TaxTMI 
TaxTMI 
2023 (4) TMI 527
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.... of ld. CIT(A) dated 29.09.2021. 2. As the issues raised in these appeals are common and the facts are identical, therefore, as agreed by both the parties, they are heard together and disposed off by way of this common order for the sake of convenience and brevity. 3. First, we take up the cross appeals in ITA No. 43/GTY/2022 and ITA No. 2/GTY/2023 for AY 2014-15. 4. The assessee is in appeal before this Tribunal in ITA No. 43/GTY/2022 raising the following grounds: "1. That on the facts and in the circumstances of the cases, the Ld. C.I.T. (A) acted illegally in disallowing and adding back to the total income of the appellant, the cost of material consumed on estimate basis amounting to Rs. 2,15,53,154/- being 0.64% of the Gross receipts of the appellant for the AY 2014-15 of Rs 3,36,76,80,365/- 2. That the Ld. CIT(A) wholly erred in appreciating the fact that the accounts of the appellant have been duly audited by a qualified auditor u/s 44AB of the Act and therefore the disallowance made amounting to Rs. 2,15,53,154/- on estimate basis without specifying the exact bills is totally incorrect and uncalled for. 3. That the Ld. CIT (A) wholly erre....
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....led its Return of Income for AY 2014-15 u/s 139(1) of the Act on 28.09.2014 declaring an income of Rs. 17,03,97,730/-. Case selected for limited scrutiny through CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. Relevant details were called for by the assessee and in response to the notices, assessee-company submitted audited accounts and copies of relevant documents as called for during the course of assessment proceedings. Assessment was completed vide order u/s 143(3) of the Act dated 30.12.2016 and Income assessed by the ld. AO at Rs. 33,38,89,830/- inter alia making following additions: 1. Cost of material consumed @ 5% of Rs. 1,91,65,43,6828/- Rs. 9,58,27,184/- 2. Vehicle running expense: Rs. 84,89,594/- 3. Repair and Maintenance Rs. 1,79,36,625/- 4. Additional depreciation amounting to Rs. 3,23,72,494/- 5. Deduction amounting to Rs. 78,01,892/- 6. Disallowance u/s 14A Rs. 3,05,471/- 6. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. Ld. CIT(A) granted part relief by partly sustaining the disallowance of cost of material consumed at Rs. 2,15,53,154/- and ....
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....cordingly. But non-rejection of books of accounts by ld. AO clearly shows that the books of accounts in the case of the assessee as per the opinion of ld. AO are genuine and correct. 12. Ld. Counsel for the assessee submitted that the assessee was conducting its business at more than 25 sites and multiple branch offices and the vouchers and bills were kept at different sites and branch offices where the relevant expenses were incurred and the assessee's books and records are very voluminous in nature and bills and vouchers are more than lakhs in number. The assessee year after year is assessed u/s 143(3) of the Act and such type of additions of disallowing expenses on estimated basis was never made in the case of the assessee for any of the preceding or subsequent assessment year. The books of accounts of the assessee are regularly audited under the provisions of the Companies Act, 2013 and tax audit has also been carried out in accordance with the provisions contained u/s 44AB of the Act. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as asked by ld. AO during the course of assessment proceedings. The impugned disall....
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....re issued to such activities from purchase and the activities are debited with the cost of materials. The sub-contractor's bills for providing services for such activities are also debited to respective activities. The closing stock is valued on the basis of inventories maintained. The company has been following this practice consistently. During the course of assessment proceedings, ld. AO stated that the material consumed amounting to Rs. 191,65,43,682/- (sub-head of "other expenses") constituted 70.14% of the "other expenses". Further, the assessee provided the details of sub-head under "Material Consumed" and the same is as under: Large other Expenses Sl. No. Particulars Amount 1 Road construction and repairing expenses 70,34,65,146.00 2 Tunnelling Work 46,64,31,697.00 3 Sub Contract Expenses 18,25,36,116.00 4 Bridge Expenses 17,69,56,347.00 5 Earthwork Expenses 10,04,03,520.00 6 Fabrication and Erection Expenses 2,66,95,843.00 7 Pile Casting 2,49,85,313.00 8 Retaining Work and Culvert Expenses 1,90,70,003.00 9 Supply of Materials 1,55,95,404.00 10 WBM Expenses 1,54,08,401.....
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.... whose addresses were not furnished. In the factual matrix, it is further noted that the Appellant had repetitively stated before the Assessing Officer that the Books of Accounts of the Appellant were voluminous, bulky and were based on various Projects/ Sites/ Activities etc. Even presuming that the Appellant was not complying with the Notices of the Assessing Officer, it is incomprehensible as to why the Assessing Officer did not resort to the provisions of Section 142(2A) of the Act. Thus, it is palpable that the Assessing Officer has not fulfilled his responsibility of identifying the specific instances of the expenses claimed sans proper address of the corresponding parties as well as that of resorting to the other provisions of the Act. In the instant Ground of Appeal, it is evident that the Assessing Officer had neither referred to the past history nor even to the comparative Net Profit Rate of the Appellant nor even has placed on record any comparative case of any other assessee who is geographically situated similar to the Appellant and is engaged in the business akin to that of the Appellant The Assessing Officer, instead of making specific disallowances, merely ....
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....1954) 26 ITR 775, 1955 AIR 65, 1955 (1) SCR 941] iii. Omar Salay Mohamed Sait vs. Commissioner of Income-Tax, Madras [1959 (3) TMI 2 - Supreme Court; Other Citation: (1959) 37 ITR 151, 1959 AIR 1238] iv. Umacharan Shaw and Brothers vs. Commissioner of Income-Tax, West Bengal [1959 (5) TMI 11 - Supreme Court; Other Citation: (1959) 37 ITR 271], v. LalchandBhagatAmbica Ram vs. Commissioner of Income-Tax, Bihar and Orissa [1959 (5) TMI 12 - Supreme Court; Other Citation: (1959) 37 ITR 288], vi. New Ambadi Estates (Private) Limited vs. State Of Tamil Nadu [1991 (3) TMI 10 - Madras High Court; Other Citation: (1993) 200 ITR 64], vii. Sayaji Iron and Engg. Co. vs. Commissioner of Income Tax [2001 (7) TMI 70 - Gujarat High Court; Other Citation: (2002) 253 ITR 749, 172 CTR 339, 121 TAXMANN 43, (2002) 108 COMP. CAS. 675 (GUJ.)] and others "In the background of the aforesaid discussion and Judicial Pronouncements cited above, considering the averments of the AO, it is evident that the reasons stated by the Assessing Officer while making the impugned disallowance are merely general in nature without any evidence to prove the disallowance.....
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....ld. CIT(A), we observe that the profit margin in the case of the assessee is fluctuating year-wise. The said profit margin has increased from 6.10 to 6.37 and then again reduced from 6.37 to 5.54. No such adjustment was made for increase or decrease in the profit margin in earlier years. Further ld. CIT(A), in spite of his own finding that where no defect is found in books of accounts and the same are not rejected by ld. AO, the estimate disallowance cannot be made, has made estimated disallowance of 0.64% of the sales revenue which is again on estimate basis and, therefore, the finding of ld. CIT(A) sustaining estimated disallowance cannot be accepted. We find support from the following decisions: "1. In case of Mysore Fertiliser Co. v. CIT [1966] 59 ITR 268 (Mad.) it was held that the ITO shall make the assessment to the best of his Judgement; it means that he must make it according to the rules of reason and justice, not according to private opinion, but according to law and not humour, and the assessment is to be not arbitrary, vague and fanciful, but legal and regular. 2. It was held in case of CIT v. Surjit Singh Mahesh Kumar [1994] 210 ITR 83 (All.) that so....
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....see nor books of accounts are rejected and disallowance of some portion of cost of material consumed expenses is merely on the basis of conjectures and surmises which cannot be held justified and since ld. D/R has failed to place any contrary material to doubt the book results, therefore, the estimate disallowance made by ld. AO as well as ld. CIT(A) cannot be accepted. Hence, the impugned disallowance made by ld. AO @ 5% of material consumed at Rs. 9,58,27,184/- is deleted. Accordingly, the ground no.1 raised by the assessee is allowed and that of the Revenue is dismissed. Now, we take the remaining grounds of appeal of the revenue for AY 2014-15: 22. Ground no. 2 of the Revenue is on account of addition of Rs. 84, 89,467/- and Rs. 1, 86, 95,467/- under the head of Vehicle Running Expenses and Repairs & Maintenance. Brief facts relating to this issue are that during the course of assessment proceedings, the assessee was required to furnish detailed breakup of the expenses aggregating to Rs. 69,62,07,198/- claimed under the expense head "Contract operation and Execution Expenses". In response to the same, the assessee furnished detailed breakup of the aforesaid expense accoun....
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....l contentions and perused the relevant records placed before us. Ld. AO during the course of assessment proceedings has identified certain heads of expenses which were alleged to have been claimed twice or shown differently. These expenses are as under: a. Vehicle running expenses - Rs. 84,89,594 and Rs. 1,79,36,625. b. Machinery repair and maintenance - Rs. 5,71,21,796 and 1,86,95,467 c. Sub-contract expenses Rs. 44,38,17,132 and Rs. 18,25,36,116/- d. Contract Operation and Execution Expenses - Rs. 69, 62, 07,198/- and again claimed under different heads in the name of the projects under 'Material Consumed'. 26. Out of the aforesaid expenses, ld. AO disallowed Rs. 84,89,594/- on account of vehicle expenses and Rs. 1,86,95,467/- on account of Machinery repair and maintenance alleging that the said expenses were claimed twice by the assessee. 27. Ld. CIT(A) allowed the claim of the assessee and deleted the addition made by ld. AO on this account with the finding that that ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and sh....
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.... expression "exaggerated expenses". The expression, "exaggerated expense" has not been defined anywhere in the entire Income Tax Act, 1961 and therefore, it would be relevant here to refer to the common meaning of the expression "exaggerate". As per common parlance, the expression "exaggerated" means "beyond normal proportions or unreasonable or enlarged". Therefore, in order to observe any particular expense as exaggerated expense, it would be relevant to firstly adduce some material which could point out to as to what is a normal / reasonable expense and secondly, to compare the normal / reasonable expense with the actual expense and then arrive at the conclusion. In the instant appeal, ld. AO has not brought on record any material or evidence which could even remotely suggest as to what was the normal / reasonable expense. Further, the assessment order is completely silent as to any comparison of the actual expense incurred by the assessee vis-à-vis any past assessment records or business ratios of the business of the assessee itself or the comparison of the business results of the assessee with that of any other assessee in such similar business having similar factual ma....
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....nance Expense of Rs. 84,89,594/- & of Rs. 1,79,36,625/- and pertaining to the Machinery Repair & Maintenance Expense of Rs. 5,71,21,796/- & of Rs. 1,86,95,467/-) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Therefore, we are inclined to hold that the claim of the assessee on account of vehicle running expenses amounting to Rs. 84,89,467/- and Rs. 1,86,95,467/- on account of repairs & maintenance expense deserves to be allowed. We, further hold that none of the expenses as alleged by ld. AO above have been claimed twice by the assessee. Therefore, no infirmity is called for in the finding of ld. CIT(A) and, thus, dismiss ground no. 2 raised by the Revenue for AY 2014-15. 32. Apropos ground no. 3 which is raised by the Revenue on account of deletion of addition of Rs. 3,23,72,494/- made by ld. AO under the head of 'excess depreciation' applying 15% rate as against 30% claimed by the assessee. Facts in brief are that the assessee claimed depreciation to the tune of Rs. 17,34,11,345/- in its Profit and Loss Account and out of which depreciation claimed for 30% block is to the tune of Rs. 6,47,44,988/-. Breakup of the sa....
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....order of ld. AO and ld. Counsel for the assessee has supported the finding of ld. CIT(A) and relied on the finding of this Tribunal in assessee's own case in ITA No. 269/Kol/2018 dated 29.03.2019. 36. We have heard rival contentions and perused the records placed before us. Revenue's Ground no. 3 is regarding applicability of depreciation rate @15% as against 30% claimed by the assessee. On perusal of the assessment order, we observe that ld. AO had perhaps perplexed up the assessee's claim of the depreciation at higher rate (i.e. @ 30%) with the claim of Additional Depreciation (i.e. the depreciation permissible as per Section 32(1)(iia) of the Act). Prima facie in accordance with the provisions contained under Section 32(1)(iia) of the Act, the claim of Additional Depreciation is permissible in the case of an assessee engaged in the business of manufacturing or producing any article or thing. On the other hand, the claim of depreciation at Excess rate is different from the claim of Additional Depreciation. Since, the Assessing Officer had proceeded on a wrong footing, (i.e. by treating the claim of Depreciation at Excess/higher Rate with the claim of Additional Depreciation), ....
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....se excess depreciation claimed and relief granted by the ld. CIT(A), submitted before us, which is reproduced hereunder: Summary Chart Showing the Assessment Year wise Disallowance on account of Excess Depreciation and the subsequent Adjudication of this issue by the First Appellate Authorities. AY Date in which the Assessment order was passed Section under which the Assessment Order was passed Relevant para of the Assessment Order wherein the Excess Depreciation was Disallowed Amount of Excess Depreciation disallowed Date on which the Order was passed by CIT (A) Designation of the CIT (A) who had passed the Appeal Order Whether the Disallowance of Excess Depreciation was deleted by the CIT (A) Remarks 2005-06 30-06-2014 143(3)/147/263 3.3 16,46,106 30-05-2019 CIT(A)-8,Kolkata Yes (**) 2006-07 30-06-2014 143(3)/147/263 3.3 13,01,877 24-02-2020 CIT(A)-8,Kolkata Yes (**) 2007-08 30-06-2014 143(3)/147/263 3.3 33,46,588 20-07-2016 CIT(A)-16,Kolkata Yes Allowed on Merits 2008-09 30-03-2016 143(3)/147 4 20,24,680 27.07.2022 CIT(A), Guwahati Yes Allowed....
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....dismissed by the Tribunal as the tax effect of appeal in all the years was below limit. The finding of the Tribunal adjudicating the issue of excess depreciation in the case of the assessee in ITA No. 269/Kol/2018 dated 29.03.2019 (order enclosed at page 1143 to 1151 of the paperbook) is reproduced below: "i) Ground No. 1: The ld. CIT(A) erred in deleting the disallowance of depreciation of Rs. 85,17,966/-(being the difference of depreciation claimed by assessee @30% and allowance of depreciation by the Assessing Officer @ 15% on the vehicles). 3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs. 85,17,966/-. 5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had stated that the assessee being civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country. Assessee also maint....
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.... heavy vehicles including tippers are exclusively given on hire." However, the Assessing Officer rejected the contention of the assessee and made the addition to the tune of Rs. 85,17,966/- being the difference between 30% and 15% of depreciation rates. 7. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us. 8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee is entitled to depreciation at higher rate of 30% for tippers against the normal rate of depreciation @ 15%. It is not disputed, that tippers are vehicles and are registered under the Motor Vehicle Act,1988. The Assessing Officer had disallowed depreciati....
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....proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income `tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee - we do not think the question should have been reopened and contrary to what ha....
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.... of thirteen days' delay and assessee's no objection thereto, we condone the impugned delay attributable to various procedural formalities and compilation of records. The case is now taken up for adjudication on merits. 3. The Revenue's first substantive grievance reads that the CIT(A) has erred in law and on facts in deleting depreciation disallowance of Rs.84,86,809/- made by the Assessing Officer in assessment order dated 31.03.2015. The assessee's depreciation claim was on its commercial depreciation @ 30% on hire and other vehicles which stood restricted to 15% only during the course of assessment. The CIT(A)'s detailed discussion deleting the impugned depreciation disallowance reads as under:- "Ground No.3 is regarding disallowance of depreciation at the rate of 30% to the extent of Rs.8486809/- claimed by the assessee. The basic facts are that the assessee is carrying on the business of civil construction in the North Eastern region. The assessee is using vehicles like Tippers, Tractor etc. For construction work. The assessee has been using the tippers both for own work and for hire. On such vehicles the company has charged depreciation ....
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....ails could have been provided if asked for. The A/R of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the AO. This method of accounting has been followed by the AO in previous year and no doubt were raised by the AO even in scrutiny assessment. In this connection reference may be made to the decision of the Apex Court in CIT vs. Excel Industries 358 ITR 295, where the court reiterated that the principal of consistency should be followed. The AO could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle tougher rate of depreciation. The Assessing Officer's contention, that the explanation given by the A/R of the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the....
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....er assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs.3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/ is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over- claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO noted that in course of the assessment proceedings, the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its....
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....depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases. 10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in areas including North East. The assessee had made the same claim in assessment year 2009- 10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has submitted before us that the Assessing Officer had not asked for details of hire charges received against the tippers given on hire. Such detai....
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....ssee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision of the Punjab & Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P&J). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs.85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal ....
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....e to the extent of exempt income earned by the assessee. 46. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R relied on the finding of ld. AO and ld. Counsel for the assessee supported the finding of ld. CIT(A). 47. We have heard rival contentions and perused the records placed before us. Disallowance u/s.14A of the Act is in dispute before us. We find that the exempt income earned by the assessee during the year is Rs. 11600/- and the same is suo moto disallowed by the assessee. We also find that this issue is no more res-integra as the Hon'ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dated 20.07.2022, has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Since the assessee has earned exempt income of Rs.11,600/- during the year therefore, we deem it fit to restrict the disallowance to Rs. 11,600/-. We therefore, under the given facts and circumstances of the case, find no inconsistency in the finding of ld. CIT(A) ....
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....18 31.10.2017 21,63,53,010/- 2018-19 31.10.2018 29,14,82,150/- 2019-20 31.10.2019 61,80,49,170/- (post search which took place on 20.09.2019) 53. Subsequently, a search and seizure operation u/s 132(1) of the Act was conducted at the registered office of the assessee at Knowledge Hub, DN 23, 2nd floor, Sector V, Salt Lake, Kolkata - 700 091, at its Corporate Office at Club Road, Silchar - 788 001 as well as at various branch offices of the assessee at Guwahati, Delhi Aizawl etc. on 20.09.2019. The search and seizure operation was finally concluded on 18.11.2019. Statedly, during the course of the search, no unaccounted cash, jewellery or any unaccounted/undisclosed asset was found or seized by the Search Team from the assessee. Prior to the search, the assessee was regularly assessed to income-tax at Kolkata. Consequent to the search and seizure operation, the assessee's case was centralized with ACIT/DCIT, Central-Circle-1, Guwahati vide order dated 23.12.2000 of the Ld. PCIT u/s 127 of the Act and accordingly, the jurisdiction over the case of the assessee was transferred from Kolkata to Guwahati. Pursuant to the search & seizure operations, the followi....
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....arious issues regarding the fresh claim of deduction made by the assessee u/s 80IA(4)(i) of the Act in the Returns of Income filed in compliance to Notices issued u/s 153A of the Act and finally passed the impugned Assessment Orders dated 29.09.2021 u/s 153A/143(3) of the Act disallowing the assessee's claim u/s 80IA(4)(i) of the Act. [as per the details in Table 3 (supra)] for each of the impugned assessment years. The reasons cited in the Assessment Orders u/s 153A/143(3) of the Act for disallowing the assessee's claim of deduction u/s 80IA(4)(i) of the Act can be broadly categorized as under: "That, having not claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Actor by way of a Revised Return, the Assessee was not entitled to claim the deduction u/s 80IA(4)(i) of the Actin in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. That, the Audit Reports in Form-10CCB [as referred to u/s 80IA(7) of the Act] were not furnished by the Assessee within the time limit as referred to u/s 139(1) of the Act and, therefore, in the absence of the Audit Report (Form-10CCB) being filed by the Assessee within th....
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....explanations in this regard were filed by the Assessee along with supporting case laws on the subject." 58. Ld. CIT(A), after considering the submissions filed by both the sides, the various provisions of the Income-tax Act, 1961 and the relevant case-laws on the impugned subject, passed an elaborate Order u/s 250 of the Act dated 27.07.2022 running into 1017 pages allowing the deduction claimed u/s.80IA of the Act and the crux of his finding is summarized as under: "(i) That, in respect of an assessment year whose proceedings had abated, a Return of Income filed in compliance to the Notice issued u/s 153A of the Act, substitutes the prior/earlier original Return of Income filed u/s 139(1) of the Act and, hence, the Returns of Income filed by the Assessee, in compliance to the Notice issued u/s Section 153A of the Act for the AY 2017-18, AY 2018-19 and AY 2019-20, shall be treated as the Returns of Income filed u/s 139(1). (ii) That, the Audit Reports in Form-10CCB [as referred u/s Section 80-IA(7) of the Act] which were furnished by the Assessee within the time limit as given in the Notice u/s 153A of the Act, on an harmonious interpretation and reading togeth....
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....ns of Income furnished by the Assessee in response to Notice u/s 153A although such claim had not been made in original Return of Income furnished u/s 139 - resulting in paradoxical situation whereby being a search case, the Assessee had derived more benefit which was not claimed in the original return u/s 139 - more so, given that the Assessee never furnished revised return to the original return so as to claim deduction u/s 80 IA of the Act [Ground Nos. 1 & 3 of the Department's Appeal] (ii) That the Ld. CIT(A) erred in procedural law in not holding that the Assessee did not furnish the requisite Audit Report and particulars of claim for deduction u/s 80IA within the specified time limit [Ground No. 2 of the Department's Appeal]" 61. The finding of ld. CIT(A) to the effect that for the purposes of Section 80IA of the Act, the assessee shall be treated as a "Developer of Infrastructure Facilities" and not a "Works Contractor" has not been contested/challenged by the Department in the appeals before us and has thus reached finality. Since the said issue does not constitute subject matter of appeals before us, the same is not required to be adjudicated by us. 62. Thus....
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....(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA." 66. As stated above, in the instant case, the dispute in the impugned appeal revolves around the fresh claims of deductions made by the assessee u/s 80IA(4)(i) of the Act in its Returns of Income filed pursuant to notices issued u/s 153A of the Act for AYs 2017-18, 2018-19 & 2019-20 although the said claims were not made in the original returns filed by the assessee u/s 139 of the Act for the said years. The factual matrix and the chronology of events leading to the impugned additions have already been alluded to by us earlier in this order. 67. Admittedly, the assessee company had been claiming similar deductions u/s 80IA(4)(i) of the Act in the past years but as per the assessee, discouraged by the litigation vis-à-vis its claim of deductions u/s 80IA of the Act in the past, the assessee company discontinued its claim of deduction since AY 2007-08 till the time it got the final Income-tax Appellate Tribunal (ITAT) Orders in December 2017 and January 2018 allowing the claim of the Assessee u/s 80IA for AY 2005-06 [vide ITAT order dt. 20....
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.... not claimed deduction u/s 80-IA in its original return of income. (v) That, for the A.Y. 2017-18, the Assessee e-filed the original return of income on 31.10.2017. The ITAT order in respect of A.Ys 2005-06 and 2006-07 were passed during December 2017 and January 2018. Thus, assuming that the Assessee was entitled to any such deduction, it still had time to e-file a revised return of income for A.Y. 2017-18 claiming such deduction, which was not done. (vi) That, notice u/s 143(2) of the Act for selecting the case of the Assessee in scrutiny for A.Y. 2017-18 was issued on 24.09.2018 whereas the search was conducted in the case of the Assessee only on 20.09.2019, which was almost one year after the notice u/s 143(2) was issued and served on the Assessee. During one year of pending scrutiny assessment proceedings before it was abated, no claim regarding deduction u/s 80-IA was made by the Assessee in any submission before the A.O. The original assessment was to get time barred on 31.12.2019. The Form 10CCB in the case of the Assessee was issued by the auditor on 12.02.2021. Thus, the Assessee could not claim that it had planned to claim any deduction u/s 80-IA before....
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....he total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years] : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years] : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso) specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately ....
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....sment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 71. Firstly, analysing the provisions of Section 153A of the Act, ld. CIT(A) in his appellate order for the impugned years has observed (at pages 168 to 172 and pages 219 to 222 of his order) as under: (i) That, in case of a search or requisition, in terms of section 153A of the Act, the A.O is compulsorily required to issue notices u/s 153A and the searched person is compulsorily required to file Returns of income afresh u/s 153A (and not u/s 139(1) or any other section) for each of the prescribed assessment years [i.e., six A.Ys immediately preceding the A.Y relevant to the P.Y. in which such search is conducted or requisition is made and for the relevant A.Y(s) defined under Explanation 1 to section 153A(2)] (ii) That, the assessment or reassessment, if any, related to any of the prescribed assessment years, which is pending on the date of search or requisition and which is done on the basis of any earlier Return filed u/s 139(1) stands ....
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....isions contained in section 139 provided, they are not inconsistent with the provisions of section 153A. Thus, in the absence of specific restriction u/s 153A, it will be wrong to hold that the Assessee will be barred from filing even a revised return assuming he satisfies the conditions for filing such revised returns. (x) That, from a perusal of the Explanation to Section 153A, the expression "save as otherwise provided in this Section, Section 153B and Section 153C, all other provisions of this Act shall apply to the assessment made under this section" it is evident that absence of any specific exceptions stipulated in the aforesaid sections, the provisions of all other sections of the Act will mutatis-mutandis apply to the assessment framed u/s 153A. Thus, the A.O is required to permit the legally tenable allowance, deductions, relief, rebates etc. which have been claimed in return filed u/s 153A of the Act. (xi) That, as per the Second Proviso to section 153A(1), any proceedings for assessment or reassessment of an assessee which are pending on the date of initiation of search or making a requisition will abate. Once those proceedings abate, the A.O is requir....
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....ws: TABLE-5 AY Date of filing the Original ITR Section under which the Original was ITR filed Date on which the Time limit as per the Proviso to Section 143(2) expired Whether on the Date of search any assessment was pending? (Yes/No) Section of the Notice by virtue of which assessment was pending If, the assessment was pending, the Date off issuance of Notice u/s 143(2)/148 2017-18 31/10/2017 139(1) 30/09/2018 Yes 143(2) 24/09/2018 2018-19 31/10/2018 139(1) 30/09/2019 Yes(##) Not Applicable Not Applicable 2019-20 31/10/2019 139(1) 30/09/2020 Yes(**) Not Applicable Not Applicable 2020-21 15/02/2021 139(1) Yes (**) Not Applicable Not Applicable (##) The assessment was pending since the time limit for service of Notice under Section 143(2) of the Act had not expired (the same would have expired on 30/09/2019). However, a Notice under Section 143(2) of the Act in respect of the AY 2018-19 was issued in the case of the Appellant on 22/09/2019. (**) Since the ITR was filed only after the Date of the Search Thus, in the case of the Appellant, as on....
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....ome filed in response to notice u/s 153A of the Act is to be considered as Return filed u/s 139 of the Act and for all other provisions of the Act, the Return u/s 153A of the Act will be treated as the original Return u/s 139 of the Act: "(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated 03/12/2014 - Gujarat High Court (ii) PCIT vs. Neeraj Jindal [Income Tax Appeal No. 463 of 2016, judgment dated 09/02/2017; 79 Taxmann.com 96] - Delhi High Court (iii) Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] - Calcutta High Court" 76. Further, ld. CIT(A) has relied upon the following case laws wherein after a detailed analysis of the relevant provisions of the Act, it has been unanimously held that the assessee is entitled to make a fresh claim of deduction, exemption, claim of expenses etc. in its Return of Income filed in response to notice u/s 153A of the Act which was not made in the Return of Income originally filed u/s 139 of the Act: "(i) CIT vs. B.G. Shirke Construction Technology Ltd. [395 ITR 371; Income Tax Appeal No. 1392, ....
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....12), 609/Hyd/ 2016 (AY 2012-13), 610/Hyd/ 2016 (AY 2013-14), 1375/Hyd/ 2016 (AY 2014-15) & 1540/Hyd/ 2016 (AY 2015-16) - ITAT Hyderabad" 78. Ld. CIT(A) has also dealt with and distinguished two seemingly adverse judgements rendered in the following cases, wherein in context of non-pending/completed assessments (i.e., unabated assessments)(and hence not applicable vis-à-vis abated assessments as in the instant case) the Hon'ble Courts had opined that it was not open to the assessee to claim and be allowed such deduction or allowance of expenditure which it had not claimed in the original assessment proceedings which stood completed: "(i) Jai Steel (India) vs. ACIT (and other connected matters) [(2013) 259 CTR (Raj) 281; ITA No. 53/2011, judgment dated 24/05/2013] - Rajasthan HC (ii) GMR Infrastructure Limited vs. DCIT 2021 (7) TMI 527; I.T.A. NO.1036 OF 2017 dated 06/07/2021] - Karnataka High Court" 79. In light of the aforesaid judgments, ld. CIT(A) has gone on to conclude as under: "1. That, a Return of Income filed in compliance with the Notice issued under Section 153A of the Act substitutes the Original Return filed under Section 139(1) o....
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....ds on the provisions of law and not on the view which the Assessee or ld. AO might take: "(i) Commissioner of Income-Tax vs. C. Parakh & Co. (India) Ltd. [on 2 March, 1956; Equivalent citations: AIR 1958 SC 775, 1956 29 ITR 661 SC] - Supreme Court of India (ii) Pope The King Match Factory vs. Commissioner of Income-Tax, Madras [1962 (3) TMI 81 - Madras High Court (iii) Commissioner of Income-Tax, West Bengal II vs. Royal Boot House [1969 (6) TMI 37, [1970] 25 STC 243 (Cal), [1970] 75 ITR 507] -Calcutta High Court (iv) Kedarnath Jute Mfg. Co. Ltd vs Commissioner of Income Tax [On 17 August, 1971; 1971 AIR 2145; 1972 SCR (1) 277] - Supreme Court of India (v) Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. Commissioner of Income-Tax [1997 (7) TMI 4 - Supreme Court; Other Citation: [1997] 227 ITR 172 (SC) - Supreme Court of India (vi) United Commercial Bank vs. Commissioner of Income-Tax [1999 (9) TMI 4 Supreme Court; Other Citation: [1999] 240 ITR 355 (SC) - Supreme Court of India (vii) Taparia Tools Limited vs. Joint Commissioner of Income Tax [2015 (3) TMI 853 - [2015] 372 ITR 605 (SC) - Supreme Court of India ....
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....pon the following case laws in support of the above proposition: "(i) CIT vs. Shelly Products and another [261 ITR 367] - Supreme Court of India (ii) CIT vs. Bharat General Reinsurance Co. Ltd. 81 ITR 303 (Del) - Delhi High Court (iii) Balmukund Acharya vs. DCIT [310 ITR 310] - Bombay High Court (iv) Nirmala L. Mehta vs. CIT [(2004) 269 ITR 001] - Bombay High Court" 83. Finally, based on the ratio laid down in the above referred judgments, ld. CIT(A) has held that the observation of the ld. AO that the assessee having not claimed the deduction in its original Income Tax Return filed u/s 139(1) of the Act, or by way of a Revised Return, cannot claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed in compliance to the Notice issued u/s 153A of the Act is devoid of legal legs. Accordingly, since the assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 had abated pursuant to the search action by virtue of operation of section 153A of the Act, the assessee was duly entitled to make a fresh/revised/new claim of deduction u/s 80IA(4) of the Act in its Returns of Income filed in compliance with notices issued u/s 153A of....
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....T [2009] 34 SOT 348 (Del), the Hon'ble ITAT, Delhi Bench had held that since the search proceedings u/s 153A were for the benefit of the Revenue, the assessee was not permitted to value the closing stock for concluded years in a different manner adopted in earlier years and claim lower income. (v) That, in the case of K.P. Varghese Vs. ITO [1981] 131 ITR 597/7Taxman 13, the Hon'ble Supreme Court held that "it is well settled recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." Hence, if an assessee is allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier, then it would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O will have power to undo what has been concluded upto the High Court. Any interpretation which leads to such conclusion has to be repelled/avoided as held by the Hon'ble Supreme Court in K.P Varghese (supra)." 86. We have heard rival contentions and perused the records placed before us and the relevant provisions of the Income-tax....
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....(2) (available up to 30.09.2019) had not expired as on the date of search. Notice u/s 143(2) qua the original Return of Income filed u/s 139(1) on 31.10.2018 was issued after the date of search i.e., on 22.09.2019. Thus, assessment proceedings were pending. (iii) A.Y. 2019-20-As on the date of search, the time limit to furnish the original Return of Income was still available. The original Return of Income was filed after the date of search i.e., on 31.10.2019. Thus, the assessment proceedings were pending." 88. The above facts are compiled in Table 5 (supra). Further, the fact that the assessments for the impugned AYs 2017-18 and 2018-19 were pending as on the date of search and were thus dropped by ld. AO after being abated due to the search operation on 20.09.2019 has also been admitted by ld. AO, vide letter no. 88 dated 07.07.2022 reproduced by ld. CIT(A) at page 228 of his order. The same is also evident from the Note-Sheet Entries for the said years, reproduced by ld. CIT(A) at 229-232 of his order stating that the above assessment years were selected for scrutiny assessment vide Notice u/s 143(2) of the Act dated 24.09.2018 and 22.09.2019 and the case had abated....
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....g within the said period of six assessment years is pending on the date of initiation of search or making of requisition, those assessment or re-assessment proceedings shall abate. In other words, pending assessment or re-assessment proceedings on the date of initiation of search or making of requisition shall abate. 8.5. That brings us to the crucial expression, which is 'abate'. The ordinary dictionary meaning of the word 'abate', as per Concise Oxford English Dictionary, Indian Edition, is to reduce or remove (a nuisance). Derivative of abate is abatement. In Black's Law Dictionary, Eighth Edition, 'abatement' has been defined to mean an act of eliminating or nullifying; the suspension or defeat of a pending action for a reason unrelated to the merits of the claim. In Supreme Court on Words and Phrases (19502008), "abating" has been defined to mean "an extinguishment of the very right of action itself"; to "abate", as applied to an action, is to cease, terminate, or come to an end prematurely." (ii) CIT (Central), Kanpur vs. Smt. Shaila Agarwal [2011 (11) TMI 213 -The Hon'ble Allahabad High Court has observed as under: ".....................11. The sec....
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....emature end, suspension or diminution, (as) of an action or of a legacy. The action of abating; being abated. [O.XXII, R.1, CPC (5 of 1908)]; decrease [S.12 (3) (b) (i), Specific Relief Act (47 of 1963)]. Of An Action Or Suit: In civil law an abatement of a suit is a complete termination of it. Abatement of a matter or cause is caused by the same becoming defective on account of the death of the parties materially interested. (Ency. of the Laws of England) A suspension or termination of proceedings for want of proper parties or due to some technical defect. The abatement of the main action abates proceedings ancillary or collateral to it. In Criminal Law: Abatement of proceedings connotes their termination without any decision on merits and without the assent of the prosecutor. (Ency. of the Laws of England) In Revenue Law: Abatement is a deduction from or refunding of duties on goods damaged during importation or in store." 13. The word 'abatement' is referrable to something, which is pending alive, or is subject to deduction. The abatement refers to suspension or termination of the proceedings either of the ma....
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....rwise provided in this Section, Section 153B of the Act and section 153C of the Act, all other provisions of this Act shall apply to assessment made under this section." This, to our mind, clearly implies that for the purpose of making an assessment u/s 153A of the Act, ld. AO is mandatorily required to allow the legally tenable deductions, allowances, claims of expenses etc. which have been claimed by the Assessee in the Returns of Income filed u/s 153A of the Act. 93. The Hon'ble Courts and various benches of the Tribunal, in a plethora of cases have uniformly held that Return of Income filed in response to notice u/s 153A of the Act is to be considered as Return filed u/s 139 of the Act and for all other provisions of the Act, the Return u/s 153A of the Act will be treated as the original Return u/s 139 of the Act. Once ld. AO accepts the return filed u/s 153A of the Act, the original return under Section 139 of the Act abates and becomes non-est. The relevant observations of the Hon'ble Courts in few such cases are reproduced hereunder for facility: "(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated ....
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....t. The obligation to file the return remained suspended, in view of the clear opening words of Section 153A(1) of the Act, till such time that a notice was issued to him under clause (a) of such sub-section. If such is the meaning of Section 153A(1) of the Act, the operation of Section 139(3) of the Act qua the time available for filing a return in order to avail of the benefit of carrying forward any loss stands extended till a return is called for under Section 153A(1)(a) of the Act and such return is filed, provided the return is filed within the time indicated in the relevant notice under Section 153A(1)(a) of the Act. There can be no dispute to such being the effect of Section 153A(1)(a) of the Act..... The second question is answered thus: When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time pe....
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....d under Section 153A by observing that for the assessment year 2009-10 and onwards, the time for filing revised return has not expired and, therefore, claim for deduction under Section 80IA if not made earlier could have been made in the revised return. Once it could have been claimed in revised return under Section 139 (1), the same could have also been claimed under Section 153 (A). 5. Sri Manish Misra, learned counsel for appellant contended that return under Section 153 (A) is not a revised return but it is a original return. If that be so, then in our view, deduction under Section 80IA, if otherwise admissible, always could have been claimed and we are not shown any authority otherwise to take a different view. Therefore, in both way, deduction under Section 80IA, if otherwise admissible, could have been claimed by Assesses. Hence, we answer both the aforesaid questions in favour of Assesses and against Revenue affirming the view taken by Tribunal. ........................................ In the result, appeal is dismissed." The SLP filed by the Department against the aforesaid Judgment of the Hon'ble Allahabad High Court was dismissed by the Hon'ble....
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....y. He held that the said return was also a belated one u/s 139(1) which could not be revised. And that section 234A(1) interest provision was also indicative that section 139(1) and section 153 return are identically meted. Case law (1996) 86 TAXMAN 122(SC) Jagdish Chandra Sinha vs. CIT that only a return u/s 139(1) and (2) could be revised u/s 139(5) and not that submitted u/s 139(4) of the Act was also quoted. The Assessing Officer thus ruled that the assessee's twin recourse(s) adopted in filing both revised return as well as computation suggested sheer confusion on its part as well. ....... 24. Mr. Tulsiyan strongly supported the CIT(A)'s action deleting the impugned deduction disallowance. He starts with admitted facts regarding the assessee having filed section 139(1) return on time followed by search, section 153A notice, its service date, time limitation of 15 days post-search return, revised computation (supra). His case is that the Assessing Officer has himself accepted the assessee's post-search return as a valid one and therefore, the same cannot be allowed to be held as an invalid one as per Revenue's stand...... 26. We have given our thought....
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....o thereto made it clear that a person; who had furnished a return under this clause, would not be entitled to file a revised return. The legislature has nowhere employed such a restrictive expression in the new scheme of search assessment in section 153A to section 153C applicable w.e.f. 01.06.03. More particularly u/s 153A(1)(a) reads that "the provisions of this Act shall so far as the case may be applied accordingly as if such return was furnished u/s 139" meaning that a return filed u/s 153A is treated as that filed u/s 139 of the Act only. Same analogy therefore applies to a revised return covered under the said general scheme of the Act only. We therefore hold that the Revenue's emphasis seeking to delete assessee's return itself as an invalid one does not deserve to be accepted." (iii) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020] - The Hon'ble Bombay High Court has held as under: "2. The assessee is a widely held public limited company engaged in various activities including production of sponge iron, galvanized sheets and cold-rolled coils through its steel plants located at Dolve and Kalmeshwar in Maharashtr....
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....ed by the A.O. In further appeal, the I.T.A.T., however, by the impugned order dated 28.09.2016, allowed the assessee's appeal and set aside both the orders passed by the A.O. and C.I.T.(A). 5.2. Hence the appeal by the revenue. ........ 6.1. Mr. A.R.Malhotra drew our attention to the proposed question of law in the present appeal which reads thus : "Whether on the facts and in the circumstances of the case and in Law, the Hon'ble Tribunal was justified in holding that in the return of Income filed u/s. 153 A of the I.T. Act, 1961 or even during the course of assessment proceedings undertaken u/s. 153A of the I.T. Act, 1961 the assessee can lodge new claims, deduction or exemption or relief which remained to be claimed in regular return of income?" ........ 6.5. He, however, fairly referred to the following two cases delivered by this Hon'ble Court, viz; CIT Vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) and DCIT Vs Eversmile Construction Co. Pvt. Ltd. 65 DTR 39 in support of the proposition that the assessee was entitled to make a fresh claim in the return filed in pursuance to initiation of ....
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....f non obstante clause in sub-section (1) of Section 153-A i.e., use of the expression "notwithstanding" is indicative of the legislative intent that provisions of Section 153-A(1) would have overriding effect over the provisions contained in Sections 139, 147, 148, 149, 151 and 153. 8.2. Having noticed the above, we may also refer to the second and the third proviso to Section 153-A(1). For the sake of convenience, the second and third proviso to Section 153A(1) of the said Act which is relevant is reproduced below and reads thus : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing....
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....perspective we are called upon to decide the question projected by the revenue as substantial question of law arising from the order of the Tribunal. We have considered the grounds of appeal and the orders passed by the AO, CIT(A) and the Tribunal with the assistance of learned counsel for the Appellant. From a reading of the above it is clear that Section 153A of the said Act, provides for the procedure for assessment in search cases. As alluded to hereinabove, the said section starts with a non-obstante clause stating that it is, "notwithstanding anything contained in section 147, 148 and 149..........." Further sub Section(a) of Section 153A(1) provides for issuance of notice to the persons searched under Section 132 of the Act to furnish a return of income. However, the second proviso to Section 153 A of the said act makes it clear that assessment relating to any assessment year filed within a period of the six assessment years pending on the date of search under Section 132 of the Act shall abate. Thus if on the date of initiation of search under Section 132, any assessment proceeding relating to any assessment year falling within the period of the said six assessment years is....
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....im of deduction u/s 80IA(4) of the Act which had remained unclaimed in the earlier Returns filed for the impugned years (AY 2017-18 & AY 2018-19) u/s 139(1) of the Act and for AY 2019-20 for which no return was filed due to initiation of search before the due date of filing return for AY 2019-20. This was because the assessment was never made in the case of the Assessee in respect of the impugned assessment years. As uniformly opined in the above cited cases, once assessment gets abated, the original return which had been filed u/s 139 of the Act becomes non-est and loses its originality and subsequent fresh returns filed u/s 153A of the Act takes place of the original return and forms the sole basis from framing the de-novo assessments re-started/ re-initiated u/s 153A of the Act. On a perusal of section 153A(1)(a) of the Act read with the Explanation appended to section 153A(2) of the Act, it is seen that all other provisions of the Income-Tax Act, 1961 (which includes deductions under Chapter VI-A) to the extent not inconsistent with sections 153A, 153B and 153C of the Act shall equally apply to the Returns filed in compliance to notices issued u/s 153A of the Act and the subseq....
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....9(1) of the Act. Thus, unlike the factual matrix in the case of Goetze India Ltd. (supra), the present case does not involve any request made by the assessee for allowing fresh claims of deductions not claimed in the original return filed u/s 139(1) of the Act via a letter before ld. AO, but claims of legally tenable deductions in Returns filed u/s 153A of the Act, which substituted the original Returns filed earlier u/s 139(1) of the Act after such Returns u/s 139(1) of the Act and the pending assessment proceedings pursuant thereto had abated/ terminated and rendered to a nullity/ had become non-est in view of the second proviso to 153A(1) of the Act. Thus, as distinguished from the judgment rendered in context of the dissimilar factual backdrop in case of Goetz India Ltd. (supra), in our considered view, by virtue of the operation of section 153A(1)(a) of the Act, the assessee, in the instant case is entitled to claim all legally tenable deductions in Returns filed afresh u/s 153A of the Act as if such Returns were Returns furnished u/s 139 of the Act. 98. Next, the contention of ld. D/R to the effect that since the Returns wherein the impugned deductions u/s 80IA(4) of the A....
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.... proceedings have already been completed and assessment orders have been passed determining the assessee's total income prior to the date of search, such orders shall subsist since there is no question of any abatement since no proceedings are pending. In such a case, ld. AO will assess or reassess the income of the assessee strictly based on incriminating material found during the course of search or requisition i.e., compute the undisclosed income based on incriminating material and simply aggregate it with the income already assessed in case of completed assessment. It was in this context that the Hon'ble Jodhpur Bench held that assessments or reassessments pursuant to notice u/s 153A of the Act in case of unabated assessment proceedings were not de-novo assessments. The said proposition, however, does not apply to abated proceedings in respect of pending assessment where the original assessment initiated on the basis of the original return filed u/s 139 of the Act terminates/abates and the entire assessment is re-initiated/re-started afresh on a de-novo basis on the basis of Return filed u/s 153A of the Act. Even in the context of completed/unabated assessment proceedings, it m....
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....nd the arguments advanced by the Learned Counsel for the assessee, the main contention is not with regard to abatement of proceedings under section 153A of the Act. The limited issue is with regard to claim of deduction in response to notice issued under section 153A of the Act even if such claim was not made in the original return. In fact, the Ld. CIT(A) has not disputed that evidence is already on record but refused the claim of deduction on the limited ground that provisions of section 153A are meant for the benefit of the Revenue and not for the assessee. As we have pointed out in the preceding paragraphs, the ITAT Chennai Bench, Pune Bench and the Bombay Bench have considered identical issue in detail and observed that once return of income is filed under section 153A of the Act, it has to be considered as a return of income filed under section 139 of the Act and all other provisions would apply as though it is a return of income filed under section 139 which includes reconsideration of any deduction permissible under the law. It is also not in dispute that the assessee has placed all the facts on record even in the original return but did not claim set off of the expenditure....
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.... 102. Further, the proposition that fresh claims of deductions can be made in returns filed u/s 153A of the Act even though such deductions were not claimed in the original returns has been decided in favour of the assessee in a plethora of judgments by the Hon'ble High Courts and various benches of this Tribunal across the country (cited earlier) and hence is no longer res integra. 103. Next, the observation of ld. D/R that if an assessee is allowed to claim an allowance or deduction u/s 153A of the Act not claimed earlier, it would mean that even in cases where the appeal arising out of completed assessment has been decided in cases by ld. CIT(A), ITAT and the High Courts, on a notice issued u/s 153A of the Act, ld. AO would have power to undo what has been concluded does not hold good for the pending/abated assessment proceedings for the impugned years under consideration. Since the proceedings for the impugned years were pending i.e., not concluded as on the date of search, there is no question of any concluded assessment orders for the impugned years or issues arising therefrom which have been decided by the appellate authorities or the Hon'ble High Court and are sought to....
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....e Assessee had filed its Returns of Income u/s 153A of the Act on 13.02.2021 i.e., within the time limit of 10 days permitted in the Notices issued u/s 153A of the Act. Further, prior to e-filing of the aforesaid Returns of Income, the assessee had electronically furnished the Report of Audit (as required u/s 80IA(7) of the Act) in Form 10CCB in support of its claim of deduction u/s 80IA(4)(i) of the Act in respect of the impugned years (as per details set out in the Table at page 383 of ld. CIT(A)'s order) on 12.02.2021. Thus, the corresponding Reports of Audit (in Form 10CCB) for claiming deduction u/s 80IA(4)(i) of the Act in respect of the impugned assessment years were electronically furnished by the assessee before the expiration of the time permitted to the Assessee to furnish Income Tax Returns in compliance with Notice u/s 153A of the Act. 109. Since the issue at hand pertains to Section 80IA(7) of the Act, the corresponding provisions (insofar as relevant for the impugned assessment years) are reproduced hereunder for reference: "(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accoun....
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....of the Act] and further since these Returns of Income (u/s 153A of the Act) are treated as Income Tax Returns filed u/s 139(1) of the Act, these Returns of Income are to be taken / treated as having been furnished within the time limit as per Section 139(1) of the Act and hence the corresponding Form 10CCBs filed by the assessee [for the aforesaid Assessment Years (i.e. AY 2017-18, AY 2018-19 & AY 2019-20)] are also to be taken as furnished within the time limit as per Section 139(1) of the Act. Further, since these Form-10CCBs, as aforesaid, are to be taken /treated as having been furnished within the time limit as per Section 139(1) of the Act, the assessee's claim for Deduction under Section 80IA(4)(i) of the Act cannot be rejected on the ground that the corresponding Forms (i.e. Form 10CCBs) were filed belatedly. 113. In course of the hearing before us, ld. D/R reiterated the reasoning advanced by ld. AO. in the impugned assessment orders while disallowing the claim of the assessee u/s 80IA(4) of the Act [i.e., the purported failure on the part of the assessee to file the requisite audit report within the time specified u/s 80IA(7) of the Act] whereas ld. Counsel for the ass....
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....e 518 of the CIT(A)'s Order) and (ii) Construction of Tunnel T74-R balance work at North Portal from Km 130/950 to Km 133/910 (Approx) on Katra-Banihal Section of Udhampur - Srinagar- Baramulla New BG Railway Line Project (Package t-74R-B(N)] (details compiled at page 495 of ld. CIT(A)'s order. Ld. D/R has relied upon Circular No. 717 dated 14.08.1995 and the provisions of section 80IA(4)(i)(c) of the Act to aver that the deduction u/s 80IA(4) of the Act should be in respect of income derived from the use of infrastructural facility whereas the above projects were still in the initial stages of construction i.e., not completed. He has thereafter gone on to allege that the Assessee was merely a 'works contractor' as opposed to a 'developer' and hence not eligible for deduction u/s 80IA(4) of the Act. 117. In regard to the above, we firstly note that the Appeals filed by the Department before us merely challenge the order of ld. CIT(A) on two grounds viz. (a) allowing fresh claims of deductions u/s 80IA(4) of the Act made in Returns filed u/s 153A of the Act despite the fact that the said claims were not made in the original Returns filed u/s 139(1) of the Act and (b) allowing ded....
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....) of the Act is also contrary to the views taken by the Hon'ble Courts and Tribunals in a catena of judgments wherein the Hon'ble Courts and various benches of the ITAT have uniformly opined that in order to avail a deduction, the assessee could either (i) develop; or (ii) operate and maintain or (iii) develop, operate and maintain the facility. Per the ratio of judgments rendered in the above cases, the requirement of developing, maintaining and operating an infrastructure facility was never regarded to be cumulative, even prior to the amendment to section 80IA of the Act by Finance Act, 2001. We derive support from the judgment rendered by the Hon'ble Bombay High Court in the case of CIT vs. ABG Heavy Industries Limited [322 ITR 323 (Bom), Judgment dated 15.02.2010] wherein the Hon'ble Bombay High Court opined and held as under: "24 ..................Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after April 1, 1995. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintainin....
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....d against the Revenue." 120. Thus, the assessee is entitled to deduction u/s 80IA(4) of the Act only in respect of development of infrastructural facility irrespective of whether it operates and maintains such facility. Similar judgments have been rendered in a plethora of other cases which have been cited by ld. CIT(A) in the impugned appellate order. However, for the sake of brevity and more so, since the impugned issue has not been impinged upon in the grounds of appeal filed by the Department, we are not delving into it any further. 121. Further, apropos ld. D/R's contention that the assessee is a 'works contractor' and not a 'developer' of infrastructural facilities, we find that the Kolkata Bench of the Tribunal has in the past allowed similar claims u/s 80IA(4)(i) of the Act of the assessee for AYs 2003-04 & 2004-05 [vide ITAT order dt. 06.08.2021 in ITA Nos. 285 & 279/Kol/2020], A.Y 2005-06 [vide ITAT order dt. 20.12.2017 in ITA No. 989/Kol/2013] and for A.Y. 2006-07 [vide ITAT order dt. 10.01.2018 in ITA No. 990/Kol/2013]. Thus, the fact that the assessee is a 'developer' of infrastructural projects and is eligible for deduction u/s 80IA(4) of the Act in respect of i....
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....where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 17. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter- and if there was not change it was in support of the assessee- we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-Tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections. 11 and 12 of the Income Tax Act of 1961." 122. The compliance with the remaining conditions viz. (i) ownership of the enterprise by a company registered in India or by a consortium; (ii) an agreement with the Central ....