TaxTMI 
TaxTMI 
2026 (1) TMI 33
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....ected and this fact has been admitted by both the parties during the course of hearing before us, therefore, all captioned appeals filed by the Revenue are decided by a common order. We first take appeal of the revenue in ITA No.3874/Del/2023 for Assessment Year 2016-17 as the lead case. ITA No.3874/Del/2023 [Assessment Year 2016-17] [Revenue's appeal] 3. Brief facts of the case are that assessee company is engaged in the business of generation of power through coal-based source. The assessee e-filed its return of income on 30.09.2016 declaring loss of INR 14,78,60,65,595/-. The case was selected under scrutiny and notice under section 143(2) was issued on 28.12.2018. Thereafter, a search and seizure operation was carried out on 28.06.2016 in the case of Sh. Paras Mal Lodha by the Directorate of Income Tax (investigation), Delhi. Based on the statements of Shri Paras Mal Lodha and his trusted employees namely Shri Kailash Mohanty and Lokesh Kumar, the AO has recorded his satisfaction that there are certain payments made by the assessee to M/s LANCO Infratech Ltd. (LANCO, in short) towards installation of its power plant at Annupur, Madhya Pradesh. The AO further observed that....
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....gly, by holding the payments made to the LANCO of 242,33,64,975/- were subsequently transferred it to the above mentioned five companies in the year 2011 was bogus and thus disallowed the depreciation of Rs 36,35,04,746/- computed @15% by holding that the total cost to the extent of the sum paid to these five companies by LANCO is bogus and thus do not form part of the total cost of the power plant. 6. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide common order dated 26.10.2023 for AY 2016-17 and AY 2017-18 allowed the appeal of the assessee. 7. Aggrieved by the order of Ld.CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal:- 1. "The Ld. CIT (A) has erred on facts and in law by allowing the appeal of the assessee by deleting the disallowance of depreciation of Rs. 36,35,04,746/- made in the hands of the assessee. 2. The Ld. CIT(A) has erred on facts and in law by ignoring the statement given by both key persons i.e., Shri Lokesh Kumar, an employee of Shri Parash Mal Lodha and Rajiv Saxena that no actual work had been done by the 5 bogus entities namely (1) Techno Fab Engineering Ltd., (2) M/s J....
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....ude invoices, bills etc. related to the power plant project constructed / commissioned by Lanco Infratech Ltd. ("LANCO") owned and installed by the assessee company at Annupur, Madhya Pradesh. Ld. CIT DR submits that based on these documents, satisfaction was recorded in the case of Paras Mal Lodha and proceedings u/s 153C in the case of the assessee were initiated. Ld. CIT DR drew our attention to the fact that assessee company has made payment to LANCO in various AYrs starting from AY 2010-11 to 2017-18 towards the cost incurred on power plant constructed and commissioned by it. He further submits that LANCO has sub-constructed certain works to various entities which includes Five independent companies namely (i) M/s. Patel Engineering Ltd.; (ii) M/s J Kumar Infratech; (iii) M/s PNC Infratech Ltd.; (iv) M/s Modern Infra Projects India Ltd.; and (v) M/s Technofab Engg. Ltd. and total work of INR 242.33 crores was sub-let to these companies. Ld. CIT DR stated that at page 3 of assessment order, one excel sheet in digital data seized during the course of search at Shri Paras Mal Lodha on 28.06.2016 is reproduced, according to which details of payments made to these five companies ar....
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....IT DR submits that it is the first year when the total cost was capitalized and depreciation was claimed thus the AO has every reason to verify and examine the total cost incurred. Ld. CIT DR submits that once the AO had information in his possession that total cost to the tune of INR 242.33 crores was bogus and has been able to establish that this amount was ultimately transferred for the benefit of the promotors of the assessee company. Therefore, the action of the AO in reducing the cost of project by this bogus cost and further disallowing the depreciation on the same, deserves to be upheld. He prayed accordingly. 12. On the other hand, Ld.AR for the assessee vehemently supported the order of Ld. CIT(A) and submits that expenditure doubted by AO were actually incurred by LANCO and were recorded in its books of accounts and the assessee has no relationship whatsoever with the day to day working of LANCO and made the payments to LANCO towards the work executed by it. The assessee has awarded contract to LANCO after inviting global tenders and appointed Tata Consultancy Engineering Ltd. as lead engineer for the project. Under this bidding process, LANCO was the successful bidde....
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....d the person managing the funds generated from this transaction outside India on behalf of the promotors of assessee. However, Shri Paras Mal Lodha has retracted from the statements and once the statements were retracted their evidentiary value has lost and such statements cannot be given credence unless corroborative material / evidences were brought on record. Ld. AR further stated that, in the case of Shri Rajeev Saxena, inquiries was carried out by the Enforcement Directorate and after making concrete verification of the entries found noted in the said Excel sheets, in the petition filed before the Hon'ble Delhi High Court, in para 41 of such petition, the Enforcement Directorate itself requested to remove Shri Rajeev Saxena as approver has he had fudged the documents to give them shape which suits his interest and had failed to give true and full disclosure to the facts. As per ld. AR the entries contained in the excel sheets cannot be held as incriminating material more particularly when no reference of any such sheets was made in the satisfaction note recorded in the case of the assessee nor any satisfaction was recorded by the AO of Shri Rajiv Saxena that such sheets belong....
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....) Ltd. * The bids were examined by TCE and a detailed comparison statement, considering technical & commercial parameters was prepared. The comparison statement, which is at page 2 to 5 of the paper-book show that LANCO's bid at Rs. 4123.27 Cr. was lower by Rs. 224.34 Cr of the next lowest bid. Accordingly, Letter of Award (LoA) was issued to LANCO on 15.11.2010. * LANCO's bid was also examined by the consortium of banks led by State Bank of India. Since the consortium has been granting lending facilities to number of other power projects, they were in know of competitive pricing in thermal power sector, therefore, their approval vindicates that LANCO's bid was lowest. Advance against bank guarantee Advance to LANCO of Rs. 5,05,94,50,000/- was made against bank guarantee of equal amount in the year 2010 and 2011. The details of advance are at pages 6 - 32 of the paper-book. In March 2011, LANCO sub-contracted a part of the contract to five companies engaged in EPC namely (i) PNC Infratech Ltd. (ii) J Kumar Infratech, (iii) Patel Engineering Ltd, (iv) Modern Infra Projects India Ltd and (v) Technofab Engg Ltd. Online description of the sub-contractors show....
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....ct amount paid to LANCO, around 250 Cr. being the amount paid by LANCO to sub-contractors was to be routed back to the promoters of Hindustan Power group through Kolkata based 'Ram-Ram Companies'. It may be noted here that: * During search on Mr. Lodha on 7th to 10th April 2019, no incriminating material/ document was seized, neither from his residence nor from the hotel. * Statement of Mr. Lodha was also not provided to assessee, though a part of it is extracted at page 10 of the assessment order. Retraction of statement by Mr. Lodha Mr. Lodha vide letter dated 17.04.2019 addressed to Addl. DIT, Inv. Unit-3, (filed on 18.04.2019) has retracted from his statement recorded on 10.04.2019, saying that the statement was taken exerting pressure. In para 6 & 8, it is specifically noted that during search nothing was seized. Copy of letter dated 17.04.2019 is at pages 68 to 72 of paper book. Search on Mr. Rajiv Saxena on 30.06.2019 Though no satisfaction was recorded by Assessing Officer of Mr. Rajiv Saxena, however, the AO of the assessee referring to the file Moser Baer Master (pages 13 to 15 & 18 to 22 of the order) has alleged that entries in file 'scan00....
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.... which may have co-relations with the random entries." In Sunil Kumar Sharma v. Dy. CIT (2022) 448 ITR 485, Hon'ble Karnataka High Court has considered almost identical fact situation. In this case, besides the search on the assessee, a search was also conducted on one Mr. Rajendran at New Delhi. During the course of search on Mr. Rajendran, certain diaries & entries relating to affairs of the assessee were found. Statement of Mr. Rajendran was recorded u/s 132(4) of the Act. Basis the statement, not only his case was transferred to New Delhi u/s 127 of the Act but notices u/s 153C were issued to the assessee. On these fact, Hon'ble Karnataka High Court referring to V.C. Shukla (supra) and Common Cause (supra) quashed the notices u/s 153C, issued on the basis of the loose sheets, observing thus at page 504 of the report: "Following the law declared by the Hon'ble Apex Court, I am of the view that the action taken by the respondent- Revenue against the petitioner based on the material contained in the diaries/loose sheets are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued under section 153C of the Act, ....
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....ng Reports' carried out by LII, which are at pages 119 to 286 of paper book are self-speaking. (d) If the AO was not convinced of the reports of LII, he ought to have confronted LII. Without confronting LII, Construction Monitoring Reports cannot be brushed aside. Not only, LII was not confronted but even TCE was also not examined. (e) Payments to sub-contractors were inclusive of service tax @4.12% and TDS @2%. Further, since the payment made by the assessee to LANCO also included MP VAT @5%, therefore, total statutory levies were more than 11%. Considering the entire gamut of facts, the inference of payback would have made the execution of project unviable for LANCO, for its bid was lowest. (f) In June 2017, the Assessee encased the bank guarantee issued by LANCO. Refence in this regard is made to balance sheet for the year ended on 31.3.2018 [page 78 to 118 @ 112 (Note 43)]. It also proves that there was no under-hand understanding with LANCO. Had it been so, the Assessee would not have encashed the bank guarantee. (g) There is no document suggesting payment of kickbacks by LANCO to the assessee. The entire case of the Assessing Officer rests ....
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....y. Despite this, it is submitted that it is Lanco that succeeded as its bid was inter alia lowest in price. Not only this, before issuing the LOI in favour of Lanco, the consortium of lenders (led by SBI) also evaluated Lanco's bid (l) The aforesaid facts undermine and belie the allegation of the contract being executed with a kickback of Rs. 250 crore. The requirement of recording of satisfaction by the AO of the searched person was not met No such satisfaction was provided to the assessee nor has the same been referred to in the Satisfaction Note dated 13.10.2020. It may be noted that satisfaction in the case of the assessee was recorded by ACIT, Circle 16(1), Delhi and the case of the assessee was centralized with Central Circle-20, New Delhi in February, 2021 and made the assessment under Section 153C of the Act. Order of the CIT(A) dated 26.10.2023 The CIT(A) requisitioned assessment records from DCIT, Central Circle-20, Delhi on 20.10.2023 and having verified the facts has recorded following finding in para 6.2 of the order: "iii. In para 6, the AO has listed the documents seized from the premises of Paras Mal Lodha in the course of that search. ....
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....erence based on the statements of Mr. Lodha and Mr. Lokesh Kumar. However, there is not even a shred of material in the seized documents to support such an inference. Hence, the fundamental pre-condition to attract Section 153C of the Act was absent in the present case. II. Requirement that seized document must be incriminating was also not met In Pr. CIT v. Abhisar Buildwell (P.) Ltd. (2024) 454 ITR 212, Hon'ble Supreme Court has held that "no addition can be made in respect of the completed assessments in absence of any incriminating material." Observation in para 12 of the judgment is relevant. In DCIT v. U. K. Paints (Overseas) Ltd (2023) 454 ITR 441 (SC), ratio of Abhisar Buildwell (P) Ltd. (supra) was applied to assessment u/s 153C. Here, the High Court had set aside the assessment u/s 153C for the reason that no incriminating material was found during search. Hon'ble Apex Court upholding the order of the High Court has held that: "As observed hereinabove, as no incriminating material was found in case of any of the Assessees either from the Assessee or from the third party and the assessments were under Section 153C of the Act, the High Co....
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....ertain and identify the year to which the material recovered relates. The years which could be then subjected to action under Section 153C would have to necessarily be those in respect of which the assessment is likely to be influenced or impacted by the material discovered". [SLP against this judgment has been dismissed (2025) 171 taxmann.com 54 (SC)], In Neeraj Bharadwaj (supra), basis search on Moser Baer group, certain documents relating to purchase of land in the FY 2013-14 were seized, notices u/s 153C for AY 2015-16 to 2020-21 were issued to the assessee, a director and promoter of Moser Baer group. On writ petition, notices were quashed on account of absence of incriminating material for AY 2015-16 to 2020-21. It was held that: "However, it is not necessary to examine whether the purchase of the properties in the name of the Assessee's wife could have a bearing on the income of the Assessee. This is because, in any view of the matter, the said transaction has no bearing on the income chargeable to tax during the AYs 2015-16 to 2020-21. As noted above, the alleged payments in cash were during the financial year [FY] 2013-14 relevant to AY 20141....
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....ted on 28.6.2016 did not pertain to the assessment years 2016-17 & 2017-18, therefore, statements of Mr. Lodha and Mr. Lokesh Kumar recorded under Section 132 on 7th / 10th April 2019 cannot be relied upon to assume jurisdiction under Section 153C of the Act, for the said statements under Section 132(4) were not to determine the total income of the assessee for the assessment year in question.. V. No presumption could have been drawn against the assessee. Section 132(4A) provides that where any books of account, documents etc. is found in the possession or control of any person in the course of search, it may be presumed that such books of account, documents etc. belong to such person and contents of such books and other documents are true. Qua the person searched, the document found may be presumed to be true & correct but not any other person - say, the assessee herein. It would be going beyond section 132(4A) / 292C of the Act to raise any presumption against the assessee herein. Reference may be made to Straptex (India) (P) Ltd. v. DCIT (2003) 79 TTJ 228 (Mum), wherein it was held that: "As per section 132(4A), where any books of account or document i....
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....the very purpose of search is defeated. The fact that there is mention in the statements that there was no pressure and the statement was given voluntarily cannot be given much significance, as has been held by Bombay ITAT in Deepchand & Co. v. ACIT (1995) [ITA No.1231/Bom/1993, dt 27.7.1994]: "The stereotyped mention at the end of the statement that whatever was stated was true and to the best of the knowledge and belief and the statement given was voluntary without any threat, force or undue influence, would not mean that they agreed for making additions. Putting certain expression at the end of the statement cannot be taken as true in view of the retraction. Retraction can be made only after understanding the correct meaning and consequences of the statement." Admittedly, Mr. Lodha by letter dated 18.4.2019 had retracted from his statement recorded during 7th to 10th April 2019. VIII. Satisfaction was not recorded by the AO of the searched persons In any case, to assume jurisdiction u/s 153C, initially the AO of the searched person is required to record satisfaction. In the present case, no satisfaction was recorded by the AO of Mr. L....
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....rding of statement of person other than the person searched after almost three years of seizure of documents is not permissible in law. D. The requirement of recording of satisfaction by the Assessing Officer of the searched person was not met. Neither such satisfaction was provided to the assessee nor the same has been referred to in the satisfaction dated 13.10.2020, recorded by ACIT, Circle 16(1), Delhi with whom the assessee was assessed prior to centralization of its case with Central Circle-20, New Delhi. E. Though Revenue has relied upon the statements but it has failed to establish link between the seized documents & the statements. In the absence of corroboration, assessee cannot be saddled with liability on the basis of the statement of a third person. Such a course would lead to demand in case of any and every assessee. It is for this reason that Delhi High Court in CIT v. Sant Lal (2020) 423 ITR 1, Pr. CIT v. Manoj Hora (2018) 402 ITR 175 and CIT v. Radico Khaitan Ltd (2017) 396 ITR 644 have deleted the additions. F. The excel files seized from Mr. Rajiv Saxena do not constitute material pertaining to the assessee, for no satisfaction u/s 153C....
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....dvance amount in the form of kickbacks to M/s Lanco as early as Jan-2011 that is prior to receiving any payment from Lanco." * The aforesaid fact and correctly recorded finding of CIT Appeal nullify the entire case against the Respondent Company which clearly seems to have been proceeded with without due application of mind. * There exists no material on record to establish the link between the alleged sub-contractors and the Respondent Company which could at all establish that cash was generated by these sub- contractors and then paid to the Respondent Company's promoters. The entire link is missing and the allegation that sub-contractors paid MB Power in offshore accounts is fanciful. The legal position is settled that the satisfaction must be based on seized material. The oral statement without corroboration by the seized material pertaining to the assessee is no substitute of the requirement that satisfaction must be based on seized material. * It is nobody's case that either of the aforesaid individuals played any direct or indirect role in the Respondent Company let alone in the awarding and construction of the power project. The evidence is that ce....
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....as held that: "25. In the recent judgment of this Court in Central Bureau of Investigation v. V.C. Shukla it has been laid down that for purposes of Section 34, "book" ordinarily means a collection of sheets of paper or other material, blank, written or printed, fastened or bound together so as to form a material whole. Loose sheets of paper or scraps of paper cannot be termed as "book" for they can be easily detached and replaced. It has also been held that: The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness." When that is the legal position, extracts of alleged account books, in our view, were wrongly treated as admissible by the courts below though the original books were not produced for comparison nor was their non-production explained and nor was the person who had prepared the extracts examined." * In the case of L.K. Advani & Ors. Vs. Central Bureau of Investigation (1997 SCC OnLine Del 382), wherein the Hon'ble High Court of Delhi held that....
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....he present value of the property, was included in the account books. According to the case of the respondent the books are authentic, and disclosed the true state of affairs. There was considerable discussion at the bar before us as well as before the High Court as is apparent from the judgment under appeal, relating to the law of evidence dealing with account books. Reliance was placed on Section 34 of the Indian Evidence Act which provides that entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the court has to enquire. It has been contended on behalf of the respondents that since the plaintiff stated that the books were being maintained from month to month the requirement of law was satisfied. Mr Mehta, the learned counsel for the appellant argued that apart from the formal proof of the execution of the document, the party relying thereon was under a duty to lead evidence in support of the correctness of the entries in the books which is completely lacking here. Besides, it was pointed out that the relevant books are merely joint khatabahis of Samvat 2005 to 2006 equivalent to 1948 to 1949 without the supp....
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....rable data to the department including in the form of excel sheets. But soon after, ED itself has taken a position that Mr. Saxena had "fudged" these excel sheets. This is evident from the perusal of the petition dated 14.05.2020 filed by ED before the Hon'ble Delhi High Court (in CRL.M.C. 1477/2020 & CRL.M.A. 6491/2020, CRL.M.A. 7117/2020) seeking revocation of approver status of Mr. Rajiv Saxena wherein the ED states that Mr. Rajeev Saxena has fudged the data in the excel sheet to suit his interest (Para 41, Page 39 of the Petition filed by ED before the Hon'ble High Court): 41. That respondent Rajiv Saxena had submitted the summary of transactions carried out on behalf of Ratul Puri. It is submitted that on 23.07.2019 he had submitted his laptop, which was found to contain a file named 'RP consolidated USD.xls' which is also a summary of transactions carried out on behalf of Ratul Puri. On comparing the data in the said two sources, it was found that the account submitted by him is inconsistent with the account found on his laptop. Further, it was also found that the account on the laptop had entries related to Deepak Puri, the father of Ratul Puri, which were n....
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....e present case and therefore the decision of the authority to commence proceedings under s.153C was not permissible. * In the lights of these facts, no case is made out that the funds in cash were generated through inflating the billing for setting up the power plant, and then these funds were sent to Mr. Rajiv Saxena for the benefit of Mr. Ratul Puri through hawala. Excel sheets recovered from /produced by Mr. Lodha and/or Mr. Saxena has no legal sanctity as these are not legally admissible evidence. In the absence of any evidence to support the stand of department w.r.t generation of cash through inflated billing and/or through any other means, no occasion has ever arisen to send the cash to Mr. Saxena through Hawala on behalf of or for the benefit of Mr. Ratul Puri. In view of what has been put forth above, the order of CIT(A) deserves to be sustained. 17. Heard the contentions of both parties and perused the material available on record. After considering the facts, allegations of the AO and observations of ld. CIT(A), following facts emerged: a.) In terms of the MOU executed between Hindustan Thermal Power Projects Ltd. (HTPPL) and Govt. of Madhya....
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.... g.) All the documents/statements referred by AO were in relation to the transaction between third parties i.e. between LANCO and its sub-contactors and none of the document supports the allegation of the AO that the assessee company had entered into any dubious arrangement with LANCO to raise bogus bills in respect of the work awarded to sub-contractors. 18. The observations made by ld. CIT(A) while deleting the disallowance as contained in para 6.2 at pages 45 to 51 of the order are reproduced as under: 6.2 Observation and Findings: i. "The satisfaction note was recorded by the AO invoking section 153C on 13.10.2020. ii. The basis of recording this satisfaction note is the documents found in the possession of Shri Paras Mal Lodha in the course of search & seizure proceedings on 28.06.2016. iii. In para 6, the AO has listed the documents seized from the premises of Paras Mal Lodha in the course of that search. iv. When these listed documents were examined, it is found that they pertain to transactions amongst various third parties with whom LANCO has transacted. v. The file found at the premises of Shri Rajiv Saxena i.e. sc....
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....quipment, systems including associated civil work for Phase-1 of the said Project. NIT was also mailed to 68 Embassies of various countries in India. The guidelines for submission of EOI document had well defined technical & financials criteria. b. By 16.02.2009, 24 parties had collected the documents for submission of their interest, out of which, 14 parties submitted their technical & financial credentials and sought 'Request for Quotation' (RFQ) document. Based upon credentials, the assessee prepared evaluation report and issued Request for Proposal (RFP) document to following seven (7) shortlisted parties: i. M/s Punj Lloyd ii. M/s Bharat Heavy Electricals Limited iii. M/s Lanco Infratech Limited iv. M/s Essar Construction (India) Limited v. M/s China Datang-Gannon Dunkerly IV vi. M/s Speco Electrical Power Construction Corporation vii. M/s Reliance Infrastructure Limited c. The aforesaid seven (7) potential bidders raised number of queries, which were responded to by the assessee in consultation with Tata Consulting Engineers Ltd. Finally, the bids were submitted by following five (5) part....
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.... * Comparative chart of several companies commissioned project near to our project commissioning date reflecting hard cost of setting up the project by us is one of the lowest in the industry. * Project Drawing * Note on process followed by MBPMPL to award EPC Contract to Lanco * Newspaper cutting for ICB Bidding * Copy of Ledger accounts of M/s LANCO Infratech Limited for the AY 2011-12 to AY 2017-18 in the books of the assessee company has already been submitted vide letter dated 20.09.2021. * Month wise details of work completed by Lanco Infratech Limited are enclosed herewith along with report of lender appointed engineers. The Id. AO could not find any fault/wrong-doing in the Bidding process through which contract was awarded to M/s Lanco by the appellant company. It is further observed that M/s Lanco was the L1 bidder i.e. all other bids were of higher amount and this bidding process was monitored by M/s Tata Consulting Engineers Ltd and further evaluated by the consortium of Bank lead by the State Bank of India. Therefore, claim of over loading the bid amount by Lanco is not supported by circumstantial evidences. ....
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.... the satisfaction note forms the basis for initiating the proceedings under Section 153 C of the Act. it is futile for Mr Manchanda to contend that this requirement need not be met for initiation of the proceedings but only during the subsequent assessment. 32. In the present case, the two seized documents referred to in the Satisfaction Note in the case of each Assessee are the trial balance and balance sheet for a period of five months in 2010. In the first place, they do not relate to the AYs for which the assessments were reopened in the case of both assessees. Secondly, they cannot be said to be incriminating. Even for the AY to which they related, i.e. AY 2011-12, the AO finalised the assessment at the returned income qua each Assessee without making any additions on the basis of those documents. Consequently even the second essential requirement for assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees. 33. This Court does not consider it necessary to examine the merits of the case as far as the deletions by the CIT (A) of the additions made by the AO under Section 153C of the Act are concerned. In any event,....
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....porting documents for work undertaken. The construction work was monitored by independent consultant firm M/s Lahmeyer International India appointed by consortium of lenders led by the State Bank of India and project completion certificates issued by Central Electricity Authority ("CEA"). A collective review of these documents establishes that the work was indeed performed by LANCO and the power plant was erected and stands commissioned. 2. No effort was made by AO to make independent enquiries to support his allegation of bogus claim of work executed through five EPC sub-contractors by LANCO by issuing summons and/or record the statements of any of the intermediary or supervisory agency including CEA, SBI, M/s Lahmeyer International India etc. It is also a matter of fact that the documents alleged incriminating and made basis for initiating proceedings u/s 153C of the Act were recovered by the department as back as in the year 2016 when the first search was carried out in the case of Shri Paras Mal Mehta. 3. It is the case of the AO that sub-contractors appointed by LANCO had not carried out any work and arrived at the conclusion that contract awarded to LANCO wa....
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....hri Paras Mal Lodha retracted from his statements recorded on 07.04.2019 and 10.4.2019 within a short period of seven days vide letter dt. 17.04.2019 therefore, such statement lost its credibility as reliable evidence and no adverse inference could be drawn against the assessee company solely on the basis of such statements of alleged over invoicing/ hawala transaction. Something far more real and credible was required to be brought on record by the AO to support his allegation of bogus expenditure to ultimately disallow the consequent depreciation. 20. In view of the above discussion, it could be seen that based on oral evidences in the shape of retracted statements the genuinely incurred expenses could not held as bogus. It is settled law that solely oral evidence cannot be relied upon to dispute or negate documentary evidence that too in the situation when such statements were retracted by the person who made them. What is most relevant is that there must exists some corroborative material on record to establish the link between the oral evidence and expenses claimed alleged as bogus in the shape of payment to alleged sub-contractors and to support the allegation that cash wa....
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....mplated under the explanation to section 132(4) of the Act. However, this statement cannot, on a standalone basis, without reference to any other material discovered during search and seizure operations, empower the AO to frame the block assessment. This court in Pr. CIT v. Best Infrastructure (India) P. Ltd. [2017] 397 ITR 82 (Del) has inter-alia held that: "38. ...statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal." 24. With regard to the observations of the AO that the excel sheets of Mr. Rajiv Saxena are also corroborating the payments transferred by the sub-contractors to the management of assessee company through Shri Lodha, it is seen that such sheets were provided by the employee of Shri Saxena on his instructions but no supporting documents such as books of accounts and bank statements etc. were provided by Mr Rajiv Saxena in support of the entries in such sheets. Moreover, as observed above, these sheets are not forming part of the seized material and, therefore, these excel sheets cannot be considered be treated as incriminating material against the....
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....not legally admissible evidence. Further all the payments alleged as bogus were made in the financial year 2010-11 and no action was taken by the department in that year to doubt the cost recorded in the books of accounts. Once the AO has not raised any doubts in the year when cost incurred was recorded in the books of accounts, and the same stood brough forward in the year under appeal forming part of the total cost capitalized during the year under appeal, claim of depreciation on such cost cannot be disallowed. Under these circumstances, we are of the considered opinion that ld. CIT(A) was justified in deleting the disallowance made by AO out of depreciation which order is hereby upheld. Accordingly, all the grounds of appeal raised by the revenue are dismissed. 26. In the result, appeal of the revenue for AY 2016-17 in ITA No. 3874/Del/2023 is dismissed. 27. Now we take up the revenue's appeal in ITA No. 3870/Del/2023 for AY 2017-18. ITA No. 3870/Del/2023 (Revenue's Appeal) [AY 2017-18] 28. In this year, disallowance of INR 30,89,79,034/- was made out of the total depreciation claimed by the assessee on the Written down value of the Power plant owned and operated by....
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....nue's appeal for AY 2018-19 in ITA No.3293/Del/2023 is also dismissed. ITA No. 3850/Del/2023 (Assessee's Appeal) [AY 2018-19] 35. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- 1. "On the facts and the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming an addition of Rs. 25,08,730/- made by the Ld.. Assessing Officer u/s 2(24)(x) r.w.s. 36(1) (va) of the Income Tax Act, 1961 on account of delay in deposit of employees' contribution to PF despite the fact that the said amount was deposited before the due date of filing of return of income. 2. On the facts and the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the addition made u/s 36(1)(va) of the Act, by applying the ratio in the case of Checkmate Services P Limited, 448 ITR 518 (SC), delivered on 12th October, 2022 and Explanation 2 to section 36(1)(va) inserted as a clarification in Finance Act, 2021, whereas, during the relevant assessment year, certain Judgments of the High Courts were favor....
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....view, looking into the instant facts, this is not a fit case for making disallowance under Section 36(1)(va) of the Act, since on his part the assessee had made payment within the due date prescribed under the respective Act and it was only on account of a technical glitches, there was a one day delay in credit of such amount to the respective account of the PF/ESIC authorities." 37. On the other hand, ld. CIT DR supports the orders of the lower authorities and submits that when admittedly the payment was delayed, in terms of the judgement of hon'ble Supreme court in the case of Checkmate Services (P.) Ltd. v. CIT reported in (2022) 448 ITR 518 (SC), the ld. CIT(A) has rightly confirmed the disallowances and he requested for the confirmation of the order on this issue. 38. Heard the parties and perused the material available on records. From the perusal of the challan available at paper book page 330, it is seen that the assessee has generated challan on 13.06.2017 at 22:50:36 hrs for INR. 50,12,724/- which includes INR 25,08,730/- towards employees' contribution towards PF. The said challan is presented on 16.06.2017 at 06:07:34 hrs and realization date as per the said chall....
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....ppeal) [AY 2021-22] 41. These are the cross appeals filed by the assessee and revenue against the order of ld. CIT(A)-27, New Delhi in Appeal No. CIT(A), Delhi-27/10030/2020-21 dated 23.10.2023 for AY 2021-22. ITA No. 211/Del/2024 (Assessee's Appeal) [AY 2021-22] 42. The assessee has taken following grounds of appeal: 1. "On the facts and the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in not squashing the assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961. 2. On the facts and the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming a disallowance amounting to Rs. 1,85,20,443/- made by the Ld. Assessing Officer on account of depreciation on assets including plant, machinery and other equipment put to use during the month of March, 2021. 3. The appellant craves leave to add to, alter, amend, modify and /or delete all or any of the foregoing grounds of appeal. The appellant prays before the Hon'ble Tribunal to delete the addition made by the AO and confirmed by the Ld. CIT(A) and....
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.... had filed sample of relevant documents. On account of volume of the documents, all bills and supporting documents along-with proof of put to use of the assets could not be filed. Hence, in the interest of justice, it is prayed that the Assessing Officer may be directed to verify the bills and allow the claim in accordance with law." 44. On the other hand, Ld. CIT DR supports the orders of lower authorities and submits that since the assessee has failed to produce details of assets purchased alongwith relevant proof put to use of the same during the previous year therefore, depreciation claimed on the same was disallowed. However, he raised no objection if the matter is set aside to the file of AO for necessary verification of the bills and date when the same were put to use, as requested by Ld.AR for the assessee. 45. Heard the parties and perused the material available on records. At the outset, it is seen that solitary reason for disallowing the depreciation on the new assets purchased and put to use during the year was that the assessee failed to produce all the necessary evidences of purchases and put them for use. Before us, it is prayed by Ld.AR that if one more opport....
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....not pertain to A.Υ 2016-17 whereas the incriminating material clearly indicates that the assessee company had wrongly started to claim deprecation on bogus capital from A.Y 2016-17 and onward. 7. (a) Whether the Order of the Ld. CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 48. The Revenue in Grounds of appeal Nos. 1 & 2 has raised the issue of deletion of addition of INR 45,60,925/- by the AO on account of reduction in insurance claim. 49. Before us, Ld.CIT DR for the Revenue supported the orders of lower authorities and submits that assessee had disclosed additional income in preceding assessment years on account of insurance claim however, complete details were not filed, and it is not clear whether the claim was finally settled. Therefore, it cannot be said that loss occurred to the assessee became final. Ld.CIT DR submits that later, based on final insurance settlement received in the month of May 2021 i.e. after the end of Financial Year, assessee had claimed reduction therefore, the same s....
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....t and Rs. 665 Cr. on account of loss of profit with New India Assurance Co. Ltd. During the financial year 2016-17 & 2017-18, the assessee received Rs. 200 Cr. and Rs. 135 Cr. (125 + 10) from the insurance company. In the balance sheet as at 31.3.2018, giving relevant facts, it was explained that the assessee on conservative basis has recognized Rs. 86.97 Cr. and Rs. 33.02 Cr. towards restoration cost in the year ended on 31.03.2017 & 31.03.2018. Similarly, a sum of Rs. 480 Cr. (427.71+52.29-480) has been recognized as "other operating income" in the aforesaid years. [Page 103 r/w 112 of Assessee's common paper book) By the final survey report dated 03.06.2021, the claim on account of 'business interruption loss was allowed at Rs. 434,39,70,705/- (434.39 Cr). Since the assessee had already recognized Rs. 480 Cr. as "other operating income" in AY 2017-18 & 2018-19, therefore, difference of Rs. 45,60,29,295/- was reversed and debited to other expenses as 'reduction in insurance claim (Note 31 & 41 to the balance sheet as at 31.3.2021-pages 192 & 199 of Deptt. paper book). Assessment order The Assessing Officer disallowed the claim of lo....
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....of both the parties and perused the material available on record. Admittedly, due to fire, the extra income offered by the assessee in AYs 2017-18 & 2018-19 on account of insurance claim was not doubted by Revenue in the respective years when such income was offered for tax. During the year under appeal, the assessee made a reversal for the excess income offered as the claim was settled by the insurance company therefore, there is no ambiguity in the claim of assessee. Further, though the letter of the final claim is received in subsequent year however, it is received much before the balance sheet date and in terms of the Accounting Standard followed by the assessee company, any event occurred after balance sheet but before signing of the balance sheet, if the same had substantial impact on the financial statement of the assessee, the same should be accounted for in the year itself. Accordingly, the assessee has carried out the necessary entries in the books of accounts with respect to the loss on account of reduction in the insurance claim. Ld. CIT(A) appreciated these facts and deleted the disallowance by making following observations in para 5.3 of the impugned order:- ....
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....vable from the Insurance companies against its claim. x. Therefore, there is nothing wrong if the appellant wants to adjust this Rs. 45,60,29,295/- as deficit of income/bad debt in the year under consideration. xi. However, in any subsequent year, the appellant receives any extra amount from the Insurance company against the claim as discussed above, same would be liable to assess as income of the appellant of that AY." 53. As observed above, the assessee's claim is duly supported by the respective details and it is also a matter of fact that in all the assessment years, there were loss declared by the assessee therefore, even otherwise no loss to the revenue if the claim was made during the year under appeal or was reduced from the total income for the respective Assessment Years i.e. 2017-18 & 2018-19. Accordingly, we uphold the order of Ld.CIT(A) on this issue. Grounds of appeal Nos. 1 & 2 raised by the Revenue are dismissed. 54. Regarding Ground of appeal Nos. 3 to 6, Ld. AR for the assessee mainly relied upon the detailed submissions made in AY 2016-17. In this year, a disallowance of INR 16,12,89,908/- was made out of the total depreciation claimed by ....