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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Bradma Logistics Parks Pvt. Ltd. The Pr. Commissioner of 145-C, Sangam, 4th Floor, Dr. Income Tax, Central-4, Vs. Vigas Street, Kalvadevi Mumbai Mumbai-400 002 .. (ApIlaaqaI- / Appellant) (p`%yaqaaI- / Respondent) स्थायी लेखा िं./PAN No. AADCB5029Q अपीलाथी की ओर े / Appellant by : Shri Rakesh Joshi, AR प्रत्यथी की ओर े / Respondent by : Shri Ajay Kumar, DR ुनवाई की तारीख / Date of hearing: 09.04.2019 घोषणा की तारीख / Date of pronouncement : 05.07.2019 AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
These appeals filed by the assessee are arising out of the Revision orders passed by PCIT under section 263 of the Income-tax Act, 1961 (hereinafter ‘the Act’) even date 05.03.2018. The Assessments were framed by the Dy. Commissioner of Income Tax, Central Circle-7(4), Mumbai (in short DCIT/ACIT/ITO/ AO) for the A.Ys. 2009-10 & 2010-11 2 | P a g e ITAs No.2755 & 2756/Mum/2018 vide even date 01.04.2015 under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The issue is same in both ITA’s i.e. in & 2756/Mum/2018 for AYs 2009-10 & 2011-12, hence, we will take the facts from AY 2009-10 in and will decide the issue.
The only issue in this appeal of assessee is against the revision order passed by PCIT under section 263 of the Act revising the assessment framed under section 143(3) read with section 153A of the Act for the reason that the AO framed assessment without making adequate inquiries and application of mind on the issue of share capital from various parties and in the relevant year, the amount received was ₹ 10.95 crores. For this assessee has raised the following grounds:-
“1. The Learned PCIT has erred in law as well as on facts while passing Revision Order u/s.263 of the Income Tax Act. 1961, for the assessment order u/s. 143(3) r.w.s 153A of the Act, 1961, passed by the Learned Assessing Officer after 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 | P a g e ITAs No.2755 & 2756/Mum/2018 3. In the facts and in the circumstances of the case and in Law, the Ld. POT has erred in exercising his revisionary powers u/s.263 in relation to completed assessment made u/s.153A despite the fact that the same was duty approved by Addl. Commissioner of Income Tax u/s.153D.
4. In the facts and in the circumstances of the case and in law, the Ld. PCIT has erred in exercising his revisionary powers u/s.263 without appreciating the fact that the order which is subject matter of revision, itself is nullity in law, hence any further proceedings thereon cannot be a valid proceeding.
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 Act in violation of the principle of natural justice by passing order u/s 263 on the issues which were not part of show cause notice.
The Learned PCIT has erred in law as well as on facts white passing order u/s 263 of the Act on the plea that there is no nexus between the capital assets purchases and share capital introduction without pointed out any defect in the reconciliation submitted before the AO as well as before investigation wing based on which order U/s 143(3) r.w.s. 153A was passed.
4 | P a g e ITAs No.2755 & 2756/Mum/2018 7. The Learned PCIT has erred in law as well as on facts while passing order u/s 263 of the Act without considering the fact that the issue of share capital has already being approved by the order of Hon'ble [TAT in the case of MIs Wellknown Technology Pvt. Ltd. for AY 2009-10.”
The PCIT issued show cause notice dated 30.06.2007 under section 263 of the Act revising the assessment requiring the assessee to show cause as to why the assessment order framed by the AO dated 01.04.2015 should not be revised. In the show cause notice, the PCIT stated that the AO while competing the assessment of this assessee company, has simply obtained the list of such shell companies through which share application money [with premium] were received and/ or preference shares were allotted. But no enquiries were made to ascertain as to whether the source of such fund was the introduction of bogus purchase bills in the books of Wellknown Polyesters Pvt. Ltd. The assessee company too had not filed any details proving the nexus of such share capital/ share application money with the said bogus purchase. If that was the case, the assessee group ought to have corrected the books of accounts later after search. But it is noted that the [preferential] share capital still remains as such in their audited books of accounts. In view of these facts, the AO ought to have examined the taxability of such share capital together with premium or share application money in the hands of the assessee company under section 68 section 2(24(iv) of the Act.
Finally, the PCIT directed the AO to verify the share capital and inquire into the same in detail by observing in para 8 as under: - 5 | P a g e ITAs No.2755 & 2756/Mum/2018 “8 It is clear from the discussions contained in the foregoing paragraphs that the Assessing Officer has failed to carry out necessary enquiries as warranted by the facts and circumstances of the case and apply the correct provisions of the law as discussed above ignoring the overwhelming evidences gathered during the course of search carried on 23/05/2013 and further reaffirmed by the statements of various responsible persons recorded at the time of search and during post search proceedings, wherein it has been clearly admitted that bogus capital has been introduced by using the shell companies as conduits. Thus, the assessments are found to be erroneous in so far as it is prejudicial to the interest of revenue as envisaged in section 263 of the I.T. Act. However, no prejudice is caused to the assessee, in case the AC. is directed to provide reasonable opportunity to the assessee to discharge its onus, before coming to any final conclusion. Nevertheless, while analyzing the chain of circuitous transactions, if any, submitted by the assessee in discharge of its onus, if any, any other income chargeable to tax is noticed by the A.O., he shall not only be free but also duty bound to tax such income in the case of the assessee. The assessment order is set aside accordingly.”
6 | P a g e ITAs No.2755 & 2756/Mum/2018 6. At the outset, the learned Counsel for the assessee stated that this issue has been dealt with greatly by this Tribunal in the case of Well known Technologies Pvt. Ltd. vs. PCIT in to 2015/Mum/2018 for AY 2009-10 to 2013-14 vide order dated 03.12.2018, wherein the Tribunal exactly on identical facts considered this issue and quash the revision order by observing as under: - “23. We have heard both the counsel and perused the records. The ld. Counsel of the assessee submitted that the assessment order in all these cases have been passed under section 153A of the Act on the same date by the same A.O. He submitted that the A.O. while completing the assessment has taken into account the overall modus operandi of the group. He submitted that after the application of mind the A.O. has completed the assessment. He submitted that the A.O. has computed the detail of fictitious capital expenditure booked and its routing back as share capital introduction in the group. He submitted that being satisfied with the said reconciliation, the A.O. has not proposed any further addition. The ld. Counsel of the assessee claimed that the A.O. has not proposed any further addition. He claimed that the detail and reconciliation were before the Investigation Wing also, and no adverse comment was made by them also.
Further, he submitted that the A.O. has considered the fact that on one hand there is 7 | P a g e ITAs No.2755 & 2756/Mum/2018 bogus capital expenditure appearing in the balance sheet of well-known polyester, on the other hand the amount from funds routed off by these capital expenditure by payment to shell companies have come back as share capital to the well-known group companies. Hence, the ld. Counsel of the assessee submitted that no outside bogus capital has been introduced. He held that the fictitious capital assets in the form of fictitious capital expenditure are represented by bogus capital introduction. He submitted that these two cancel each other. He claimed that the funds which have been taken out from M/s.Wellknown Polyesters Ltd. and introduced in the form of share capital in the group cannot again be added as the source of the fund is the assessee group itself. He claimed that the only result is the claim of bogus deprecation in the case of M/s.Well-known Polyesters Ltd. He submitted that this has been duly withdrawn by the assessee and has been accepted by the A.O. after due examination. The ld. Counsel of the assessee submitted that the entire details of bogus capital introduction through the shell companies in the group companies was taken into consideration by the A.O. in the assessment order. The ld. Counsel of the assessee further submitted that in the case of M/s.Wellknown Technologies Pvt. Ltd. in original assessment, addition was made by the A.O. for bogus share 8 | P a g e ITAs No.2755 & 2756/Mum/2018 capital. The addition was deleted by the ld. CIT. The Revenue has duly raised the issue of introduction of bogus share capital which had travelled with the ITAT. He submitted that the same has been duly deleted. Hence, the ld. Counsel of the assessee submitted that when the matter is already concluded by the ITAT, the same cannot be visited again by the A.O. u/s. 153A of the Act and the same cannot be visited by the ld. CIT under the jurisdictional power u/s.263 of the Act.
He further submitted that in s.153A assessment of M/s.Wellknown Polyesters Ltd. several other additions were made which were deleted by the ld. CIT and confirmed by the ITAT, as the same were de hors incriminating material found in search. Hence, the ld. Counsel of the assessee pleaded that when no incriminating material was found regarding the introduction of bogus share capital for other sources, the A.O. has neither any reason nor jurisdiction to examine this aspect.
Furthermore, the ld. Counsel of the assessee submitted that the A.O. has clearly brought out all the aspects of the matter in detail and has clearly mentioned that in these facts no other addition is being considered. He submitted that the view adopted by the assessee is clear and cogent. In any case, he claimed that the 9 | P a g e ITAs No.2755 & 2756/Mum/2018 view adopted by the A.O. is a possible one. Hence, he submitted that as held by the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) and CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC) if two views are possible and the assessing officer adopts one view to which the Ld. CIT-is not in agreement with the same will not result in the assessment order being erroneous insofar as it is plea judicial to the interest of revenue.”
Similarly, on identical facts, the Tribunal in the case of Nishita Infrastructure Pvt. Ltd. vs. PCIT (which is one of the group companies) in for AY 2010-11 to 2012-13, vide order dated 27.02.2019 has considered this issue and quash the revision order passed by PCIT by holding in paras 10 to 12 as under: - “.10. We have deliberated at length on the issue under consideration and are of the considered view that M/s Wellknown Polyester Ltd. 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 10 | P a g e ITAs No.2755 & 2756/Mum/2018 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 11 | P a g e ITAs No.2755 & 2756/Mum/2018 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 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