltd., was framed under Sec.143(3) r.w.s. 153C of the IT Act on 01.04.2015 and its returned income of Rs. Nil was accepted.
3. The Pr. CIT after calling for and perusing the records of the assessee observed that the assessments in the case of the captioned assessee were completed for A.Ys. 2008-09 to 2014-15 under Sec. 143(3) r.w.s. 153C of the IT Act, determining its total income at Nil in all the said years, as under:
AY Returned Total Assessed Date of Assessment
Income Addition Income Order.
2008-09 Nil Nil Nil 01.04.2015
2009-10 Nil Nil Nil 01.04.2015
2010-11 Nil Nil Nil 01.04.2015
2011-12 Nil Nil Nil 01.04.2015
2012-13 Nil Nil Nil 01.04.2015
2013-14 Nil Nil Nil 01.04.2015
2014-15 Nil Nil Nil 01.04.2015
It was observed by the Pr. CIT that in the course of the assessment framed in the case of a group concern of the assessee viz. M/s Wellknown Polyesters ltd., it was noticed by the A.O that the said concern had debited bogus capital expenses in its 'books of accounts'. The Pr. CIT noticed that the A.O while framing the assessment in the case of the aforementioned group entity viz. M/s Wellknown Polyesters ltd. had observed that the purchase consideration pertaining to the bogus purchase of capital assets was routed back through various shell companies who would subscribe the preference shares (with huge premium)/share application money of the other group entities viz. (i) M/s Wellknown Technologies Pvt. Ltd.; (ii) M/s Wellknown Textiles Industries Pvt. Ltd; (iii) M/s Bradma Logistics Parks Pvt. Ltd.;
P a g e |4 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax
(iv) M/s Ashtavinayak Agro Forms Pvt. ltd.; (v) M/s Nishita Infrastructure Pvt. Ltd. etc. The Pr. CIT was of the view that the A.O while framing the assessment in the case of the assessee viz. M/s Nishita Infrastructure Pvt. Ltd. had simply obtained the list of such shell companies through which share application money (with premium) was received and/or preference shares were allotted and had failed to make any inquiries and therein verify as to whether the source of such funds had any nexus with bogus purchase bills booked by the aforesaid group entity viz. M/s Wellknown Polyesters Ltd. It was observed by the Pr. CIT that the assessee company had also not filed any details which would prove the nexus of such share capital/share application money with the bogus capital expenses that were debited in the books of its group entity viz. M/s Wellknown Polyesters Pvt. Ltd. Apart therefrom, the Pr. CIT also held a conviction that in case a clear nexus between the receipt of share capital/share application money with the booking of bogus capital expenses by the aforementioned group concern viz. M/s Wellknown Polyesters Pvt. Ltd. would have been established, then the assessee would had corrected its books of accounts after the search and seizure proceedings, which however was not the case and the amount of the preferential share capital still remained as such in its books of accounts. In the backdrop of his aforesaid deliberations, the Pr. CIT was of the view that the failure on the part of the A.O to examine the aspect of taxability of such share capital together with premium and/or share application money in the hands of the assessee company under Sec.68 and/or Sec. 2(24)(iv) of the IT Act had rendered the order passed by him under Sec. 143(3) r.w.s. 153C, dated 01.04.2015 as erroneous, in so far as it was prejudicial to the interest of the revenue in terms of Explanation 2 to Sec. 263 of the IT Act.
P a g e |5 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax
4. On the basis of his aforesaid observations the Pr. CIT called upon the assessee to explain as to why the assessment framed by the A.O under Sec.143(3) r.w.s. 153C, dated 01.04.2015 may not be revised under Sec. 263 of the IT Act. The reply filed by the assessee in order to impress upon the Pr. CIT that the assessment framed by the A.O under Sec.153C r.w.s. 143(3), dated 01.04.2015 was not amenable for revision under Sec. 263 of the IT Act, however did not find favour with him. The Pr. CIT holding a conviction that as the assessee had utterly failed to discharge the onus cast upon him as regards proving the genuineness of the share capital, therefore, the acceptance of the share capital as genuine by the A.O while framing the assessment without making any verifications had rendered the order passed by him under Sec. 143(3) r.w.s. 153C, dated 01.04.2015 as erroneous, to the extent the same was prejudicial to the interest of the revenue. It was observed by the Pr. CIT that the A.O had failed to carry out necessary enquiries as were warranted by the facts and circumstances of the case and had also ignored the overwhelming evidences that were gathered during the course of the search proceedings conducted under Sec.132(1) on 25.05.2013. On the basis of his aforesaid observations the Pr. CIT characterised the assessment framed by the A.O under Sec. 143(3) r.w.s. 153C as erroneous, insofar it was prejudicial to the interest of the revenue and therein set aside the matter to the file of the A.O with a direction to analyse the chain of circuitous transactions and pass a fresh order after affording a reasonable opportunity to the assessee to discharge its onus.
5. The assessee being aggrieved with the order passed by the Pr. CIT under Sec. 263 of the IT Act, dated 28.02.2018 has carried the matter in appeal before us. The ld. Authorized Representative (for short 'A.R') for the assessee at the very outset of the hearing of the appeal submitted that the issue involved in the present case was P a g e |6 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax squarely covered by a consolidated order passed by a coordinate bench of the Tribunal i.e ITAT 'G' bench, Mumbai in the case of similarly placed group entities viz. (i) M/s Wellknown Technologies Pvt. ltd, Vs. Pr. CIT(Central)-4; (ii) M/s Wellknown Enterprises Pvt. Ltd. Vs. Pr. CIT(Central)-4; and (iii) M/s Wellknown Textile Industries Pvt. Ltd. Vs. Pr. CIT(Central)-4. Apart therefrom, it was submitted by the ld. A.R that the Tribunal had also deliberated at length on the facts involved in the case of M/s Wellknown Polyesters Ltd. which had formed the very genesis of the issue under consideration. It was averred by the ld. A.R that in the case of another group entity viz. M/s Wellknown Technologies Pvt. Ltd., a similar addition towards introduction of bogus share capital was made by the A.O while framing the assessment under Sec. 143(3) for A.Y. 2009-10. On appeal, the aforesaid addition was deleted by the CIT(A), and the latters order was upheld by the Tribunal, vide its order dated 21.12.2015. In the backdrop of his aforesaid contention, it was submitted by the ld. A.R that now when the similar issue under consideration pertaining to introduction of bogus share capital resulting from booking of bogus capital expenditure by M/s Wellknown Polyester Ltd. had already been deleted by the Tribunal in the case of the aforementioned group entity viz. M/s Wellknown Technologies Pvt. Ltd., therefore, the Pr. CIT by brushing aside the said material fact had traversed beyond the scope of his jurisdiction and by adopting a contrary view had revised the assessment framed by the A.O u/s 143(3) r.w.s 153C of the IT Act. It was submitted by the ld. A.R that as the view taken by the A.O could safely be held to be legally correct and a possible view, thus on the said basis itself the exercise of revisional jurisdiction by the Pr. CIT stood excluded. Apart therefrom, it was submitted by the ld. A.R. that the Tribunal while disposing off the appeal in the case of the other group entity i.e. M/s P a g e |7 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax Wellknown Technologies Ltd. had observed that in the course of the search and seizure proceeding conducted on M/s Wellknown Polyester Ltd. no incriminating document except for that pertaining to booking of bogus capital expenditure and the admission by the latter of routing it back to the group companies was found from its premises. It was submitted by the ld. A.R that the Tribunal taking support of the aforesaid facts had concluded that in the absence of any incriminating material having been found during the course of search and seizure proceedings, there was neither any reason nor any justification on the part of the A.O to have further made a detailed inquiry in respect of the source of the share capital in the case of the aforesaid group entity viz. M/s Wellknown Technologies Ltd. On the basis of his aforesaid contention it was the claim of the ld. A.R that as the assessment framed by the A.O under Sec. 143(3) r.w.s. 153A, dated 01.04.2015 did not suffer from any infirmity, therefore, the Pr. CIT had wrongly revised the said order under Sec. 263 of the IT Act.
6. Per contra, the ld. Departmental Representative (for short 'D.R') relied on the order passed by the Pr. CIT. It was submitted by the ld. D.R that as the AO while framing the assessment under Sec. 143(3), r.w.s. 153A, dated 01.04.2015 had not made any verification in respect of the bogus share capital appearing in the books of accounts of the assessee, therefore, the Pr. CIT observing that the order passed by him was erroneous, in so far it was prejudicial to the interest of the revenue, had thus validly revised the same under Sec. 263 of the I.T. Act.
7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, a group entity of the assessee viz. M/s Wellknown Polyesters Ltd. and its directors were subjected to search P a g e |8 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax and seizure proceedings under Sec.132(1) of the I.T. Act on 23.05.2013. In the course of the search and seizure proceedings Shri Anil Gupta, CMD of M/s Wellknown Polyesters Ltd. had admitted that the said concern had debited capital expenditure on account of purchase of bogus assets aggregating to Rs. 188.39 crores during the period relevant to Financial Year 2008-09 to 2013-14. It was stated by him that in turn the aforesaid amount was routed back through various shell companies, and in the said process amounts were introduced into the group concerns viz. (i) M/s Wellknown Technologies Pvt. Ltd.; (ii) M/s Wellknown Textiles Industries Pvt. Ltd.;
(iii) M/s Bradma Logistics Parks Pvt. ltd; (iv) M/s Ashtavinayak Agro Firms Pvt. Ltd; (v) M/s Nishita Infrastructure Pvt. Ltd. etc, in the form of preference shares (with huge premium)/share application money, which thereafter was brought back in the books of M/s Wellknown Polyesters Ltd., by subscribing its preference shares with premium by its aforementioned group entities. In sum and substance, the funds of M/s Wellknown Polyesters were siphoned off in the garb of payments made for purchase of capital assets, which as a matter of fact was never made. We find that the aforementioned group entity viz. Wellknown Polyester Ltd. by capitalising the aforesaid bogus purchase of assets had claimed depreciation on the same. However, the said concern viz. M/s Wellknown Polyesters Ltd. had in its return of income that was filed in compliance to notice issued under Sec.153A withdrawn its claim of depreciation on such bogus assets.
8. We find that the Pr. CIT had observed that the A.O while framing the assessment under Sec.143(3) r.w.s. 153A, dated 01.0.2015 in the case of the present assessee viz. M/s Nishita Infrastructure Pvt. Ltd,, which was one of the group entity in which the consideration pertaining to bogus purchases of M/s Wellknown Polysters Ltd. was routed through various shell companies in the form of preference P a g e |9 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax shares (with huge premium)/share application money, had failed to make any inquiry in relation to the share application money/share premium received through the said shell companies. The Pr. CIT observed that the A.O while framing the assessment in the case of the assessee had simply obtained the list of the shell companies through which share application money (with premium) was received and/or preference shares were allotted, and had failed to make any inquiries in order to ascertain whether the source of such fund had any nexus with the bogus purchase bills booked by the other group entity viz. M/s Wellknown Polyesters Pvt. Ltd. Apart therefrom, we find that the Pr. CIT had also observed that the assessee too in the course of the assessment proceedings had failed to establish any nexus of such share capital/share application money with the bogus purchases made by the aforementioned group entity viz. M/s Wellknown Polyesters Pvt. Ltd. Rather, the Pr. CIT was of the view that in case the source of the share application money (with premium) received by the assessee from the shell companies would had any nexus with the transactions of booking of bogus capital expenditure by the other group entity viz. M/s Wellknown Polyester Pvt. Ltd., then the assessee would had corrected its books of accounts after search and seizure proceedings. In sum and substance, the Pr. CIT being of the view that the failure on the part of the A.O to make necessary verification of the source of share application money received and/or (preferential) share capital [with premium] introduced in the books of accounts of the assessee, had thus rendered the assessment order passed by him under Sec. 143 r.w.s. 153C as erroneous, insofar as it was prejudicial to the interest of the revenue in terms of Explanation 2 to Sec.263 of the IT Act.
9. We have deliberated at length on the issue under consideration, and are unable to persuade ourselves to subscribe to the view taken P a g e | 10 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax by the Pr. CIT for revising the order passed by the A.O under Sec. 143(3) r.w.s. 153C, dated 01.04.2015. We find that pursuant to the search and seizure proceedings conducted under Sec. 132(1) on M/s Wellknown Polyesters Ltd. and its directors, it stood revealed that the said concern had debited bogus capital expenditure in its books of accounts. The amount of purchase consideration was thereafter routed through various shell companies and was introduced into the books of accounts of the group concerns viz. (i) M/s Wellknown Technologies Pvt. Ltd.; (ii). M/s Wellknown Textiles Industries Pvt. Ltd.; (iii). M/s Bradma Logistics Parks Pvt. ltd; (iv). M/s Ashtavinayak Agro Firms Pvt. Ltd; (v). M/s. Nishita Infrastructure Pvt. Ltd. etc., in the form of preference shares [with huge premium]/share application application money. Subsequently, the funds were finally brought back in the books of the aforementioned group entity viz. M/s Wellknown Polyesters Ltd. by the group concerns who would subscribe its preference shares at a premium. We find that in the case of one of the group entity viz. M/s Wellknown Technologies Pvt. Ltd. certain additions were made by the A.O on account of unexplained share capital while framing the assessment under Sec.143(3) of the I.T. Act. On appeal, the aforesaid addition was deleted by the CIT and the latters order was confirmed by the Tribunal. Subsequently, pursuant to search and seizure proceedings conducted on M/s Wellknown Polyesters Ltd. and its directors, assessment was framed in the case of the said group entity viz. M/s Wellknown Technologies Pvt. Ltd. under Sec.143(3) r.w.s. 153A of the IT Act. The A.O while framing the assessment in the hands of the said group entity did not make any addition in respect of the bogus share capital for two reasons viz. (i) that the booking of the bogus capital expenditure in the books of account of M/s Wellknown Polyester Ltd. would have tax implication only to the extent that the depreciation claimed by the said concern on P a g e | 11 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax such bogus capital assets was not to be allowed; and (ii) that even otherwise in the absence of any incriminating material found during the course of the search proceedings in the case of the aforementioned group entity viz. M/s Wellknown Technologies Pvt. Ltd, no addition under Sec.153C was permissible in the backdrop of the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Continental Warehousing Corporation (2015) 374 ITR 645 (Bom). The concluded assessment framed by the A.O under Sec. 143(3) r.w.s. 153A in the case of the aforementioned group entity viz. M/s Wellknown Technologies Pvt. Ltd. was however revised by the CIT under Sec.263. The CIT as in the case of the assessee before us, had observed that as the A.O while framing the assessment under Sec. 143(3) r.w.s. 153A had failed to make necessary verifications in respect of the bogus share capital that was introduced in the books of accounts of the aforementioned group entity viz. M/s Wellknown Technologies Pvt. Ltd., therefore, the assessment framed by him was rendered as erroneous, in so far it was prejudicial to the interest of the revenue. On appeal, the Tribunal after deliberating at length on the facts emerging from booking of bogus capital expenditure by M/s Wellknown Polyester Ltd., and the subsequent siphoning of its funds in the form of bogus share capital (with huge premium) into the books of accounts of the group entities through the facilitator shell companies, observed that the assessments pursuant to the search and seizure proceedings were conducted in the hands of the various group entities under Sec.143(3) r.w.s 153A on the same date by the same A.O. The Tribunal after deliberating at length on the modus operandi as per which the funds were finally brought back into the books of accounts of M/s Wellknown Polyesters Ltd, therein concluded that the effect of the aforesaid admitted state of affairs was that the fictitious depreciation that was claimed by the aforementioned group entity viz.
P a g e | 12 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax M/s Wellknown Polyester Ltd was withdrawn and offered for tax. The Tribunal observed that in the backdrop of the aforesaid facts no further addition in respect of the routing of the funds of the aforementioned group entity viz. M/s Wellknown Polyester Ltd. was called for in the hands of the assessee. In so far the observation of the CIT that the A.O had failed to consider the addition in respect of the bogus share capital under Sec. 68 of the I.T. Act while framing the assessment was concerned, it was observed by the Tribunal that the complete outflow in the form of capital expenditure of M/s Wellknown Polyester Ltd., and inflow in the form of bogus capital in the hands of the group entities was duly reconciled and nothing adverse was either noted by the A.O or the investigation wing. Apart therefrom, it was observed by the Tribunal that on the one hand there were fictitious assets in the balance sheet of M/s Wellknown Polyester Pvt. ltd., and on the other hand consideration paid for purchase of such fictitious assets had been routed back through the group companies in the form of share capital and share premium through shell companies that had facilitated the same. In the backdrop of the aforesaid facts, it was observed by the Tribunal that now when the aforesaid group entity viz. M/s Wellknown Polyester Ltd. had withdrawn the fictitious depreciation and the A.O after deliberating on the modus operandi and the list of the shell companies which had acted as facilitators had not made any addition under Sec.68, therefore, it could safely be concluded that he had arrived at a plausible view that there was an inextricable nexus between the bogus assets on the one side of the balance sheet of the aforementioned group company viz. M/s Wellknown Polyester Ltd., and the bogus share capital coming from the same source.
10. We have deliberated at length on the issue under consideration and are of the considered view that M/s Wellknown Polyester Ltd.
P a g e | 13 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax after booking bogus capital expenditure, had in the process of routing back the purchase consideration through various shell companies had introduced the same into its group concerns, which included amongst others the assessee company viz. M/s Nishita Infrastructure Pvt. Ltd. In our considered view the receipt of share application money (along with premium) by the assessee company [as being a group entity] which had facilitated siphoning of the funds of M/s Wellknown Polyester ltd. has a clear inextricable nexus with the aforesaid transaction of booking of bogus capital expenditure by M/s Wellknown Polyester Ltd. In fact, now when M/s Wellknown Polyester Ltd. had in its return of income filed in compliance to notice under Sec.153A withdrawn its claim of fictitious depreciation amounting to Rs.60,14,71,456/- on the value of the bogus assets as were claimed to have been purchased, and the same had been admitted by the A.O after necessary deliberations on the modus operandi so adopted by the assessee, therefore, the share application money (along with premium) received by the assessee from the shell companies could not be characterised as an unexplained cash credit in terms of Sec. 68 of I.T. Act. In sum and substance, the receipt of the bogus share capital (along with premium) by the assessee from the shell companies only formed a part of the chain of events involved in routing back of the purchase consideration pertaining to the bogus purchase of capital assets claimed to have been made by the aforementioned group entity viz. M/s Wellknown Polyester Ltd. We are unable to persuade ourselves to subscribe to the observations of the Pr. CIT that an inextricable nexus between the claim of bogus capital expenditure by the aforementioned group entity viz. M/s Wellknown Polyester Ltd. and receipt of bogus share application money by the assessee from the shell companies had not been established. We are of a strong conviction that the view taken by the A.O that the amount of bogus P a g e | 14 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax share application received by the assessee has a clear and an established inextricable nexus with the bogus capital expenditure debited by M/s Wellknown Polyster Ltd., hence no addition of the said amount was liable to be made in the hands of the assessee under Sec. 68 was a permissible and a possible view. In fact, the aforesaid view so arrived at by the A.O had been acted upon by the revenue while accepting the withdrawal of claim of depreciation amounting to Rs. 60,14,71,456/- by M/s Wellknown Polyester Ltd. in its return of income filed in response to notice issued under Sec.153A of the IT Act. Be that as it may, in our considered view the observation of the A.O that no addition under Sec. 68 and/or Sec. 2(24)(iv) of the IT Act was liable to be made in respect of the bogus share application money received by the assessee from the shell companies could not have been dislodged by the Pr. CIT in exercise of his revisional jurisdiction under Sec. 263 of the IT Act. We have further perused the order passed by the Tribunal in the case of other group entity viz. M/s Wellknown Technologies Pvt. ltd. Vs. Pr. CIT (Central)-4 [ITA No. 2912- 2915/Mum/2018; dated 03.12.2018] for A.Ys. 2009-10 to 2013-14, and find that the order passed by the CIT under Sec.263 on similar lines in the case of the said group entity had been vacated by the Tribunal. Apart therefrom, we also find substantial force in the contention of the ld. A.R that as during the course of the search and seizure proceedings conducted on M/s Wellknown Polyester Ltd. and its directors no incriminating material pertaining to receipt of bogus share capital (along with premium) was found, therefore, in the backdrop of the judgment of Hon'ble High Court of Bombay in the case of CIT Vs. Continential Warehousing Corporation (2015) 374 ITR 645 (Bom) no addition on the said aspect could have been made by the A.O while framing the assessment under Sec.153C r.w.s. 143(3) of the IT Act.
P a g e | 15 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax
11. We thus in terms of our aforesaid observations are of the considered view that the order passed by the A.O under Sec. 143(3) r.w.s. 263, dated 01.04.2015 cannot be held to be erroneous. As a result thereof, the very exercise of the revisional jurisdiction by the Pr. CIT culminating into an order under Sec.263, dated 21.03.2018 cannot be sustained and is liable to be vacated.
12. We thus set aside the order passed by the Pr. CIT under Sec.263 of the IT Act and restore the order passed by the A.O under Sec. 143(3) r.w.s 153C of the IT Act, dated 01.04.2015.
13. The appeal of the assessee is allowed.
AY.2011-12 ITA No. 2753/Mum/2018
14. We shall now advert to the appeal filed by the assessee for A.Y. 2011-12. Briefly stated, the assessment under Sec.143(3) r.w.s. 153A, dated 01.04.2015 of the IT Act was framed by the A.O and the returned income of Rs.Nil was accepted.
15. The Pr. CIT being of the view that as the A.O while framing the assessment under Sec. 143(3) r.w.s. 153C, dated 01.04.2015 had failed to examine the bogus share capital (along with premium) received by the assessee during the year, therefore, the assessment framed by him was rendered as erroneous, to the extent it was prejudicial to the interest of the revenue. On the basis of his aforesaid observations the Pr. CIT vide his order passed under Sec.263, dated 28.03.2018 set aside the order passed by the A.O with a direction to frame fresh assessment after analysing the chain of circuitous transactions carried out by the assessee.
16. The assessee being aggrieved with the order passed by the Pr. CIT under Sec. 263 of the IT Act, has carried the matter in appeal P a g e | 16 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax before us. As the facts and the issue involved in the present appeal of the assessee remains the same as were there before us in its appeal for the immediately preceding year viz. A.Y. 2011-12 (ITA No. 2753/Mum/2018), therefore, our order therein passed shall apply mutatis mutandis for the disposal of the present appeal.
17. We thus set aside the order passed by the Pr. CIT under Sec.263 of the IT Act and restore the order passed by the A.O under Sec. 143(3) r.w.s 153C of the IT Act, dated 01.04.2015.
18. The appeal of the assessee is allowed.
AY.2012-13 ITA No. 2754/Mum/2018
19. We shall now advert to the appeal filed by the assessee for A.Y. 2012-13. Briefly stated, assessment under Sec.143(3) r.w.s. 153C of the IT Act, dated 01.04.2015 was framed by the A.O and the returned income of Rs. Nil was accepted.
20. The Pr. CIT being of the view that as the A.O while framing the assessment under Sec.143(3) r.w.s. 153A, dated 01.04.2015 had failed to examine the bogus share capital (along with premium) received by the assessee during the year, therefore, the assessment framed by him was rendered as erroneous, to the extent it was prejudicial to the interest of the revenue. On the basis of his aforesaid observations the Pr. CIT vide his order passed under Sec. 263 of the IT Act, dated 28.03.2018 set aside the order passed by the A.O with a direction to frame fresh assessment after analysing the chain of circuitous transactions carried out by the assessee.
21. The assessee being aggrieved with the order passed by the Pr. CIT under Sec. 263 of the IT Act, has carried the matter in appeal before us. As the facts and the issue involved in the present appeal of P a g e | 17 ITA Nos. 2752- 2754/Mum/2018 A.Y. 2010-11 M/s Nishita Infrastructure Pvt. Ltd. Vs. Principal Commissioner of Income Tax the assessee remains the same as were there before us in its appeal for the preceding year viz. A.Y. 2012-13 (ITA No. 2754/Mum/2018), therefore, our order therein passed shall apply mutatis mutandis for the disposal of the present appeal.
22. We thus set aside the order passed by the Pr. CIT under Sec.263 of the IT Act and restore the order passed by the A.O under Sec. 143(3) r.w.s 153C of the IT Act, dated 01.04.2015.
23. The appeal of the assessee is allowed.
24. In terms of our aforesaid observations the appeals of the assessee viz. ITA Nos. 2752 to 2754/Mum/2018 for A.Y(s) 2010-11, 2011-12 and 2012-13 are allowed.
Order pronounced in the open court on 27.02.2019 Sd/- Sd/-
(G.S.Pannu) (Ravish Sood) VICE PRESIDENT JUDICIAL MEMBER भुंफई Mumbai; ददन ुंक 27.02.2019 Ps. Rohit
आदे शकीप्रतिलऱपिअग्रेपिि/Copy of the Order forwarded to :
1. अऩीर थी/ The Appellant
2. प्रत्मथी/ The Respondent.
3. आमकयआमक्त(अऩीर) / The CIT(A)-
4. आमकयआमक्त/ CIT
5. विब गीमप्रतततनधध, आमकयअऩीरीमअधधकयण, भुंफई/ DR, ITAT, Mumbai
6. ग र्डप ईर / Guard file.
सत्म वऩतप्रतत //True Copy// आदे शानुसार/ BY ORDER, उि/सहायकिंजीकार (Dy./Asstt. Registrar) आयकरअिीऱीयअधिकरण, भुंफई / ITAT, Mumbai