TaxTMI 
TaxTMI 
2025 (12) TMI 1642
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....TA No.3360/Chny/2024 for AY 2019-20. Ground Nos. 1 to 6 of the appeal relates to the Ld. CIT(A)'s action of deleting the addition of Rs. 60,36,408/- made on account of cash returned against the rebate of 7.5% allowed in construction bills. The facts relating to this issue are that, the assessee is in the business of manufacturing in the sale of sugar, industrial alcoholic products, granites and cogeneration of power. A search and seizure action u/s 132 of the Act was conducted in the Chettinad Group of cases on 09.12.2020. During the course of search upon Chettinad Group, three diaries vide ANN/CTSPL/SB/B&D/S (1 to 3) and one loose sheet folder vide ANN/CLTSP/SB/LS/S were seized, which according to the Investigation officers, contained evidence for receipt of cash by Chettinad Builders Private Limited (in short 'CBPL') from the assessee. According to the AO of the searched person therefore, the seized material contained information which pertained to the assessee and had a bearing on their total income. After recording his satisfaction, the AO issued notice(s) u/s 153C of the Act inter alia for the relevant AY 2019-20. 2.1 The AO in the impugned order noted that, the entries fou....
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....he Bannari Group, more particularly the assessee. The AO was of the view that, if the employee(s) had admitted that the rebate given to BAET was not genuine and it was received back in cash, then same modus operandi would have been followed in the construction bills of the assessee as well. The AO referred to an email communication found from the seized electronic data wherein CBPL was requesting for the release of mobilization advances for the work wherein the schedule of quantities of work was provided, in which there was a mention of 7.5% rebate. This email communication, according to the AO, disproved the averment of Smt. V. Valliammai that the rebate of 7.5% was negotiated prior to finalization of construction contract. He thus inferred that the assessee must have also paid back the rebate of 7.5% in cash to CBPL. The AO also discussed the contents of some of the notings found in the impugned seized material, which according to him, suggested the name of the assessee and/or the location of their construction site. This according to AO corroborated his contention that the impugned notings were not vague but specific and it suggested payment of unaccounted cash by the assessee t....
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....r notice that, the AO had blatantly contradicted himself by adding these very same notings in the hands of BAET as well. According to him, this action of the AO clearly showed that he himself was not sure regarding the veracity of the notings as to who did they possibly relate to and was simply shooting arrows in the dark. He thus submitted that such arbitrary addition made by the AO on assumption and surmises was rightly deleted by the Ld. CIT(A). He therefore does not want us to interfere with the appellate order impugned before us. 2.5 We have heard both the parties and perused the material placed before us. It is noted that, a search was conducted upon Chettinad Group in the course of which, three diaries bearing identification ANN/CTSPL/SB/B&D/S (1 to 3) and one (1) loose sheet bunch vide ANN/CLTSP/SB/LS/S was seized, copies of which has been placed before us. The case of the Revenue is that, certain notings /jottings were found in these material where certain amounts were mentioned against the words 'Bannari Amman' or 'BASL' etc., which according to them, suggested notings of cash receipts from the assessee. According to the Revenue, this cash was received by CBPL from the....
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....ebate allowed and whether it was on behalf of the assessee or BAET. The Ld. CIT(A) particularly noted that, none of them had averred that any cash was received against rebate of 7.5% allowed by CBPL to assessee on their construction bills. The Ld. CIT(A) is also found to have taken note of the statement of Smt. Valliammai, CFO of Chettinad Group, who had denied having received any cash from the assessee and had specifically averred that the rebate of 7.5% allowed to the assessee in their construction contract was genuine. It is noted that, she had also specifically asserted that the impugned notings did not pertain to the assessee. We find that Smt. Valliammai was also cross-examined in the course of assessment wherein she has affirmed her original statement that the assessee had not made any unaccounted cash payments to CBPL and the 7.5% rebate given in their construction contract was genuine. We find that the Ld. CIT(A) had also analyzed the email communication referred to by the AO in the impugned order to discredit the statement of Smt. Valliammai and found that these emails only contained estimations of cost working and nowhere did it suggest any payment of cash for 7.5% rebat....
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....rebate of the total bill value. However, the Sr. No. 10 & 11 contain the invoices raised by CBPL in the name of BASL and none of the invoices has rebate, either @ 7.5% or 15%, meaning thereby that there is no rebate mentioned in these invoices raised by CBPL on BASL for the same period. Another seized material which the AO relied on was an email correspondence between BASL and CBPL with respect to construction of Distillery expansion unit at Nanjangud, Karnataka. According to the AO, this email communication contains proof for 7.5% rebate given to BASL which was subsequently received by cash. On perusal of the contents of the email, it is noted that these are all estimations of cost for the said project given by CBPL before entering into the contract. This cost working was examined by BASL through their architects and after the negotiations, the contract was agreed wherein rebate @ 7.5% was given before entering into the agreement itself. This also supports the statement given by Ms. Valliammai, CFO that the 7.5% rebate given to BASL is part of the business negotiation and not in the invoices raised against BASL." 2.7 The Ld. DR appearing for the Revenue was unable to controvert....
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....evant documents are not forthcoming. However, Hon'ble High Court observed that it does not mean that the AO can arrive at any figure without any basis by adopting any arbitrary method of calculation. The relevant findings of the Hon'ble High Court are as under: "3. It is well-settled that in cases where material is detected after search and seizure operations are carried out, the Assessing Officer is required to determine the undisclosed income. In such cases additions are generally based on estimates. In matters of estimation some amount of latitude is required to be shown to the Assessing Officer, particularly when relevant documents are not forthcoming. However, it does not mean that the Assessing Officer can arrive at any figure without any basis by adopting an arbitrary method of calculation. In the present matter, A3, A4 and A6 nowhere records the turnover of the assessee as found by the Tribunal and yet on the wrong basis of the incoming and outgoing cash transactions, the Assessing Officer has arrived at the turnover. Moreover, the peak investment was Rs. 40,14,806 for three months. However, there is no material seized to justify any figure to be included for a....
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....al, the Ld. CIT(A) following the order passed by his predecessors deleted the impugned disallowance. Aggrieved by the said order, the Revenue is now in appeal before us. 3.1 Heard both the parties. We find that the impugned issue is no longer res integra. It is observed that this Tribunal in assessee's own case for AY 2010-11 reported in 140 taxmann.com 53 has held that, the various components which forms part of cogeneration plant being integral to the cogeneration system is entitled for higher rate of depreciation. Upholding the order of Ld. CIT(A), the Tribunal noted that, the individual components could not be used on standalone basis, except when it forms part of the whole cogeneration system and therefore following the decision of coordinate bench of the Vishakapatnam Bench of this Tribunal in the case of Sri Sarvaraya Sugars Ltd. Vs JCIT (ITA No. 577/Viz/2014) allowed the higher rate of depreciation of 80% (now 40%, in the relevant AY 2019-20) as claimed by the assessee, by observing as under:- "8.3 The Ld. CIT(A), after considering the manual/literature of all the equipment came to a conclusion that the assets were part and parcel of power generation unit. Each ....
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....ciation of Rs. 423.29 Lacs. Aggrieved, the revenue is in further appeal before us. 9. We find that this issue is covered in assessee's favor by the decision of Vishakhapatnam Tribunal in Sri Sarvaraya Sugars Ltd. v. Jt. CIT [IT Appeal No. 577 (Viz.) of 2014, dated 20-12-2017] wherein it was held that various components which form integral part of cogeneration plant are to be allowed higher rate of depreciation. We find that the facts are similar in the present case whereas the undisputed findings are that the various components form part of integral part of cogeneration plant. These components could not be used on standalone basis but part and parcel of power generation unit. Each item would not have any function by itself except when it forms part of the whole system. Therefore, no infirmity could be found in the impugned order, on this issue. The grounds thus raised stands dismissed." 3.2 Following the above decision (supra), we see no reason to interfere with the order of the Ld. CIT(A) and accordingly dismiss these grounds of the Revenue. 4. We now come to the Revenue's appeal in ITA No.3361/Chny/2024 for AY 2021-22. 5. Ground Nos. 1 to 6 of the Revenue's ....