TaxTMI 
TaxTMI 
2025 (9) TMI 209
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....entical. Therefore all the appeals were taken up together for hearing. 3. Brief facts relating to the case, as stated before us and as derived from the orders of the authorities below, is that the assessee is involved in carrying out infrastructure projects in India. Search action u/s 132 of the Act was undertaken on the assessee on 06.04.2017 as part of the main group searched i.e. Sadbhav Group. The main allegation leading to the search being that the assessee had given sub-contracts in large volumes to companies/firms/persons based in Kolkata, Mumbai, Hyderabad, Vadodra etc. which did not have any credentials and provided only accommodation entries. The parties from whom the assessee had so allegedly undertaken bogus sub-contracts were simultaneously searched. Based on statements and evidences gathered during these searches it was found by the AO that the assessee had booked bogus sub-contract expenses from the parties so identified. Accordingly, all expenses of sub-contract booked in relation to these parties were disallowed by the AO. Evidences pertaining to other bogus expenses booked were also found and disallowance/addition made of the same. 4. The AO also noted that ....
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....unt, and also disallowed assesses claim of deduction under section 35D of the Act. Employees contribution to ESIC /PF which was delayed was also disallowed by the AO under section 36(1)(va) of the Act. 8. The above, in sum and substance, summarises the additions/disallowances made by the AO in assessment framed for the impugned years before us u/s 153A/ 143(3) of the Act. 9. The assessee carried the matter in appeal before the ld.CIT(A) who : * restricted the disallowance made by the AO on account of alleged bogus sub-contract expenses to the extent of profit element embedded therein, being 20% thereof; * deleted the addition made by the AO under section 69A/69C of the Act read with section 115BBE of the Act. * allowed assessees claim to deduction u/s 80IA(4) of the Act to the extent originally claimed in the return filed u/s 139(1) of the Act and also to the enhanced income on account of disallowance of sub contract expenses. * allowed claim of ESOP expenses and deduction claimed under section 35D of the Act - While he confirmed, * the disallowance of enhanced claim of deduction u/s 80IA(4) of the Act in the return filed ....
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....ade in assessments framed u/s 153A of the Act for the years where there was no abatement of any pending assessments (Reference Hon'ble apex court decision in the case of Principal Commissioner of Income Tax, Central-3 vs Abhisar Buildwell (P) Ltd.(2023) 149 taxmann.com 399(SC). * that incriminating material/evidences found with third parties ought to have been used for framing assessment in terms of section 153C of the Act on the assessee and not u/s 153A of the Act as done in the present case. * that even otherwise, material found from other parties also was not incriminating, so as to warrant any addition on the basis of the same, since it was mainly statements of subcontractors allegedly owning up to be providing accommodation entries to the assessee with no corroborative evidence found ;and some jottings and scribblings; 16. Detailed arguments were made by both the sides, and reference was also made to various judicial decisions in support of their contentions, all of which were carefully considered by us. 17. What is derived from the above is that the entire/ major thrust of the argument of the Ld.Counsel for the assessee rests on the factual contention....
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.... Thus, main issues in the present case are booking of bogus expenses/bogus sub-contract expenses thereby generating unaccounted cash and various unaccounted cash expenses. The details on each of the above issues have been discussed in the paragraphs below with relevant evidences and materials on record. 21. Thereafter he has tabulated the paras where he has dealt with evidences found from various operators/entities, thus listing the various entities providing these bogus entries, at page 12 of his order as under: Issues dealing with Bogus sub-contract charges and generation of unaccounted cash through it Issues related to the cash flow given by the assessee and telescoping of cash expenses (other than those entities as stated in 6.1) 80IA(4) deduction Any other issues Sub-issue Para No. Sub-issue Para No. Sub-issue Para No. Sub-issue Para No. Parties of Kewalchand Jain (Mumbai based) such as Padmavati Infra, Orbit Corporation and Arihant Infrastructure 6.1.1 Unaccounted cash receipts by booking bogus Diesel expenses 6.2.1 80IA (4) deduction 6.3.1 Paper related to transaction of Rs. 18 lakhs (Assessee's submission) ....
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..... Shri Kewalchand Jain has admitted that he was in touch with various key persons of Sadbhav group. The mobile numbers of various key persons of Sadbhav group were found in the phone of Shri Kewalchand Jain. 4. Shri Kewalchand Jain had also sent messages regarding details of bogus entities to Shri Girish Patel. Shri Girish D. Patel is the key person of Sadbhav group who handles cash transactions of the group. Shri Girish D. Patel in his statement has admitted that he used to handle the cash with the help of Angadias on the instruction of Shri Vikram Patel. 5. During this course of search/survey, statements of various employees of Shri Kewalchand Jain and key associates of Shri Kewalchand Jain were recorded. They have admitted that Shri Kewalchand Jain is in to the business of providing accommodation entries and have provided accommodation entry to Sadbhav Group. 6. During the course of search, various evidences in the hard copy as well as in the soft copy were found which clearly indicate that Shri Kewalchand Jain is in the business of providing accommodation entries and he has provided accommodation entries to Sadbhav group. 7. From the various ....
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.... under: * Digital back up of K. C Jains phone revealed messages from parties seeking entries, sending their account no., amount of entry required, details of amount transferred to bank accounts of entities of K. C Jain providing the entry and also the serial no of Rs. 10 currency note for identifying person to whom money is to be returned and various such information * Financials of all entities which allegedly provided accommodation entry to the assessee were analyzed and it was found that they had declared very low income/ no income to tax which was found not commensurate with the scale of work awarded by the assessee to these concerns. * Further these concerns were found to have no fixed assets to perform the scale of work awarded. * Cash flow of all these entities revealed that all credits in the bank account received from the assessee were transferred immediately to other entities, mostly jewellers. 26. The main points derived from the corroborative evidences is detailed at page 35 of the order as under: * Entities which requires accommodation entries or the entities which want to increase its turnover approach Shri Kewalchand Ja....
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....so corroborates that same were for transfer cash in the case of M/s. SEL also. * Shri Kewalchand Jain used to earn commission in these transactions to the tune of 0.25-1.00% which was received in cash. Shri Atul Sangvi also used to earn commission to the tune of 0.25- 0.75%. 27. Para G notes that there was no documentary proof of work done by these entities by way of any agreement, purchase order, etc. Para H of the order records that commissions were sent to Departmental authorities in Mumbai to verify genuineness of the entities who in turn reported all of them to be bogus. 28. Finally at Para I, the inference from all of the above is detailed mentioning all material found and relied upon for finding entities of K.C Jain as providing only bogus accommodation entry of sub contract as under: 5. During this course of search/survey, statements of various employees of Shri Kewalchand Jain and key associates of Shri Kewalchand Jain were recorded. They have admitted that Shri Kewalchand Jain is into the business of providing accommodation entries and have provided accommodation entry to Sadbhav Group. 6. During the course of search, various evidences ....
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....ntities. 30. With respect to the assessee, K C Jain admitted to providing accommodation entry to the assessee through his entities, as also revealing the entire modus operandi of providing these accommodation entries. He admitted to being in touch with key persons of the assessee group and their mobile numbers were also found in his phone. Girish Patel, a key employee of the assessee, handling cash transactions was found to be have been sent messages by K C Jain regarding details of bogus entities and he admitted to handling cash with the help of angadias on the instruction of Vikram Patel. 31. Similarly with all other entities identified by the AO as providing accommodation entries tabulated in his order and reproduced by us at page 7 of our order, such identical adverse material was found.. 32. From the above facts it is abundantly clear that the contention of the Ld.Counsel for the assessee that only statement of the contractors and some jottings or notings were found during search is patently incorrect. In fact alongwith the statements various evidences were also gathered corroborating the modus operandi followed by way of email and other messages found from their phon....
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....es not arise because the source of the expenditure is duly explained. It is only the 'on money' which can be considered for the purpose of taxation. Once the 'on money' is considered as a revenue receipt, then any expenditure out of such money cannot be treated as unexplained expenditure, for that would amount to double addition in respect of the same amount. - [CIT v. Golani Brothers (2018) 300 CTR 245 (Bom)] 1.5 Once the undisclosed income had been determined in the hands of the assessee, it proved that there was availability of funds with the assessee, which, in turn, could be said to have been utilized for meeting unexplained expenditure. In view thereof, the telescoping of undisclosed income against undisclosed expenditure was allowed and addition of balance net undisclosed expenditure was made in the hands of assessee.-Vide Paras Rice Mills v. Asstt. CIT2015 TaxPub(DT) 2050 (ChdB-Trib). Also see, Asstt. CIT v. Ashok Kumar Agarwal 2014 TaxPub(DT) 3607(KolA-Trib). 1.6 From the above discussion it is concluded that whenever any receipt is treated as income then any expenditure out of such money cannot be treated again as unexplained expenditure ....
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.... 2.7. Observance of important religious festivals by labourers in general and migrant labourers in particular adversely affects progress of the projects. Many a time they remain absent from the project for longer duration, which ultimately results in undue delay completion of project. In these circumstances the Assessee Company has to suffer lot of expenses to protect -its goodwill. 2.8. Encroachments by locals / activists hampers the progress as getting them evicted is a time-consuming process. 2.9. In all the above cases, even though it is normal that there will be delay which are not attributable to the Assessee Company but still the department does not grant full extension for the period but levy liquidated damages which is an extra burden on the contractor. Also, a major factor affecting the infrastructure projects are the fluctuation in the market for the materials and also non-availability of skilled and unskilled labourers to the full extent of requirement. Further, once a site is mobilized, a fixed cost is incurred irrespective of any actual work being carried out. Machinery hired and labour have to be paid irrespective of whether a single brick being ....
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....the exigencies as discussed above, certain expenses are incurred which are difficult to prove to be genuine having regard to the complexity of the transactions and nature of industry in which the Assessee Operates. However, in no circumstances amounts so generated have not been retained as income. Though such expenses are not strictly prohibited under the law yet these are not third party verifiable. Such expenses are considered as inflow in the date wise cash flow as produced hereunder. 2.13. The project in-charge are always given a budget for such expenses for which they need not even take prior approval except for keeping the management informed and also to take approval for expenses which are higher than normal or represent a new set of problems. 2.14. Such expenses are necessity of business and are allowable as deduction. Further major amount generated is spent and only a small amount remains unspent. 2.15. The Assessee Company submits that in order to meet the above stated expenses and to remove impediments to work, funds were generated by booking inflated/non-genuine expenses including sub-contract expenses, etc. 3. Updated Cash flow in pl....
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....for making disallowance in the hands of the assessee since they were not found during search on the assessee. 38. During the course of hearing before us, the ld.counsel for the assessee was pointed out at bar that the Hon'ble apex court in the case of CIT, Chennai vs S. Ajit Kumar (2018) 93 taxmann.com 294(SC) has held that all material with the AO of the searched person is to be considered for framing assessment,irrespective of where the material is found. Ld.Counsel for the assessee countered by stating that the said decision was rendered in the context of different provisions of law dealing with search assessment, i.e block assessment proceedings under chapter XIV B of the Act, more particularly while interpreting the provisions of section158BB of the Act dealing with undisclosed income. He contended that the Hon'ble apex court in a recent decision in the case of Abhisaar Buildwell has held only incriminating material found during search on the assessee to be considered for framing assessment. 39. We do not find any merit in the contention of the Ld.Counsel for the assessee. We have gone through the order of the Hon'ble Apex Court in the case of S. Ajit Kumar (supra) .The ....
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....iod shall be the aggregate of the total income of the previous year failing within the block period computed, in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or, as the case may be, as increased by the aggregate of the losses of such previous year determined...... 158BH. Application of other provisions of this Act - Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter." (Emphasis supplied by us) 13) On a perusal of the above provision, it is evident that for the purpose of calculating the undisclosed income of the block period, it can be calculated only on the basis of evidence found as a result of search or requisition of books of accounts or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence. Section 158BB has prescribed the boundary which has to be foll....
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....ions (2) and (3) of Section 143." 15) The power of survey has been provided under Section 133A of the IT Act. Therefore, any material or evidence found/collected in a Survey which has been simultaneously made at the premises of a connected person can be utilized while making the Block Assessment in respect of an assessee under Section 158BB read with Section 158 BH of the IT Act. The same would fall under the words "and such other materials or information as are available with the Assessing Officer and relatable to such evidence" occurring in Section158 BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or found during the survey or any other method while making the Block Assessment. 16) In view of the foregoing discussions, we are of the considered opinion that the decisions relied upon by learned senior counsel for the assessee do not lay down the correct law. 17) In the result, all the appeals succeed and are allowed. The impugned orders are set aside and the orders passed by the Assessing Officer making the Block Assessment are restored. However, the parties shall bear their own co....
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....sly. 41. Though this decision may have been rendered in the context of block assessment proceedings but we hold that it is applicable even to the present prescribed procedure of search assessment u/s 153A of the Act, which was interpreted by the Hon'ble Apex Court in its subsequent decision in Abhisaar Buildwell(supra). The Ld.Counsel for the assessee heavily relied on the findings of the Hon'ble apex court at para 14 as under: 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthe....
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...." for an assessee searched. And therefore, borrowing from the same, we hold, that all material found during search conducted simultaneously on the assessee and/or its associates would constitute incriminating material. We hold, that incriminating material cannot be confined to only that found during search on the assessee, rejecting/ignoring the material found from others in proceedings simultaneously conducted. 44. Therefore, when the Apex Court in the case of Abhisar Buildwell (supra) held that addition in search assessments can be made only on the basis of incriminating material, it does not help the case of the assessee that only incriminating material found from search conducted on him alone is to be considered, since the interpretation of the word "incriminating material" by the ld.Counsel for the assessee is totally misplaced and very restrictive. In fact all adverse material found with the assessee and his sub-contractors in simultaneous search actions constitute incriminating material for the purpose of computing the income of the assessee, as held by the Hon'ble Apex Court in the case of S. Ajitkumar (supra). 45. Even otherwise, we find, that the proposition advance....
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....ot support the contention of the assessee. The provisions of section 153C of the Act are reproduced hereunder for better understanding: "153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other p....
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....he Revenue authorities for disallowance of sub-contract expenses. ISSUE NO.2 OF DENIAL OF OPPORTUNITY OF CROSSEXAMINATION: 57. One of the contentions of the ld.counsel for the assessee was that the addition on account of bogus sub-contract expenses and other expenses was made in violation of principles of natural justice, since the assessee was denied opportunity to cross-examine the subcontractors who in the statement had allegedly admitted to have provided bogus accommodation entries to the assessee. The reliance was placed on the judgement of the Hon'ble Apex Court in the case of Andaman Timber Industries Vs. Comm. Of Central Excise, Civil Appeal NO.4228 of 2006 order dated 02.9.2015. The ld.CIT(A) had dismissed this contention of the assessee stating that all copies of seized material/impounded material, as also statement of the persons, who were relied upon by the AO, were provided to the assessee during the assessment proceedings itself; that accordingly, there was no violation of principles of natural justice in passing the assessment order. 58. We have considered the contentions of the ld.counsel for the assessee, and after appreciating the facts of entire case, we....
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.... that the right to crossexamination the witness who made adverse report is not invariably attributes of the requirement of the dictum viz. audi alteram partem. The principles of natural justice do not require formal crossexamination. The relevant portion of the observation of the ITAT is as follows: "...ITAT has further held that, "As regards the dictum 'audi alteram partem' the assessee's basic contention was that the statements of witnesses and materials which were relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which were adverse to the assessee should have been disclosed to the assessee and the witnesses should have been offered for cross-examination. The right to cross-examine the witness who made adverse report is not an invariable attribute of the requirement of the said dictum. The principles of natural justice do not require formal cross- examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, of law that the revenue could not rely on any evi....
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....T had adjudicated the assessee's appeal for Asst.Year 2011-12 wherein the assessee had challenged restriction of deduction by the ld.CIT(A) to the tune of 16%, contending that the same be restricted to 8%. He pointed out that the ITAT had considered it fair and just to restrict the addition to the extent of 12.5% of the bogus purchases. He pointed out that in Asst.Year 2009-10 also, the AO on the basis of information received from the Maharashtra Sales Tax Department, it found that the assessee had claimed bogus purchase of material and accordingly had disallowed the entire purchases. The ld.CIT(A), however, had restricted the disallowance to 25% of the purchase, which in turn was restricted by the ITAT to the extent of 12.5% of the bogus purchase. Our attention was drawn to para 59.0 to 59.3 of the order passed by the ITAT in IT(SS)A.No.363/Ahd/2018 for Asst.Year 2009-2010 as under: "59. We have heard the rival contentions and perused the materials available on record. It is observed that assessee in the year under consideration has claimed the purchase of Rs. 2,10,354/- from NB Enterprises. During the assessment proceedings, the AO has received information from Maharasht....
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....e bogus purchases in the return of income filed with the Revenue 59.3 Therefore, we direct the AO to restrict the addition as stated above, thus, the ground raised by the assessee is treated as partly allowed. 60. The other issues raised by the assessee in ground No. 2 to 4 are either general or consequential or premature to decide. Hence the same are dismissed being infructuous." 65. He further pointed out that this issue was dealt with by the ITAT in succeeding year also i.e. Asst.Year 2010-11 and 2011-12 in its consolidated order passed along with that for Asst.Year 2009-10 in order dated 24.2.2023. He pointed out that in AY 2010-11 and 2011-12, besides the assessee challenging the order of the ld.CIT(A) restricting the disallowance to the extent of 25%, the Revenue had also in its appeal challenged the order of the ld.CIT(A) reducing the disallowance made by the AO by 75%. He pointed out that the ITAT had dismissed the grounds raised by the Revenue, while in assessee's appeal, it followed its order for Asst.Year 2009-10, restricting the disallowance of bogus purchased to the tune of 12.5%. He, therefore, stated that this issue now stands covered by the orde....
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....re could be telescoped against the unexplained money generated by the assessee. He held that all the additions made on account of bogus sub-contract expenses booked by the assessee were liable to be taxed specifically under section 69A of the Act, as unexplained money. 71. The ld.CIT(A) found that the disallowance of bogus sub-contract expenses resulted only in increase in the business profits of the assessee, and arose in the course of business carried out by the assessee. He accordingly held that all the disallowances, therefore, made was to be treated as business income of the assessee alone, and holding so, he held that the assessee was not liable to be taxed at a special rate under section 115BBE of the Act nor the assessee to be denied deduction under section 80IA(4) of the Act on account of the same. 72. We have considered the issue, and we do not find any infirmity in the order of the ld.CIT(A). Admittedly, it is the alleged bogus subcontract expenses booked by the assessee, which have been held to be liable to be taxed as unexplained money/unexplained expenditure by the AO under sections 69C and 69A of the Act respectively. The provisions of section 69A have been rep....
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.... 76. ISSUE NO.5 REGARDING DENIAL OF CLAIM UNDER SECTION 80IA(4) OF THE ACT. 77. The next issue being dealt with by us, relates to assessee's claim of deduction under section 80IA(4) of the Act of profits earned from its business of infrastructure development. 78. There are two components to this issue, which shall be dealt hereunder and for the same, it is necessary to bring out the facts relating to the issue. 79. Briefly stated, the assessee in its original return filed under section 139(1) of the Act had claimed deduction under section 80IA(4) of the Act for all the years impugned before us i.e. assessment year 2012-13 right upto Asst.Year 2018-19. In the return filed in response to the notice under section 153A of the Act the assessee made a claim of the same amount of deduction under section 80IA(4) of the Act as claimed in the original return filed under section 139(1) of the Act. However, subsequently, the assessee filed a revised return enhancing its claim of deduction under section 80IA(4) thereon multiple times. The facts as stated above are tabulated assessment year wise at page no.205 of the assessment order as under: S. No. A.Y. Original 80IA(4) clai....
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....ional claim of deduction under section 80IA(4) of the Act. 82. Therefore, the issue of claim of deduction under section 80IA(4) is to be dealt in two ways - a. relating to the claim of deduction in the return filed in response to the notice under section 153A of the Act, corresponding to the claim made in the original return of income filed under section 139(1) of the Act, and b. regarding the enhanced claim of deduction made by the assessee in the revised return filed under section 153A of the Act. 83. Dealing with the first issue of the assessees entitlement to claim deduction under section 80IA(4) of the Act, the order of the ld.CIT(A) reveals the fact that the assessee's claim of deduction under section 80IA(4) of the Act was found to be in accordance with law by the ITAT in the A.Y 1998-99 TO 2013-14. Before us, copy of the order of the ITAT in the case assessee for Asst.Year 1998-99 TO 2013-14 in ITA No.939/Ahd/2011 and others dated 24.2.2023 was filed, disclosing the said fact. 84. In the view of the same, we see no reason as to why the assessee should be denied the claim of deduction under section 80IA(4) of the Act, commensurate to that as claime....
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....nal return. Thus, the assessment proceedings initiated on the basis of an action under Section 132 of the Act also cannot be utilized by the assessee to seek a relief not claimed earlier and thus cannot seek a review of a concluded item which in this case is deduction u/s 80IA(4) which was claimed in the original return of income filed by the assessee and allowed by Ld. CIT-Appeals but now the assessee is trying to review the same by including various other projects to enhance its deduction u/s 80IA(4) which is nothing but a review of a concluded quantification of deduction of 80IA(4). b) The following principles of search assessments have been propounded by various courts in their judgments (All Cargo Global Logistics Ltd 23 taxmann.com 103 (Mum)(SB) (2012), jurisdictional High Court in the case of Saumya Constructions Private Limited, Delhi High Court in the case of Kabul Chawla). * No addition can be made in search assessments in absence of incriminating documents * Income already assessed plus income on the basis of incriminating material found during search- * Matters that were debated and discussed in assessments already made is a completed....
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.... unearthed. during course of search The provisions of sections 153A to 153C cannot be interpreted to be a further innings for the Assessing -Officer and/or. assessee beyond provisions of sections 139 (return of income), 139(5) revised return of income, 147 (income escaping assessment) and 263 (revision of orders) Additions are being made in the present case of SEL on the basis of a plethora of incriminating material. However, the assessee is using it as a further innings to unsettle a completed assessment so much so that even in cases which are before the Tribunal (AY 12-13 to AY 14-15), the assessee has filed a revised form 10CCB and enhanced its claim of 80IA(4) deduction by almost a thousand of crore. It is a calculated move and illegal attempt of tax evasion by the assessee company by way of creating a buffer for subsequent additions on the basis of various incriminating documents seized/impounded. From the above discussion, it is evident that the assessee's claim of enhanced deduction in the returns filed u/s 153A vis-à-vis returns filed in response to Section 139 is impermissible. c) The object of legislation in these matters is to assess....
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.... well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." From a plain reading of these judgements, it is clear that the assessee cannot be allowed to claim a allowance, deduction etc. u/s 153A not claimed earlier as. 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 under Section 153A of the Act, the assessee as well as the AO would have the power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese (supra). The most important question here is "Whether section 153A can be used for the benefit of the assessee?" In this regard, the judgement of the jurisdictional High court in the case of Pr. CIT-4 vs. Saumya Constructions Private Limited 387 ITR 529(Gujarat) needs to be highlighted here. In para 7, 16 and 19 of its order, it affirmed the principles laid down by Rajasthan High Court in the case of Jai Stee....
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....nt with the ld.CIT(A)/ AO that the assessee is not entitled to claim enhanced deduction under section 80IA(4) of the Act in a return filed in response to the notice under section 153A of the Act, particularly, in cases where the assessments are completed and unabated. 89. The AO has referred to various decisions of the Hon'ble High Courts/Supreme Court laying down the principle that in proceedings for the benefit of Revenue, the assessee cannot take any benefit. Reliance has been placed on the following decisions for the purpose The AO has also relied on the proposition of law now settled by the Hon'ble apex court in Abhisaar Build well (supra) that completed assessment s cannot be disturbed in assessments framed u/s 153A of the Act, unless some incriminating material is found. 90. Ld.Counsel for the assessee has distinguished both the above by referring to various decisions where courts have held returns filed u/s 153A of the Act to be treated as filed u/s 139(1) of the Act. And thus as a corollary entitling assessees to make any claims therein, irrespective of whether claimed in original return or not. 91. Having heard both the parties, we are in agreement with the AO....
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.... filed under section 153A of the Act is to be treated as return filed under section 139(1) of the Act. The Ld.Counsel for the assessee has borrowed this proposition to contend that accordingly fresh claims can be made in returns filed u/s 153A of the Act. But, we find, that these decisions have been rendered while addressing completely different issue, relating to levy of penalty for furnishing inaccurate/ concealing particulars of income, on additional income, revealed during search conducted. Courts is such circumstances have held that disclosure of such incomes in the return filed under section 153A of the Act, even if not disclosed in the original return of income filed u/s 139(1) of the Act, would not attract the levy of penalty. The said decisions interpreted the provisions of section 271(1)(c) Explanation- 5/5(a) and held that no penalty would be levied as the returns filed u/s 153A of the Act are to be treated as filed u/s 139(1) of the Act. These decisions being rendered in completely different context and in the background of totally different set of facts, they have no application in the fact situation of the present case nor any benefit can be derived by the assessee fr....
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....e us was that this was not a fresh claim but only an additional claim. We see no difference in the same. The fact remains that the additional claim is being made for the first time in the return filed u/s.153A of the Act. It is beyond any doubt a fresh claim. Therefore the decision of the Special Bench of the ITAT would squarely apply to it. 97. In view of the same, on the issue of deduction under section 80IA(4) of the Act, we confirm the order of the ld.CIT(A), holding that- * The assessee is entitled to claim of deduction under section 80IA(4) of the Act, corresponding to the claim made in the original return filed under section 139(1) of the Act. * That the assessee is not entitled to additional/fresh claim of deduction under section 80IA(4) of the Act in those years where assessments are completed. 98. ISSUE NO.7 REGARDING ASSESSMENT ORDER BARRED BY LIMITATION: 99. The next issue which came up for consideration before us was regarding assessment order passed in the present case being barred by limitation as prescribed under section 153B of the Act. 100. During the assessment proceedings itself the assessee had objected to the AO, of the proceed....
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.... to FT&TR. 102. Before us, the ld.counsel for the assessee did not dispute the fact that in terms of section 153B of the Act limitation for passing assessment orders were extended by a period of one year where a reference is made by the AO to FT&TR. He also does not dispute the fact of the Government notifying extension of limitation during the period of COVID by 31.3.2020 to 31.4.2021 by two notifications. What is being disputed by the ld.counsel for the assessee is the genuineness of the reference made by the AO to FT&TR. His contention was that this reference was made at the fag end of the assessment proceedings i.e. December 2019 when the assessment was getting time barred; that no information has been divulged to the assessee as to the incriminating documents on the basis of which such reference was made by the AO to the FT&TR. His case, therefore was that, in truth, this reference by the AO to FT&TR was without any basis and only to buy time for framing the assessment. 103. During the course of hearing before us, the ld.DR was asked to produce the copies of the letter containing the reference made by the AO to FT&TR. To which, he responded by stating that it was a confi....
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....ed u/s 143(3) Remarks 1 2012-13 4,02,46,403 4,02,46,403 Department has filed appeal in ITAT against order of CIT(A) 2 2013-14 3,77,68,000 3,77,68,000 3 2014-15 4,33,13,765 4,33,13,765 4 2015-16 85,67,905 108. Before us, the ld.counsel for the assessee pointed out that the ITAT had confirmed the order of the Ld.CIT(A) deleting the disallowance of ESOP expenses in Asstt.Year 2012-13 to 2014-15 in its order passed in ITA No.589/Ahd/2016 and others dated 24.2.2023. Copy of the order was placed before us. The ld.DR fairly conceded with the same, though, he vehemently supported the order of the AO. 109. In the light of the fact that the identical disallowance in Asstt.Year 2012-13 to 2014-15 of the ESOP expenses claimed by the assessee stands deleted by the ITAT, we see no reason to disagree with Ld.CIT(A) deleting the disallowance of ESOP expenses claimed by the assessee in Asstt.Year 2015-16 amounting to Rs. 85,67,905/-. The issue of disallowance of ESOP expenditure in the Asstt.Year 2015-16 accordingly stands adjudicated in favour of the assessee and is directed therefore to be deleted. 110. ISSUE NO....
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....18-19. Accordingly, the issue of disallowance of claim of deduction under section 35D of the Act stands adjudicated in favour of the assessee. 115. ISSUE N0.10 REGARDING DISALLOWNACE OF ESI/PF U/S.36(1)(va) OF THE ACT. 116. The net issue being taken up for consideration is relating to disallowance of Employee's contribution to ESI/PF made in terms of provisions of section 36(1)(va) on account of delayed deposit of Employees' contribution to ESI/PF. The AO had made the impugned disallowance in assessment framed under section 143(3) of the Act for the Asstt.Year 2012-13 to 2014-15, which stood confirmed by the ld.CIT(A). Accordingly, he went to make disallowance of delayed payment of Employees' contribution to ESI/PF in Asstt.Year 2015-16 to 2018-19 which is tabulated at page no.256 of the AO's order as under: A.Y. 2015-16 Sr. No Nature of Payment Due Date of Payment Actual Date of Payment Amount (Rs.) 1 Provident Fund 20.06.2014 21.06.2014 533988 2 Provident Fund 20.08.2014 02.09.2014 358956 TOTAL 892944 A.Y. 2016-17 Sr. No Nature of Payment Due Date of Payment Actual Date of Payment Amount ....
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.... Appeal) 121. The grounds raised in this appeal read as under: "1. The Ld. CIT(A) grossly erred in law and facts of the case in not appreciating the fact that assessment order under section 143(3) r.w.s 153A(1) (b) dated 26/03/2021 passed by the AO is outside the time limit prescribed under section 153B of the IT Act, 1961 and therefore the said order is bad in law by reason of it being time barred. It is therefore prayed that the said assessment order may please be cancelled as being time barred. 2. The Ld. CIT(A) erred in law and facts of the case in confirming disallowance/ addition made by the AO on alleged bogus subcontract charges, alleged cash receipts by booking alleged bogus diesel expenses etc. in as much as entire addition is made based on third party evidence, without any corroborative evidence at office premises of appellant company or residential premises of directors. 3. Without prejudice to the above, the Ld. CIT(A) grossly erred in law and facts of the case in retaining a part of the disallowance/ addition made by the AO on alleged bogus sub contract charges, alleged cash receipts by booking alleged bogus diesel expenses etc. by adopti....
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.... the assessee is dismissed. 124. In ground no.2 the grievance of the assessee is that the Ld. CIT(A) erred in confirming the disallowance/addition based on alleged bogus subcontract charges and diesel expenses, relying solely on third-party evidence without corroborative proof at the appellant's office or directors' residences. While, the ground no.3, which relates to ground no.2 however states that the ld. CIT(A) incorrectly retained part of the disallowance by adopting a profit rate of 20%, disregarding the assessee's disclosed net profit rate of 7.79% and past average of 6.33%. And therefore, it is prayed that the disallowance be restricted to the disclosed NP rate. 125. In ground no.4 which is also part of ground nos.2 and 3 the grievance of the assessee is that the ld. CIT(A) erred in retaining part of the disallowance based on statements from unrelated third parties without granting the appellant the right to cross-examine the deponent. It is prayed that the retained disallowance/addition be deleted. 126. All the disputes raised in the above grounds, have been dealt with by us while dealing with the Issue No.1, 2, 3 and 4 above. Therefore, for the reasons giv....
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....from various parties and unaccounted cash expenses made by it. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in deleting the disallowance of Rs. 22,19,13,751/- being 80% of the disallowance of the inflated expenditure on account of payment to subcontractors, purchase of diesel etc. without appreciating the fact that the assessee company booked bogus bills in the name of various entities and payment for the same were made through online modes / cheques for which actual work was not carried out and the cash thereafter brought back after commission thereon. It was established by claiming telescoping of such unaccounted cash transactions to avoid double taxation, by the assessee. 3. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing the deduction u/s 80IA as per the return filed u/s 139(1), even though the assessee did not fulfil the conditions as laid down in section 80IA(4) of the Act. 4. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing the deduction u/s 80IA on the confirmed disallowances u/s 69A r.w.s. 69C holding as business income, witho....