ITAT : Quashes Sec. 263-order, AO’s acceptance of fictitious capex & bogus shares nexus, ‘permissible view’

Mumbai ITAT quashes revision u/s 263 made by Pr.CIT on the grounds that there was no nexus between fictitious capital assets purchase & subsequent routing back as share capital in assessee Group; Notes that Pr.CIT had initiated revisionary proceedings on 4 grounds – allowance of bogus depreciation for the purpose of 115JB, acceptance of the withdrawal claims for deprecation without referring to the schedule of assets, non-consideration of addition of bogus share capital u/s 68 and AO not ordering a special audit/ rejecting the books of accounts; Notes that AO had consciously not disallowed the depreciation amount from the computation of book profits u/s. 115JB and had applied his mind in doing so, also holds that no addition u/s 68 could be made as assessee had explained the scam entries and all details were available during assessment proceedings itself; Opines that it was a clearly & legally permissible view that inflow in the form of bogus capital was related to the fictitious capital purchased coming from the same source; Also dismisses Pr.CIT’s ground to reject the books of accounts stating that the addition on account of bogus deprecation withdrawn would itself come under ‘cloud’ as there would be no case of making further additions based upon the figures of the same books; Observing that no material pertaining to introduction of share capital from other sources had been found in the search or as a result of investigation or on record, ITAT concludes that there was no reason or any justification on the part of the AO to further make detailed enquiry for the source of share capital:ITAT