TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 527
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.... 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 erred in appreciating the fact that the appellant year after year, assessed under section 143(3) of the Act and no such additions ....
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....wed 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 deleted the following additions made by the ld. AO: Vehicle running expense: Rs. 84,89,594/- Repair and Maintenance Rs. 1,79,36,625/- Additional depreciation amounting to Rs. 3,23,72,494/- ....
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....ted 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 disallowance is purely on guess work and first ld. AO has to reject the books of accounts and then can compute disallowance on estimate basis. Further, there is no material on record that the assessee had claimed any unreasonable e....
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.... 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 1,54,08,401.00 11 GSB Expenses 1,12,86,445.00 Total 1,74,28,34,235.00 16. 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. Further, it is noted that ld. AO had averred that the assessee had made some payments to Mizo Tribals without deducting any tax....
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....essing 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 made an ad-hoc and general disallowance by resorting to estimation without rejection of the Books of Accounts of the Appellant. In the result, the Appellant has been fastened with a disallowance of a magnitude which the Appellant had not faced in any of the earlier assessments completed in the case of the Appellant for any of the earlier assessment years wherein the assessments have been completed under Section 143(3....
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....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. The Appellant has been regularly following the same method of accounting and the Accounts of the Appellant have been duly audited by a qualified Auditor under Section 44AB of the Act. Hence, in my considered opinion, in this situation, no addition can be made without specifying the exact bills or vouchers which, in the opinion of the Ld. AO, were not proper or which were defective. In the presence of audited Books of Accounts, the Ld. Assessing Officer cannot estimate the profits of t....
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....owance 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 long as the Best Judgement has nexus to material on record and the discretion in that behalf has not been exercised arbitrarily or capriciously, it is not open to scrutiny in reference proceedings to give rise to a question of law or to a mixed question of law and fact. 3. In case of CIT v. Eastern Commercial Enterprises [1994] 210 ITR 103 (Cal.) it was held that where the assessee has given a comparative instance of gross profit rate, it is necessary for the department to come to a finding as to the n....
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....ed 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 accounts. However, ld. AO had averred that the aforesaid expense head was designed by the assessee just to create a sub-head to claim exaggerated expense as there was no proper base of claiming such expenditure when all expenses were already covered under materials consumed. Ld. AO had referred to some purported discrepancies being attributable to some expenses which were claimed purportedly by the assessee twice. These details are at Page 101, Para 4 of the impugned Assessment Order of which is reproduced hereunder for reference: "There are ....
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....jects 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 should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated but the same was not done by ld. AO. Ld. CIT(A) also held that impugned disallowance has been made by ld. AO merely on suspicion that the assessee had booked "inflated expenses" rather than on any evidence or proof thereof and therefore, on this count alone, the impugned addition cannot be sustained. It is settled that suspicion, however strong, cannot take place of material proof in support of any findings. 28. On perusal of the assessment order we observe that ld. AO has not pointed out any instance of claim of e....
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....ual 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 matrix and operating in the same geographical location in which the assessee had carried out its business during the above assessment year. 30. Further, as contended by ld. Counsel for the assessee, we note that executed contracts/works are in far flung areas which are not geographically scattered but have a tough and hilly terrain and are not adequately connected to the means of transport and required infrastructure and thus, the assessee has to incur comparatively higher expense for same work at a far off contract site than what it might have incurred for same work at a place which is geographically situated. However, t....
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.... 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 same is as under: 2. Vehicles: Rs. 4,79,10,612/- 3. JCB: Rs. 1,40,47,786/- 4. Total Rs. 6,19,58,397/- 33. Complete details of the block of assets, written down value and depreciation claimed on the aforesaid vehicles were placed before ld. AO and the same are placed at pages 740 to 753 of the paperbook filed before us. Ld. AO on an analysis of the plant and machinery disclosed under the Block 30%, came to a conclusion that that the assets stated to be under 30% block are actually eligible for depreciation @ 15%. Ld. AO observed that since these plant and machinery which mostly consists motor vehicles are eligible for d....
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....). 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), for this reason alone, the impugned disallowance is not legally sustainable. 37. It is also noteworthy to adduce to the argument raised by the ld. Counsel for the assessee who brought to our notice that the case of the assessee was selected for Limited Scrutiny and reference made to notice issued u/s 143(2) of the Act dated 01.09.2015 placed at page 1 of the paperbook wherein it has been clearly mentioned that the case has been selected under CASS for Limited Scrutiny. However, the issues are not defined in the notice u/s 143(2) of the Act. Thereafter, ld. Counsel for the assessee referred to the notice u/s 142(1) of the Act dated 22.04.2016 wherein l....
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....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 2009-10 30-06-2014 143(3)/263 3.3 21,73,214 20-07-2016 CIT(A)-16,Kolkata Yes Allowed on Merits 2010-11 27-12-2016 143(3)/147 3 85,17,966 03-11-2017 CIT(A)-8,Kolkata Yes Allowed on Merits 2011-12 27-12-2016 143(3)/147 3 1,44,44,778 14-03-2018 CIT(A)-5,Kolkata Yes Allowed on Merits 2012-13 31-03-2015 143(3) 2.2 84,86,809 27-02-2018 CIT(A)-3,Kolkata Yes Relied on CIT(A) orders for other AY's 2013-14 30-03-2016 143(3) 4 60,96,128 2013-14 18-12-2017 143(3)/147 3 71,40,599 27.07.2022 CIT(A), Guwahati 40. From a perusal of the above chart, it is evident that the ld. CIT(A)s vide their different orders passed in the case of the a....
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....ssessee. 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 maintained various kinds of motor vehicles to carry workers to the sites and for the use of the officials/directors. In its return of income, the asessee is found to have shown 30% on the WDV of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.l,70,28,233/- @ 30%. The allowable depreciation rate as per 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 bl....
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.... 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 depreciation claimed @ 30% and restricted depreciation to 15% and disallowed Rs. 85,17,966/- as excess depreciation. The main reason given by the Assessing Officer in his assessment order u/s 143(3) of the Act, was that the explanation given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher 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 difficult areas including North East. The assessee had made the same claim in assessment year 2009-10, whi....
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.... 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 had been decided by the Commissioner of lncome-tax in the earlier proceedings, a different and contradictory stand should have been taken." We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. 11. We note that the A.O. 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 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 theassessee 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 us....
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....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 at the rate of 30%. However the Assessing Officer has allowed depreciation at the rate of 15% only. it has been argued that the issue is covered by the orders of my predecessors in AY 2007-08 and AY 2010-11. In the AY 2007-08 in appeal No.754/CIT(A)-16/Kol/2014-15/C- 15(1)/Kol order dated 20/07/2016 it has been held as under:- 'I have gone through the submissions of the AR I find that the AO is not justified in not allowing excess depreciation, while the AR has made the case that the tipprs are used for the transportation of goods, although the hire charges are received directly. Reliance has been made by the AR on the decision of Bombay High Court in the case of CIT vs. S.C. Thakur 322 ITR 463. This case of Bombay High Court is identical to the case of the assessee. Reliance has been made on the CBDT's Circular No. 609 dt. 29/07/1991. This circular talks about the higher depreciation on motor lorries used in the assessee's business of transportation of goods on hi....
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....arges 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 and Haryana High Court in the case of CIT vs. Rakesh Jain (2013) 350 ITR 230. After a careful consideration of the submission of the assessee and relevant assessment records, the addition of Rs.85,17,966/- on account of additional depreciation claim on higher rate is allowed. This ground of appeal is succeeds, and therefore, allowed.' It is therefore seen that the issue has already been decided in favour of the assessee by my predecessors and additional depreciation claim in this case has been allowed. Accordingly the claim of the assessee company for depreciation of Rs.8486809/- in the impugned year is hereby allowed." 5. Suffice to say, learned departmental representative fails to dispute that this first issue bet....
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....the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its claim of excess depreciation. 6. In response, the assessee submitted the written reply to the assessing officer as follows: "........ the assessee company is carrying on business of civil construction and manufacturing of construction material. It is doing civil construction in various places in India particularly in North Eastern Region. The company has purchased various light and heavy vehicles for its civil construction work and other official work such as trucks, tippers, tractor, car motor cycle etc. The assessee company has claimed depreciation on such vehicles at 30%. All the heavy vehicles are not used by the assessee company for substantial part of the year and therefore, it gives such vehicles on hire to other contractors carrying construction work in nearby places to earn more income. Some of the 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....
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....ils of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The Counsel 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 A.O. This method of accounting has been followed by the Assessing Officer in previous year and no doubt were raised by the A.O. even in scrutiny assessments. Therefore, a method followed by the Assessing Officer in previous year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or 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&....
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....tion is, therefore, upheld and the grounds of appeal of the Revenue is dismissed." 42. We find that ld. CIT(A) has correctly appreciated the facts of the case of the assessee and stated that "Therefore, for above reasons, being bound by decision of Hon'ble ITAT Kolkata, in view of the Principles of Consistency (per supra), in the absence of any adverse material on record and considering the fact that the reasons based on which the impugned disallowance was made are incorrect and legally unsustainable, the disallowance of Rs. 3,23,72,494/- which is impugned in the instant Ground of Appeal, is being, hereby, deleted. The instant Ground of Appeal is, accordingly, allowed." 43. Thus, since the issue of excess depreciation is squarely covered against the Revenue by the decision of Coordinate Kolkata Bench extracted (supra), and since ld. D/R failed to put forth any binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A) deleting the disallowance of excess depreciation of Rs. 3,23,72,494/-. Accordingly, Ground No. 3 raised by the Revenue is dismissed. 44. Ground no. 4 raised by the Revenue is on account of disallowance of Rs. 3,05,471/- u/s 14A of ....
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....consistency in the finding of ld. CIT(A) duly supported by judicial pronouncements referred above and appearing in the impugned order consistently holding that disallowance u/s 14A of the Act cannot exceed the exempt income earned by the assessee and the same holds good prior to amendment made in Section 14A of the Act by Finance Act 2022. Thus, no infirmity is called for in the finding of ld. CIT(A). Accordingly, Revenue's ground no.4 is dismissed. 48. Ground no. 5 raised by the Revenue is general in nature. 49. In the result, the appeal filed by the assessee for Assessment Year 2014-15 in ITA No. 43/GTY/2022 is allowed and appeal filed by the Revenue for Assessment Year 2014-15 in ITA No. 02/GTY/2022 is dismissed. 50. Now, we take up the appeals of the Revenue in ITA Nos. 37 to 39/GTY/2022 for the Assessment Years 2017-18, 2018-19 & 2019-20. 51. The common Grounds of Appeal taken by the Department in respect of the impugned AYs 2017-18, 2018-19 & 2019-20 read as under: "1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 ....
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....to the assessee: "(i) Notices u/s 153A dated 04.02.2021 for A.Ys 2014-15 to 2019-20 (i.e., six A.Ys preceding the A.Y relevant to the P.Y in which the search was conducted). (ii) Notice u/s 143(2) dated 28.06.2021 for A.Y. 2020-21 (i.e., the A.Y relevant to the P.Y in which the search was conducted)." 54. The years covered in the impugned appeals before us are A.Ys. 2017-18, 2018-19 and 2019-20. Thus, we shall be restricting our discussions to the said years only. Notices issued u/s 153A dated 04.02.2021 for A.Ys. 2017-18, 2018-19 and 2019-20 were authenticated (i.e., digitally signed) by the ld. AO on 05.02.2021 and were required to be complied with by the assessee within 10 days of service of such notices. Accordingly, the time for furnishing the Returns of Income in compliance to Notice u/s 153A of the Act in respect of the impugned years was to expire on 15.02.2021. In response to the Notices issued u/s 153A of the Act, the assessee filed its Returns of Income u/s 153A of the Act for the years under appeal on 13.02.2021 i.e., well within the time allowed under the Notices issued u/s 153A of the Act and claimed deduction u/s.80IA of the Act for the first time and the detail....
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....hat, for the purposes of Section 80IA, the Assessee was a "Works Contractor" and NOT a "Developer of Infrastructure". 56. Being aggrieved, the assessee assailed the above Assessment Orders u/s 153A/143(3) of the Act for the impugned assessment years in appeal before ld. CIT(A) challenging the disallowance of assessee's claim of deduction u/s 80IA(4) of the Act in respect of the above years. 57. Before ld. CIT(A), the assessee filed detailed written submissions challenging the disallowance of deduction claimed u/s 80IA(4) of the Act by the ld. AO vide impugned Orders passed u/s 153A/143(3) of the Act for AYs 2017-18, 2018-19 and 2019-20. The crux of the assessee's submissions before ld. CIT(A) can be summarized in following manner: "(i) Firstly, a Return of Income furnished in compliance with a notice issued u/s 153A of the Income Tax Act, 1961 substitutes the Original / Earlier Return of Income furnished (prior to the Date of the Search) u/s 139(1) of the Act. (ii) Secondly, since a Return of Income furnished in compliance with a notice issued u/s 153A of the Act substitutes the Original / Earlier Return of Income furnished (prior to the date of the Search) u/s 139(1) of the ....
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....t as referred to u/s Section 139(1) of the Act. In view of Paras (i) & (ii) supra, even though, not having claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Act or by way of a Revised Return, the Assessee was still entitled to claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. (iii) That, for the purposes of Section 80IA, the Assessee shall be treated as a "Developer of Infrastructure Facilities" and not a "Works Contractor" as concluded by the A.O." 59. Based on the above reasoning, ld. CIT(A) deleted the disallowances made by ld. AO in respect of deductions claimed by the assessee u/s 80IA(4) of the Act for the impugned AYs 2017-18, 2018-19 and 2019-20, except for two undertakings which pertained to AY 2019-20 [in respect of which development had not started/commenced on or before 01.04.2017 in view of the second proviso appended to section 80 IA(4)(i) of the Act] in the manner as follows: TABLE 4 AYs. Aggregate amount of deduction as claimed by the Assessee u/s 80IA (Rs.) Aggregate amount of deduction disallowed by the Ld. AO (Rs.) Aggregate amount of d....
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....r fresh claim of deduction u/s 80IA(4) of the Act can be made in returns filed pursuant to section 153A of the Act when the same has not been claimed in original returns u/s 139 of the Act and (ii) whether, in terms of section 80IA(7) of the Act, the Audit Reports in Form 10CCB furnished within the time limit allowed in the Notices u/s 153A of the Act can be treated as filed within the time specified u/s 80IA(7) of the Act, given that the same were not filed with the original returns u/s 139 of the Act. 63. Barring the above, the Department has impliedly accepted the assessee's compliance with all the other conditions specified u/s 80IA(4) of the Act vis-à-vis the assessee's claim for deduction u/s 80IA(4) of the Act in respect of the impugned infrastructural facilities for the impugned AYs 2017-18, 2018-19 and 2019-20. The assessee has not filed any appeal before us to the extent the impugned additions/disallowances of Rs. 12,78,15,656/- in respect of deduction claimed u/s 80IA of the Act vis-à-vis two infrastructural projects for AY 2019-20 that have been sustained by the ld. CIT(A) in view of the applicability of second proviso appended to section 80IA(4)(i) of th....
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....of correct legal position, were claimed for the impugned abated AYs 2017-18, 2018-19 & 2019-20 in view of the second proviso to Section 153A of the Act which provides that all pending assessments (wherein no such deductions had been claimed) and reassessments pending on the date of search shall abate. 68. The reasoning advanced by the ld. AO (insofar as relevant to the aforesaid grounds of appeal) in the assessment orders u/s 153A of the Act for the impugned years for disallowing the assessee's claim of deduction u/s 80IA of the Act in Returns of Income filed in response to notices issued u/s 153A of the Act for AYs 2017-18, 2018-19 & 2019-20 may be summarized as under: "(i) That, returns e-filed u/s 153A of the Act were in consequence of action taken u/s 132 of the Act and thus, couldn't be advantageous to the Assessee since the object of the legislation was to assess undisclosed income. If new claims of deduction or exemption were allowed to searched persons, then the same would be discriminatory to the other regular assessees who had lost a right as such to claim the deduction by efflux of time. (ii) That fresh claim of deduction u/s 80-IA in return u/s 153A, almost one and....
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..... The aforesaid assessment order(s) u/s 153A/143(3) of the Act for the impugned assessment years were challenged in appeal before ld. CIT(A). Apropos the impugned grounds challenging the disallowance of fresh claims of deduction u/s 80IA of the Act in returns filed u/s 153A of the Act, 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 vide his order u/s 250 of the Act dated 27.07.2022 finally held that even though the impugned claim of deduction u/s 80IA of the Act had not been made in the Original Income Tax Return filed u/s 139(1) of the Act or by way of a Revised Return, the assessee was still entitled to claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed by the assessee u/s 153A of the Act in respect of the impugned assessment years. 70. Before dealing with the findings of ld. CIT(A) in respect of the above grounds, it is expedient to quote the relevant provisions of section 153A(1) of the Act (as applicable for the relevant period): "Assessment in case of search or requisition. 153A. [(1)] Notwithstanding anything contained in section ....
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....his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.- For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) If any proceedi....
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....isclosed) by the Assessee after the search. (v) That, the assessment or reassessment for each of the prescribed A.Ys is to be compulsorily made afresh by the A.O. u/s 153A of the Act only on the basis of the Return filed u/s 153A and not on the basis of Return filed u/s 139(1) or any other section. (vi) That, the Return filed u/s 153A is not an addendum or an Annexure of the earlier Return filed u/s 139(1) and the proceedings u/s 153A are not an extension of the earlier proceedings which has either abated or remains unabated. (vii) That, for one assessment, for the purpose of making an assessment, there can only be one return. After the search or requisition, for the purpose of making assessment or reassessment u/s 153A, details filed in both Returns [i.e., u/s 153A and u/s 139(1)] cannot be used by the A.O at his whims and fancies i.e., he cannot choose Return filed u/s 153A for the purpose of collecting taxes on additional income disclosed during the search and cannot rely on earlier Return u/s 139(1) for denying the benefit of deduction. The A.O cannot approbate and reprobate simultaneously. (viii) That, while completing assessment u/s 153A, ALL provisions (including pro....
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....ks about three things, viz. (a) First, about abatement of pending proceedings which were initiated on the basis of the Return filed u/s 139 (b) Second, about filing of fresh Return of income u/s 153A of the Act, and (c) Third, about assessment to be made on the basis of such fresh Return of Income u/s 153A. (xiii) That, no other section in the Act talks about abatement of the proceedings. Thus, once section 153A is invoked, then all other proceedings and the basis of those proceedings are extinguished. The entire process of the Return of Income and Assessment is initiated de-novo and completed afresh after section 153A is invoked for the purpose of assessment or re-assessment. (xiv) That, however, in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the total income, such orders will subsist at the time when a search is conducted or a requisition is made since there is no question of any abatement since no proceedings are pending. In this case, the A.O will assess or reassess the income strictly based on incriminating material found during the course of search or requisition. (xv) That, h....
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....et Further, in the case of the Appellant, as on the date of the Search (i.e. on 20.09.2019), the assessment proceedings for A Y2018-19 & AY2019-20 were pending since either the time limit for issuance to a Notice under Section 143(2) of the Income Tax Act, 1961 had not expired OR the time limit to furnish a Return of Income was still available. Lastly, since on the date of Search (i.e. on 20.09.2019), the Appellant could not have furnished any Income Tax Act, 1961 in respect of the Assessment Year 2020-21 (relevant to the financial year 2019-20 during which the Search was conducted) since the relevant Financial Year had not expired and therefore the assessment proceedings for the aforesaid Assessment Year (i.e. AY 2020-21) were the Original/Regular Assessment Proceedings and could be said to pending. 74. Ld. CIT(A) (at pages 223 to 233 of his Order) has also taken note of the fact that the ld. AO, vide letter no. 88 dated 07.07.2022 had admitted that the original/regular assessment proceedings initiated u/s 143(3) of the Act for AYs 2017-18 & 2018-19 had abated and further for AY 2019-20, since the Income-tax Returns had not been furnished till the date of search (since the 'due....
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....Kantibhai Savalia vs. DCIT [2019 (12) TMI 250 - IT (SS) Appeal Nos. 76 To 84 & 887 To 889 (Ahd.) Of 2015, order dated 17/09/2019] - ITAT Ahmedabad (vii) Shree Yamuna Pulses vs. ACIT [2013 (2) TMI 344 - IT(SS)A No.233, 234, 235, 236, 237, 238 and 239/Ahd/2010, order dated 07/08/2012]- ITAT Ahmedabad (viii) ACIT vs. Splendor Landbase Limited [2018 (6) TMI 444 - I.T.A. No.2461/DEL/2016 And C.O. NO. 215/DEL/2016, order dated 06/06/2018] - ITAT DELHI (ix) A. Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - TA.No.975/Hyd/2015, order dated 19/08/2016] - ITAT Hyderabad" 77. Next, ld. CIT(A) has placed reliance on the following judgments which are directly relevant to the issue at hand, wherein the Hon'ble Courts have opined and held that fresh claim of deduction u/s 80IA of the Act can be made in Returns of Income filed in response to notice u/s 153A of the Act although the same was not made in the original Return of Income filed u/s 139 of the Act: "(i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956 - Income Tax Appeal No. 29 of 2016, judgment dated 12/07/2017] - Allahabad High Court - SLP filed by the Department against the aforesaid Judgment of the Hon'ble Allahabad Hi....
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....ns (filed, as aforesaid) become non-est (i.e. a nullity). 4. That, in respect of the Assessment Years whose assessment were pending / had abated, since the Returns of Income filed in compliance with the Notices issued under Section 153A of the Act substitute the Original/Earlier Income Tax Returns (filed prior to Search or even afterwards) under Section 139(1) of the Income Tax Act, 1961, an assessee was entitled to make Fresh/ New/ Revised Claim in the aforesaid Returns (i.e. under Section 153A), notwithstanding that the aforesaid claims were not made by the assessee in earlier income tax returns filed prior to /after the Search." 80. Ld. CIT(A) has also opined (at page 367 of his order) that even if the assessee, at the time of filing the Returns of Income u/s 139(1) of the Act was under a mistaken belief that he was not entitled to the said deductions under Section 80IA of the Act and, subsequently, on a re-think or on legal advice came to believe that he was actually entitled to the said deductions, the deductions permissible to the assessee would depend on the provisions of Law and not on the view which the assessee might have taken of his rights to be entitled to such dedu....
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.... Return, may make the said claim during the Appellate Proceedings. He has placed reliance on the following judgments in this regard: "(i) Himachal Gramin Bank vs. DCIT [(2009) 176 Taxman 433(HP)] - Himachal Pradesh High Court (ii) V. Lakshmi Reddy vs. ITO [(2011) 196 Taxman 78 (Mad)] - Madras High Court (iii) CIT vs. Jai Parbolic Springs Ltd. [(2008) 306 ITR 42 (Del.)] -Delhi High Court (iv) CIT vs. Ramco International [221 CTR 491 (P&H)] -Punjab and Haryana High Court (v) CIT vs. Bharat Aluminium Ltd. [303 ITR 256 (Del.)] -Delhi High Court (vi) CIT vs. Jindal Saw Pipes Ltd. [(2010) 328 ITR 338 (Delhi)]- Delhi High Court (vii) Pruthvi Brokers & Shareholders Pvt. Ltd. [[(2012) 349 ITR 336 (Bom.); ITA No.3908 of 2010 decided on 21/06/2012] - Bombay High Court (referred to at page 927 of the CIT(A)'s Order) (viii) Giridharlal Parasmal v. State of Mysore [(1967) 20 STC 64 (Mys)] - Mysore High Court (at page 928 of the CIT(A)'s order)" 82. Referring to Article 265 of the Constitution of India which provides that "no tax shall be levied or collected except by the authority of law", ld. CIT(A) (at page 925 of his order) has averred that in terms of Article 265 of the Cons....
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....f the Act made by the assessee in its Returns filed in response to Notices issued u/s 153A of the Act. He also filed a written submission dated 25.01.2023 reiterating the reasons advanced by ld. AO while making the impugned disallowance in the impugned assessment orders u/s 153A of the Act qua the years under appeal. Vide his written submissions, apropos the impugned grounds of appeal, ld. D/R has further stated as follows: "(i) That the Ld. CIT(A) has failed to appreciate that the A.O hasno power to entertain a claimmade by the Assessee otherwise than by filing a revised return - the Ld. DR has placed reliance on the judgment of the Hon'ble Supreme Court in Goetze (India) Ltd.Vs. CIT (2006) 284 ITR 323 (ii) That, since the Assessee had not filed the return of income within the due date prescribed/s 139(1) of the Act, the right course of action for the Assessee would be to file condonation of delay u/s 119(2)(b) & (c) of the Act with the Appropriate Authority for filing of return of income, which was not done. (iii) That the Hon'ble Jodhpur ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 had held that the assessments or reassessments made pursuance to ....
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....e Act for the impugned assessment years were earlier filed by the assessee without claiming any deduction u/s 80IA of the Act. While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the impugned assessment years, the assessee filed the corresponding forms (being Report of Audit of the Eligible Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021) [this aspect has been dealt with later on in this Order while deciding Ground No. 2]. The details of assessment year-wise Form 10CCB e-filed and the corresponding amount of deduction claimed by the assessee in respect of the corresponding eligible undertakings are tabulated at page 153 of ld. CIT(A)'s order. 87. Admittedly, as on the date of search i.e., 20.09.2019, the assessments for the impugned AYs 2017-18, 2018-19 & 2019-20 were pending on account of the following reasons: "(i) A.Y. 2017-18 - Assessment proceedings initiated vide Notice u/s 143(2) dated 24.09.2018 (i.e., issued prior ....
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....rn of Income filed u/s 153A of the Act [and not on the basis of the original Returns filed earlier u/s 139(1) of the Act] by virtue of the provisions of section 153A(1)(b) of the Act and the first proviso thereto. 90. Even though the word "abate" has not been defined under the Income-tax Act, 1961, the said expression has been judicially explained vis-à-vis section 153A of the Act by the Hon'ble Courts in the several judgments, few of which are extracted hereunder: "(i) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020], it was held/averred, as follows, by the Hon'ble Bombay High Court: "8.3. The second proviso says that any assessment or re-assessment proceedings falling within the said period of six assessment years pending on the date of initiation of search under Section 132 or making of requisition under Section 132-A shall abate. The third proviso mentions that the Central Government may frame rules to specify such class or classes of cases in which the assessing officer shall not be required to issue notice for assessing or re-assessing the total income for the said six assessment years. 8.4. Reverting back to the secon....
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.... To abate means to diminish or to take away. The word 'abatement' has been defined in the Concise Law Dictionary (P. Ramanatha Aiyer) as follows: "Abatement. "Abatement" means, in respect of any chargeable accounting period, ending on or before the 31st day of March, 1947 a sum which bears to a sum equal to: (a) in the case of a company, not being a company deemed for the purposesof Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having(i) nor more than two working partners, one lakh of rupees, or (ii) three working partners, one and a half of rupees, or (iii) four or more working partners, two lakh of rupees, or (c) in the case of a Hindu undivided family, two lakhs of rupees, or (d) in any other case, one lakh of rupees, The same proportion as the said period bears to the period of one year and, in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. [Business Profits Tax Act (21 of 1947), S.2 (1)] Remova....
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....ears were the subject of assessment for the Revenue for the first time in the case of abated assessment proceedings of the said years. Consequent to the notice issued u/s 153A of the Act, the earlier Returns of Income filed u/s 139 of the Act for the impugned years for the purpose of assessment which were pending on the date of search, were to be treated as non-est (i.e., a nullity) in law [see para 11 of the judgment of the Hon'ble Bombay High Court in CIT vs. B.G. Shirke Construction Technology Ltd. (395 ITR 371)] 92. Upon a conspectus of section 153A(1)(a) of the Act, it is seen that it provides that "the provisions of this Act" [i.e., the provisions of Income-tax Act, 1961, which impliedly includes the deduction under Chapter VI-A], "shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act" thus, implying that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A of the Act) shall apply to a Return filed in compliance with the Notice issued u/s 153A of the Act. The Explanation to section 153A(2) of the Act further, lays down that "save as otherwise provided in ....
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....e Act suspends, for the purpose and to the extent as indicated in such provision, the operation of several other provisions of the Act, including Section 139 and even Section 147 in course of any reassessment. In other words, when a search is initiated under Section 132 of the Act, the assessee is not required to file the assessee's return till such time that the assessee receives a notice under Section 153A(1)(a) thereof. Once such notice is received the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. To boot, the second proviso to Section 153A(1) of the Act, insofar as it is material for the present purpose, mandates that any "assessment or reassessment ... relating to ... the relevant assessment year or years ... pending on the date of initiation of the search under Section 132. ... shall abate". It goes without saying that since the search operations in this case were initiated on September 2, 2004, it was no longer necessary for this assessee to file his regular return by October 31, 2004 notwithstanding the mandate of Section 139(1) of the Act. The obligation to file the return remained suspended, in vi....
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....s 80IA of the Act in Returns of Income filed in response to notice u/s 153A of the Act despite the same not being made in the original Return of Income filed u/s 139 of the Act: "(i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956- ITA No. 29 of 2016, judgment dated 12/07/2017] - The Hon'ble Allahabad High Court held as under: "3. It was admitted on the following substantial questions of law: "(i) Whether the Income Tax appellate Tribunal was justified in allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A of the Act. "(ii) Whether the Income Tax Appellate Tribunal was justified under the facts and circumstances of the case in confirming the order of CIT (A) who has travelled beyond the statutory provision of Chapter VIA, u/s 80A(5) of the Income Tax Act, 1961 which clearly provides that if assessee fails to make a claim in his return of income of any deduction; no deduction shall be allowed to him thereunder". 4. Tribunal has justified deduction under Section 80IA on the basis of return filed under Section 153A by observing that for the assessment year 2009-10 and onwards, the time for filing revised ret....
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....ome of its projects had not been considered as eligible for this relief due to amendment introduced vide Finance Act No.2 of 2009 with retrospective effect from 01.04.2000 and that it had finally considered itself as eligible for the deduction in question as per various judicial pronouncements at that point of time. 19. The Assessing Officer's assessment order dated 22.03.13 declined assessee's section 80IA deduction claim on multiple grounds. He observed that this relief could not be allowed in absence of a revised return as per Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC). That the assessee had also filed a revised return on the same day which was not valid since submitted beyond a period of one year from end of the relevant assessment year. The Assessing Officer went on to quote date of section 153A notice i.e., on 20.07.2011 asking for return within 15 days of service. He observed that assessee's return; which was required to be filed on or before 11.08.11 inclusive of 15 working days; came on 30.09.2011 only. 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 s....
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....ot taxable and the corresponding claim can also be allowed to be raised for the first time even in section 254 proceedings. It has also come on record that the assessee had very well explained the reasons of having not raised the impugned scheme due to the corresponding legislative amendments in section 80IA followed by CBDT's explanatory memorandums. This tribunal in (2012) 22 taxmann.com 2(Hyderabad) ITO vs. S. Venkataiah also holds that an assessee's legally allowable claim which could not be raised owing to circumstances beyond its control and pressed later on by way of belated return, could not be declined on account of mere technicality. 29. Coming to the statutory aspect viewed from various legislative developments right from "block" to "search assessments" applicable up to 31.05.03 and w.e.f. 01.06.03 onwards; respectively, we find that the same sufficiently answer the Revenue's arguments. The former scheme of block assessment in section 158BCA(i) and (ii) read with 2nd proviso 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....
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....gh the same was credited to the assessee's profit and loss account being difference between the deferred sales tax and its NPV. 5. However, the primary question that arose before the AO was whether the claim which was not made in the earlier original return of income filed under Section 139(1) of the said Act, could be filed and considered in the subsequent return filed by the assessee in pursuance to notice under Section 153A of the said Act (which was consequent to search action conducted under Section 132 of the said Act). AO held that the assessee could not raise a new claim in the return filed under Section 153A which was not raised in the original return of income filed under Section 139(1). Thereafter, the claim was disallowed and was treated as "revenue receipt" 5.1. By order dated 15.04.2013, the first appellate authority i.e. the Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT(A)") upheld the order passed 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.....
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....ceding the assessment year relevant to the previous year in which search is conducted or requisition is made. Such returns of income shall be treated to be returns of income furnished under Section 139. Once returns are furnished, income is to be assessed or re-assessed for the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, once Section 153-A(1) is invoked, assessment for 6 assessment years immediately preceding the assessment year in which search is conducted or requisition is made becomes open to assessment or reassessment. Two aspects are crucial here. One is use of the expression "notwithstanding" in sub-section (1); and secondly, that returns of income filed pursuant to notice under Section 153-A (1)(a) would be construed to be returns under Section 139. The use of 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 a....
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....nating 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. 9. Therefore, from a critical analysis of the provisions contained in Section 153A(1) of the Act more particularly the key expressions as referred to above, it is evident that assessments or reassessments pending on the date of initiation of search would stand abated. Return of income filed by the person concerned for the six assessment years in terms of Section 153-A(1)(a) would be construed to be a return of income under Section 139 of the Act. ..... 12. In this 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 sai....
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.... under Section 153A(1). ....... 16. From the above we conclude that in view of the second proviso to Section 153A(1) of the said Act, once assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) which was not claimed in his regular return of income, because assessment was never made/finalised in the case of the assessee in such a situation." 96. Respectfully following the above judgments, we hold that pursuant to the search & seizure operation conducted in the case of the Assessee on 20.09.2019, since the pending assessment proceedings for the impugned AYs 2017-18, 2018-19 & 2019-20 had got abated by virtue of application of the second proviso to section 153A(1) of the Act, it was open for the Assessee to make a legitimate claim 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 asse....
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....gs (and not proceedings u/s 153A of the Act pursuant to a search action). On the said question, the Hon'ble Apex Court ordained that ld. AO had no power to entertain a claim for deduction not made in the return of income otherwise than by filing a revised return. The aforesaid judgment is clearly inapplicable to the disparate set of facts in the present case wherein pursuant to the search and seizure operations u/s 132(1), the original returns of income for the impugned assessment years [wherein no claim of deduction had been made u/s 80IA(4) of the Act] had become non-est (i.e., rendered to a nullity) and the fresh returns filed u/s 153A of the Act [wherein deductions had been claimed afresh u/s 80IA(4) of the Act] had substituted and taken place of the original returns filed u/s 139(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....
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....39(1) of the Act] are not delayed and hence the question of filing any condonation of delay does not arise. 100. Next, ld. D/R's reliance on the judgment of the Hon'ble Jodhpur Bench of the ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 to the effect that assessments or reassessments made pursuant to notice u/s 153A of the Act are not de-novo assessments and therefore no new claim of deduction or allowance can be made by the assessee is also misplaced. The judgment in the said case was rendered in context of completed assessment proceedings i.e., unabated assessment years which are not covered under the second proviso to Section 153A(1) of the Act. In case of completed/unabated assessment proceedings i.e., where assessment or reassessment 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., com....
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....ent case, making the ratio inapplicable to the present case. Further, insofar as the observation of the Delhi Bench in the above case to the effect that - fresh claims cannot be made u/s 153A of the Act which have the result of lowering income returned earlier considering that search proceedings are for the benefit of the Revenue - is concerned, it is seen that other benches of this Tribunal have taken a divergent view in this regard. To cite a few such judgments: "(i) Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - ITAT Hyderabad; TA.No.975/Hyd/2015, order dated 19/08/2016]: The Hon'ble ITAT Hyderabad held as under: "11. We have carefully considered the rival submissions and perused the record. As could be noticed from the grounds of appeal and 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 deduct....
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....d after the search operation was conducted but before the issuance of notice under section 153A of the Act. In para28 of its order, the Bench has observed as under: "28. Next we have to examine the decision of the Commissioner of Income tax(Appeals) rendered on the alternate ground raised by the assessees before him. The alternate ground was whether the returns filed in response to notices issued under section 153A can be taken as returns filed within the time limit stipulated under section 139(1). The Commissioner of Income-tax (Appeals) has decided in favour of the assessees holding that the returns filed under section 153A are to be treated as returns filed under section 139(1) within the time allowed under the statute." 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....
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....on of disallowance of deductions claimed by the assessee u/s 80IA of the Act in returns filed pursuant to notice issued u/s 153A of the Act on the ground that the assessee did not furnish audit report and particulars for claim of deduction u/s 80IA of the Act within the specified time. 107. The relevant ground reads as under: "2. The Ld. CIT(A) erred in procedural law when the assessee did not furnish requisite audit report and particulars for the claim for deduction u/s 80IA within the specified time." 108. In the instant case, as stated above, in response to Notices issued u/s 153A of the Act dated 04.02.2021 (authenticated by ld. AO on 05.02.2021) for the impugned AYs 2017-18, 2018-19 and 2019-20, the 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 pag....
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....of the Act, the said Forms 10CCB filed on 12.02.2021 were not only much beyond the due date but also generated 18 months after the date of search operation conducted in the case of the assessee on 20.09.2021. Thus, as per ld. AO, the assessee's claim of deduction u/s 80IA(4) of the Act was not allowable as the Assessee had failed to furnish the requisite audit report in Form 10CCB within the time specified u/s 80IA(7) of the Act. 112. On appeal, ld. CIT(A) vide his impugned appellate order u/s 250 of the Act has held that the Returns of Income filed in compliance with Notices issued u/s 153A of the Act substitutes the original Income Tax Returns [filed u/s 139(1) 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-....
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....ve observations, Ground no. 2 of the Department's appeal is dismissed. 116. Before concluding, it will be pertinent to mention that ld. D/R, vide his written submission dated 25.01.2023 has also tried to agitate certain issues which have neither been urged in the original Grounds of Appeal filed by the Department nor challenged vide any additional/supplementary Grounds of Appeal raised before us. In a nutshell, ld. D/R has culled out details of two projects awarded by IRCON International Ltd. to the assessee viz. (i) Construction of Tunnel T-5 (between Km 11 + 604 to Km 13+697 approx) on Sivok Rangpo Rail Link Project (details compiled at page 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 th....
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....e assessee u/s 80IA(4)(i) of the Act is in respect of profits derived from the 'development' of infrastructural facility (which is unconnected to the completion or the commencement or stage of operation of the facility) and not from its operation and maintenance. Thus, ld. D/R's assertion that the impugned project was at its nascent stage becomes irrelevant vis-à-vis the Assessee's claim of deduction u/s 80IA(4)(i) of the Act. 119. Next, the contention of ld. D/R that deduction u/s 80IA(4) of the Act is allowable only where the assessee starts operating and maintaining the infrastructural facility in terms of section 80IA(4)(i)(c) 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....
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....y was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the Finance Act of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to section 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature. 26. In view of the aforesaid observations, the question of law shall accordingly stand answered in favour of the assessee and 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....
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....re must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." Assessments are certainly quasi-judicial and these observations equally apply. 16. 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. 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 t....