9911796707
TMI Blog2024 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the ld AO for AY 2010-11 also u/s 143(3) of the Act on 25.03.2013. We find that the ld CIT(A) had granted relief to the assessee both on merits with regard to claim of deduction u/s 80IA of the Act and also on the aspect of absence of incriminating material found during the course of search qua this addition. The existence of incriminating material in respect of unabated assessment as mandatory has been endorsed by the Hon'ble Supreme Court in the recent decision of Pr.CIT Vs. Abhisar Buildwell Pvt. Ltd.[ 2023 (4) TMI 1056 - SUPREME COURT] Further, we find that the ld CIT(A) had relied on the decision of Vijay Infrastructure [ 2015 (12) TMI 897 - ITAT LUCKNOW] to give relief to the assessee on merits. We find that this decision of Lucknow Bench of Tribunal has been approved by the [ 2017 (7) TMI 956 - ALLAHABAD HIGH COURT] , wherein, specifically, the widening of roads from 2 lanes to 4 lanes have been approved to be development of roads activity by placing reliance on the CBDT Circular No. 4/2010. We find that the Special Leave Petition preferred by the revenue against this decision of the Hon ble Allahabad High Court has been dismissed by the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough Shri Govind Prasad Pandeyor through any other person. Hence, the seized documents found from Shri Govind Prasad Pandey s premises which is not supported by any corroborative evidence/material cannot be used against the assessee company for making addition in the hands of the assessee company. In view of the aforesaid observations, we have no hesitation to delete the substantive addition in the hands of the assessee company. Accordingly, the addition made on alleged illegal payments for various assessment years are hereby deleted. Addition u/s 68 in respect of share capital contribution - AO observed that the assessee had allotted shares at a premium of ₹ 40 per share to different Kolkata based companies - assessee made a preliminary objection that AY 2011-12 being unabated/ completed assessment and no incriminating material was found during the course of search qua the issue of share capital either at par or at a premium, no addition per se could be made in the hands of the assessee company in the search assessment u/s 153A - HELD THAT:- During the year under consideration, the promoters of the assessee company had purchased the shares held by Kolkata based companies in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framing the search assessment in the hands of the assessee company by stating that Shri Sushil Singhal is a man of no means and does not have capacity to execute sub-contract work for the assessee company. These facts were duly appreciated by the ld CIT(A) on merits while granting relief to the assessee company, on which, we do not find any infirmity. In any event, no addition could be made at all in the hands of the assessee company for AYs 2012- 13 and AY 2013-14, being unabated/ completed assessments, as there was absolutely no incriminating material that was found either in the course of search of assessee company or in the course of search of Shri Sushil Singhal to doubt the genuineness of sub-contract payment to Shri Sushil Singhal. Addition on account of Sale of Gitti - AO observed that the assessee company apart from civil construction works is engaged in mining of minor minerals. It excavates black basalt, Gitti , murum etc and the same are used as raw material at their construction sites and sold to others as well - HELD THAT:- The addition made by the ld AO ignoring this fact and merely based on statement of Shri Padam Singhania cannot be sustained in the eyes of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im at the site. It is not disputed that the expenditure incurred by Shri Pradip Khare for and on behalf of the assessee company were duly claimed as deduction and allowed by the ld AO in the search assessment proceedings. Hence, it cannot be said that those payments are not recorded in the books of accounts of the assessee company warranting any addition. In these facts and circumstances of the case, the statement given by Shri Padam Singhania has got absolutely no relevance. In any event, the said statement stood subsequently retracted by him. Hence, the entire addition is made by the ld AO without appreciating the modus operandi adopted and the evidences on record. Addition on the basis of rough extracts of invoices - CIT(A) deleted addition -HELD THAT:- We find that the ld CIT(A) had taken due cognizance of the independent verification carried out by the ld AO from the proprietor of 2 concerns i.e. Om marketing and Ishwari Industries, wherein the proprietor had categorically denied having made any cash sales in respect of those invoices to the assessee company and also denied having made any transaction qua those invoices reflected in the seized documents with the assessee compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso pertinent to note that in the instant case, the stock statement submitted to the bank is less by ₹ 4.14 crores than the actual WIP as on 31.08.2014. It is not the case of the revenue in the instant case that the said differential amount of ₹ 4.14 crores has been invested by the assessee towards WIP from sources outside of the books of account. No addition, whatsoever was even sought to be made as unexplained investment or unexplained expenditure by the ld AO. On the contrary, the said investment of ₹ 32.89 lakhs as on 31.08.2014 representing closing WIP as on 31.08.2014 matches with the regular books of account maintained by the assessee. Hence, the source for such investment stands duly explained from the regular books of account itself which had not been rejected by the ld AO. Hence, these facts have been duly appreciated by the ld CIT(A) while granting relief to the assessee on which we do not find any infirmity. Accordingly, we hold that there is absolutely no case for making addition in the hands of the assessee for AY 2015-16. - Shri Saktijit Dey, Vice President And Shri M. Balaganesh, Accountant Member For the Assessee : ShriK. P. Dewani, Adv For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or developing, operating and maintaining any infrastructure facility. An amendment was brought by Finance Act 2007 with retrospective effect form 01.04.2000 by way of an Explanation to section 80IA(13) of the Act which reads as under:- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of work contract awarded by any person (including the Central or State Government and executed by the undertaking or enterprise referred to in sub-section (1). 2.2. According to the ld AO, the assessee herein is merely executing works contract of getting contracts. Even as per the Form 26AS, the company has got contracts from various state government departments like Rural Road Development, Public Works Department (PWD), Pradhan Mantri Gram Sadak Yojana (PMGSY) etc merely to complete certain projects. According to the ld AO, the assessee is not at all engaged in any infrastructure development activity. The assessee company does not bear any business risk at all and has been getting funds from concerned Government departments in regular tranches. Accordingly, the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclosed the complete evidences with regard to construction/ up gradation of rural roads under PMGSY in Dindori District, Shahdol District, Umaria District. Pursuant to widening of two lanes in NH 59A (Indore-Betul Road), widening to two lanes in NH78 under NH Dn. Shahdol, widening to two lanes at NH-78 under NHDn. Shahdol and widening to two lanes at NH-78 pursuant to agreement entered into MPRRDA and PWD. The letter of acceptance and all the correspondence with MPRRDA and PWD are enclosed in pages 1 to 227 of the PB Vol-1. The assessee had also carried out asphalting and construction of bridges and culverts 26 nos at Dindori by pass road at Dindori, gross drainage work in Umaria District, widening to two lanes in Sagar-Kanpur Road, cross drainage work in Anuppur District and widening to two lanes at Tara-Premnagar pursuant to agreement entered into with PWD and Rural Engineering Services, as the case may be. The various correspondence and certificates in this regard are enclosed in pages 29 to 33 of the Paper Book Vol-1. The assessee had also carried out construction of Dureha-Kapuri-Madatola-Dharampura Road at Rewa, construction/ up gradation of rural roads under PMGSY in Dindhor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate issued by the Executive Engineer PWD National Highway Division, Bhopal dated 17.11.2016 also states that the activity of assessee to be certified as development of roads. The assessee in the instant case has claimed deduction u/s 80IA of the Act in respect of Burhar Unit and profits derived thereon could be easily deducible from the manner in which the books of account are maintained by the assessee. Hence, the profits derived by the eligible undertaking could easily be worked out for the purpose of claiming deduction u/s 80IA(4) of the Act. 2.5. The assessee also pleaded before the ld. CIT(A) that since the deduction u/s 80IA(4) of the Act had been granted to the assessee in AY 2009-10 u/s 143(3) of the Act itself, same cannot be disturbed in the search assessment framed u/s 153A of the Act unless there is any incriminating material found during the course of search contrary to the said claim of deduction. Admittedly, there is no incriminating material found in any manner whatsoever which could assist the revenue to disturb the claim of deduction u/s 80IA(4) of the Act in respect of completed assessments. It was pleaded that the assessment years 2009-10 to 2013-14 would f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment Authority is an Agency of Govt. of MP, Panchayat Rural; Development Department constituted for implementation of Pradhan Mantri Gram Sadak Yojna in the State. The objective of PMGSY is to provide all weather connectivity to unconnected rural habitations. M/s. Tirupati Build-Con Private Limited Burhar Distt. Shahdol (M.P.) was awarded work of construction and development of rural roads/CDs and their maintenance for five years after construction under the project in package no.MP 4404, MP 3809, MP 1208, MP 1209, MP 1251, MP 1252, MP 1253, MP 1214, MP 1215, MP 1216, MP 1217, MP 3821, MP 1231, MP 4423, MP 4424, MP 4418, MP 44-1-31 and MP 44-1-34. This certificate is issued on the request of contractor Sd/- (M.K. Gupta) Engineer-in-Chief M.P. Rural Road Development Authority Bhopal (M.P.) The aforesaid certificate clearly indicates that the appellant company is engaged in the development of roads and its maintenance for various packages as observed in the said certificate. The receipt shown in the profit and loss account is also in respect to amount received from the Government for execution of various development projects which are observed in the certificate issued by Madhya Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities at site and is also responsible for loss or damage to the physical property and personal injury and death which may arise in consequence of the performance of contract during the tenure of development of infrastructure projects. The appellant company has executed the development of roads as to performance of various activities which included the development of roads and it consists of earthwork, GSB, WMM/WBM, DBM/BM/OGPC, BC/SDBC/Seal Coat and all allied culverts like Hume Pipe Culvert, Slab Culvert, Box Culverts, Minor Bridge and Major Bridge varies with the width of the road. Roadside drains, traffic signage and utility shifting etc. are the major source of road construction, which varies with the type of road. These roads generally have 3-5 years of maintenance contracts after the period of construction. It is seen from Clause 58 that appellant company after development of roads projects has to prepare the drawings and operating maintenance manual giving details of As Built in respect to infra structure projects for approval of the Engineer of the Government. The aforesaid document along with the developed site has to be handed over to the Engineer of the Government Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... projects were awarded by Central / State Government / Local Authority / Statutory Body on turnkey basis. The Assessing Officer, during the course of assessment proceedings observed that assessee is acting as a contractor. Accordingly, AO opined that assessee is executing the projects as works contractor within the meaning of Explanation to Sec. 80IA of the Act. On question by the AO for the non-deduction of deduction under section 80IA of the Act, the assessee submitted that the writ petition has been filed challenging explanation to Section 80IA of the Act in the Hon'ble jurisdictional High Court and further requested not to consider the effect of the explanation to Section 80IA of the Act till the disposal of writ petition. However, the AO observed that no further details was submitted by the assessee Hence, AO disallowed the deduction claim u/s 80-IA(4) for an amount of Rs. 1598,85,0511/- and added to the total income of assessee 4. Aggrieved, assessee preferred an appeal before the LdCIT(A) who has Allowed the deduction under section 80-IA of the Act by observing as under:- Now, keeping in view the scheme of the tax holiday under sec. 80-IA and the provisions of the Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ITO Ward 33(4), Kolkata in Appeal No. 1684/Kol/2011 for AY 2007-08 and in the case of M/s Simplex Subhas J.V. vs. ITO Ward 33(4) Kolkata in Appeal No. 1685/Kol/2011 for AY 2007-08, respectively vide their order dated 18.06.2013, held in para 11 12 of the order while deciding on the issue having identical set of facts of the cases that the assessee were entitled to get the benefit deduction u/s. 80IA of the Act as claimed them. In the light of the above discussion and findings, perusing the facts of the case and respectfully following the principles laid down in various factual pronouncements relied upon by the appellant on the issue as discussed above, it is held that the appellant company is engaged in development of infrastructure projects. Therefore, the appellant had acted as developer of the infrastructure facilities and has not acted merely as a work contractor, hence, it was entitled to get deduction under sec 80-IA(4) of the Act as claimed by the appellant. The Assessing Officer is, thus, directed to allow the same accordingly. Hence, these grounds of appeal of the appellant are allowed. Being aggrieved by this, Revenue has come up in appeal before us on the following g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA all the following conditions should be satisfied: (ii) There exists an agreement with the Central Government, State Government, Local authority or any other statutory body and (iii) Pursuant to the agreement specified in point (ii) the company engages itself in any of the following activities. (a) Development of infrastructure facility (b) Operation and maintenance of infrastructure facility (c) Development, operation and maintenance of infrastructure facility 6.2 Now the assessee in the given case is a company which, pursuant to agreements with various Government bodies, engaged itself in the development of infrastructure facility as defined in the Explanation to sub section 4 of section 80-IA These set of facts have not been disputed by the AO. The Ld. AO disallowed the claim on the ground that the assessee has challenged the provisions of explanation to section 80IA of the Act to the Hon'ble High Court and the Court has restrained to enforce the demand that may be raised in pursuance to the explanation to section 80IA of the Act. There is no direction to keep the assessment proceedings under abeyance. The AO treated the assessee as a mere works contractor conducting mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the contractor in addition to employing labour, procures material from a third party. Thus, contracts involving mere labour of the contractor are included in the purview of works contract . Further, attention is invited to the judgment of the Supreme Court in case of Associated Cement Co. Ltd. vs. CIT (201 ITR 435], wherein the Hon'ble Court while interpreting the term 'work' u/s 194C held that Words 'any work' in sub-s. (1) of s. 194C means any work including supply of labour to carry out work and is not intended to be confined to or restricted to works contract, therefore, a person who credits to the account of or pays to a contractor any sum payable on behalf of organizations specified in s. 194C(1) for carrying out any work (including supply of labour for carrying out any work) is liable to deduct income-tax as required under that sub-section. The words in the sub-sections (1) of 194C `on income comprised therein' appearing immediately after the words 'deduct an amount equal to two per cent of such sum as income-tax' from their purport, cannot be understood as the percentage amount deductible from the income of the contractor out of the sum cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80-IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the said section. Thus, in a case where a person makes the investment and himself executes the development work, Le., carries out the civil construction work he will be eligible for tax benefit under section 80-IA of the Act. In contrast to this, a person who enters into a contract with another person (ie, undertaking or enterprise referred to in section 80-IA) for executing works contract, will not be eligible for tax benefit under section 80-IA. This amendment will take retrospective effect from 1st April 2000 and will accordingly apply in relation to the assessment year 2000-01 and subsequent years. The Explanatory Memorandum clearly lays out that purpose of extending tax benefit u/s 80-IA was to encourage investments from the private sector and hence work contracts, ie. contracts involving merely labour (or mere execution of construction without making investments) are outside the purview of the provisions of section 80-IA. Thus, the term works contract used in Explanation to section 80-IA(13) means a contract of developing infrastructure by merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the said infrastructure for a period of 12 to 24 months. During this period, if any damages are occurred it shall be the responsibility of the assessee. Further, during this period, the entire infrastructure shall have to be maintained by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an undeveloped area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05- 2010, such activity is eligible for deduction under section 80IA (4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The department i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1008-09/Hyd/2013 for AYs 2009-10 2010- 11 dated 25.10.2013 held that The next reason given by the CIT(A) is with regard to non- financial participation by the assessee, as the assessee has got mobilization advance. The mobilization advance has not been given freely. It has been given only after the assessee furnished a bank guarantee, and the bank guarantee has been given by the bank only after getting enough security from the assessee, to protect itself from any risk on account of any default on the part of the assessee. The assessee has taken financial assistance from bank and paid huge interest of Rs. 2,87,10,943.00 for assessment year 2009-10 and of Rs. 9,35,78,373.00 for assessment year 2010-11, as seen from the Profit and Loss Account of the assessee for the relevant years ending on 31.3.2009 and 31.3.2010 respectively, copies of which are furnished by the assessee at pages 20 and 65 of the paper-book. Similarly, assessee has invested its own fund of Rs. 5,55,00,000.00 for assessment year 2009-10 and of Rs 7,86,75,710.00 for the assessment year 2010-11, as seen from the Balance Sheet of the assessee as on 31.3.2009 and 31.3.2010 respectively, copies of which are furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-IA grants deduction on profits from the activity of development carried out in pursuance of an agreement with the Government it presupposes that assessee will earn some profits from mere development (without operating and maintaining) of the infrastructure facility. Now the relevant question that arises here is that how would an assessee engaged in mere developmental activity (and no operation) pursuant to an agreement with the Government earn profits? The obvious answer is that the assessee will recover its cost of development development from the Government otherwise the entire cost of development will be a loss in its hands. Thus, if deduction u/s 80-IA is denied on the ground that the assessee had received payments from Government, then an assessee who is only a developer (and not an operator) will never be entitled to deduction u/s 80-IA, which is clearly not the intention of legislature as discussed by the Bombay High Court in case of ABC Heavy Industries Ltd. Thus, merely because the assessee was paid by the Government for development work it cannot be denied deduction under section 80-IA(4). The contention of the assessee finds strength from the following judgments: The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. If the interpretation canvassed by the Revenue authorities is accepted, no enterprise, carrying on the business of only developing the infrastructure facility, would be entitled to deduction under s. 80-IA(4), which is not the intention of the law. If a person who only develops the infrastructure facility is not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he is not operating the infrastructure facility. When the legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction, it presupposes that there can be income to developer, Le, to the person who is carrying on the activity of only developing infrastructure facility. Obvious as it is, a developer would have income only if he is paid for development of infrastructure facility, for the simple reason that he is not having the right/authorisation to operate the infrastructure facility and to collect toll therefrom, and has no other source of recoupment of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic specifications are laid down, would not debar the assessee from claiming deduction under s. 80-IA(4). If a person who only develops the infrastructure facility was not paid by the Government, the entire cost of development would be a loss in the hands of the developer as he was not operating the infrastructure facility. Merely because the assessee was paid by the Government for development work it could not be denied deduction under section 80-IA(4). The Chennai Bench of Tribunal in case of R.R. Constructions, Chennai vs. Department of Income tax held that When an assessee is only developing an infrastructure facility project and is not maintaining nor operating it, obviously such an assessee will be paid for the cost incurred by it; otherwise, how will the person, who develops the infrastructure facility project, realize its cost? If the infrastructure facility, just after its development, is transferred to the Government, naturally the cost would be paid by the Government. Therefore, merely because the transferee had paid for the development of infrastructure facility carried out by the assessee, it cannot be said that the assessee did not develop the infrastructure facility. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e w.r.t the above, it is submitted that under the impugned contracts, the assessee was merely carrying out the civil construction work. It was responsible for overall development of the infrastructure facility. It was merely provided with the site which it had to develop into an infrastructural facility by deploying his resources Le. material, plant machinery, labour, supervisors etc. It was responsible for any damage/loss caused to any property or life in course of execution of the works. It was even responsible for remedying of the defects in the works at its cost. It was also required to operate and maintain the infrastructure facility. Hence, it cannot be said that the contract with the Government was to carry out mere civil construction. Attention in this regard is invited to the following: (i) The ITAT (Ahmedabad) in case of Sugam Construction (P) Ltd. vs. ITO (56 SOT 45] held that It is also gathered (a) That a developer is a person who undertakes the responsibility to develop a project. (b) That a developer is therefore not a civil contractor simplicitor. (c) That if we apply the commercial aspect, then a developer has to execute both managerial as well as financial respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court that the assessee at present has undertaken huge risks in terms of deployment of technical personnel, plant and machinery, technical knowhow, expertise and financial resources. Thus, the fact that the assessee deploys its resources (material, machinery, labour etc.) in the construction work clearly exhibits the risks undertaken by the assessee. Further, the assessee vide the agreements has clearly demonstrated the various risks undertaken by it. The assessee was to furnish a security deposit to the Employer and indemnify the employer of any losses/damage caused to any property/life in course of execution of works. Further, it was responsible for the correction of defects arising in the works at it cost. Thus, it cannot be said that the assessee had not undertaken any risk. The ITAT (Hyderabad) in case of Siva Swathi Construction (P) Ltd. (supra) held that Further reason given by the ld. CIT(A) for denying deduction under S.80IA to the assessee is that the assessee has not undertaken any risks. The observations of the Id. CIT(A) in this behalf are also not valid and correct. It was clearly mentioned in the agreement that the assessee shall execute and furnish indemnity bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) is correct and in accordance with law and no interference is called for. We uphold the same. Hence, this ground of Revenue's appeal is dismissed. The facts in the aforesaid case would show that it was also a case of development of roads for National Highways Authority of India apart from the other projects given in the facts in the order of Tribunal at para 3 of the judgement. The claim of deduction under section 80IA(4) of I.T. Act 1961 was in respect to widening of road in to four lane roads of the existing National Highway No. 57. The activity was similar/identical to that in the case of appellant company for consideration. Respectfully following the decision of Hon'ble Kolkata Bench, Kolkata, I am of the view that disallowance of deduction under section 80IA(4) of I.T. Act 1961 in the case of appellant company is unjustified and unsustainable. 7.2.8 The Hon'ble ITAT, Lucknow Bench, Lucknow in the case of M/s. Vijay Infrastructure Pvt. Ltd, vide order dated 30/10/2015 in ITA No. 254/LKW2015 has held as under: 14.1 From the above paras, reproduced from the order of CIT(A), we find that a categorical finding has been given by CIT (A) that the assessee company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development work ie, carries out the civil construction work, he will be eligible for tax benefit under section 80 IA of the Act. In contrast to this, a assessee, who enters into a contract with another person including Government or an undertaking or enterprise referred to in Section 80 IA of the Act, for executing works contract, will not be eligible for the tax benefit under section 80 IA of the Act. We find that the word owned in sub-clause (a) of clause (1) of sub section (4) of Section 80IA of the Act refer to the enterprise. By reading of the section, it is clears that the enterprises carrying on development of infrastructure development should be owned by the company and not that the infrastructure facility should be owned by a company. The provisions are made applicable to the person to whom such enterprise belongs to is explained in sub-clause (a). Therefore, the word ownership is attributable only to the enterprise carrying on the business which would mean that only companies are eligible for deduction under section 80IA (4) and not any other person like individual, HUF, Firm etc. 22. We also find that according to sub-clause (a), clause (i) of sub section (4) of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to in the agreement or not. The agreement is not for a specific work, it is for development of facility as a whole. The assessee is not entrusted with any specific work to be done by the assessee. The material required is to be brought in by the assessee by sticking to the quantity and quantity irrespective of the cost of such material. The used to denote the person who enters into such contract. Even a person who enters into a contract for development of infrastructure facility is a contractor. Therefore, the contractor and the developer cannot be viewed differently Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. 25. We find that the decision relied on by the learned counsel for the assessee in the case of CIT vs Laxmi civil Engineering works (supra) squarely applicable to the issue under dispute which is in favour of the assessee wherein it was held that mere development of a infrastructure facility is an eligible activity for claiming deduction under section 80IA of the Act after considering the Judgment of the Mumbai High Court in the case of ABG Heavy Engineering (supra). The case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n three activities was not there, after the amendment or has been inserted w.e.f. 1- 4-2002 by Finance Act 2001. Therefore, in our considered view, the assessee should not be denied the deduction under section 80IA of the Act if the contracts involves design, development, operating maintenance, financial involvement, and defect correction and liability period, then such contracts cannot be called as simple works contract to deny the deduction u/s 80IA of Act. In our opinion the contracts which contain above features to be segregated on this deduction u/s. 80-IA has to be granted and the other agreements which are pure works contracts hit by the explanation section 80IA(13), those work are not entitle for deduction u/s 80IA of the Act. The profit from the contracts which involves design, development, operating maintenance, financial involvement, and defect correction and liability period is to be computed by assessing officer on pro-rata basis of turnover. The assessing officer is directed to examine the records accordingly and grant deduction on eligible turnover as directed above. It is needless to say that similar view has been taken by the Chennai Bench of the Tribunal and deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal, used his own management and expertise in maintenance and had to bear the risk and defect correction. These findings of CIT (A) could not be controverted by learned DR of the revenue and therefore, this tribunal order rendered in the case of Koya Co. (Supra) is squarely applicable because the facts are similar. In the order of CIT (A), he has followed this tribunal order and various other judicial pronouncements as noted by him in his order, as reproduced above. Considering this factual and legal position, we find no infirmity that the order of CIT (A) on this aspect that in the facts of the present case, it cannot be said that the assessee company was mere a contractor and not a developer. Therefore, on issue No. 3, we find no infirmity in the order of the CIT(A). This issue is decided in favour of the assessee In the aforesaid decision widening of road from two lanes to four lanes in terms of agreement with National Highways Authority was for consideration. The activity considered in the judgement is similar to that being carried out by the appellant on the basis of evidence on record. After considering the facts in detail the ITAT had concluded that the assessee therein was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material or evidence on record and is thus unjustified and unsustainable. 7.2.10 The legal position as regard to addition in 153A proceedings without there being incriminating material and evidence on record has been dealt by Hon'ble ITAT, Delhi Bench, Delhi in case M/s. Best Infrastructure (India) Pvt. Ltd. Ors. vs. ACIT Ors. The aforesaid case addition made in the absence of incriminating evidence or material on record came to be considered by Hon'ble ITAT and the relevant findings as recorded in the said order are reproduced hereunder. 8. We have carefully considered the arguments of both the sides and have perused the material placed before us In the case of Kabul Chawla (supra), Hon'ble Jurisdictional High Court has considered all earlier decisions of Hon'ble Delhi High Court and has also considered the decisions of other High Courts and Tribunals and summarized the legal position in paragraph 37 and at the conclusion of the case in paragraph 38, which are reproduced below - Summary of the legal position. 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07 On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 9. In clause (iv) above, their Lordships held Obviously an assessment has to be made under this Section only on the basis of seized material . In clause (v), the same is reiterated by holding In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made . In clause (vu), it is stated Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search 10. In the case of RRJ Securities Ltd. (supra), in paragraph 21, it has been held.- In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. However, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 12. Thus, Hon'ble Jurisdictional High Court has held The words evidence found as a result of search would not take within its sweep statements recorded during search and seizure operations . Their Lordships further observed However, such Government does not provide any material to the assessee. It provides the works in packages and not as a works contract. The assessee utilizes its funds, its expertise, its employees and takes the responsibility of developing the infrastructure facility. The losses suffered either by the Govt. or the people in the process of such development would be that of the assessee. The assessee hands over the developed infrastructure facility to the Government on completion of the development. Thereafter, the assessee has to undertake maintenance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court in various cases. We have also discussed the facts of the assessee's case. Now, applying the law as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court to the facts of the assessee's case, the following position emerges. (1) No addition u/s 153A in respect of a completed assessment can be made unless some incriminating material was unearthed during the course of search Admittedly, in the case of the assessee, no incriminating material with regard to issue of share capital has been found and seized during the course of search. (i) Any statement recorded during the course of search cannot on a standalone basis without reference to any other material discovered during search and seizure operation would empower the Assessing Officer to make the addition. The words evidence found as a result of search would not take within its sweep statement recorded during search and seizure operations. Therefore, the Revenue's stand that the addition u/s 153A can be made in respect of share capital on account of statement of ShriTarunGoyal and ShriAnuAggarwal cannot be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor. The deduction of Tax at source is merely a mechanism/method to collect tax under which certain percentage of amount is deducted by payer at the time of credit/payment to payee This fact brings no adversity with regard to activity of appellant being developer as discussed in above paras. 7.2.13 The decision rendered by Hon'ble Bombay High Court in case of in case of M/s Simple Foods Ltd in ITA No.27/2010 vide judgment dated 12/07/2017 and the decision of Hon'ble Delhi High Court in case of International Tractors Ltd. in ITA No. 1082/2005vide judgment dated 20/07/2017 also support the contention of appellant and deduction is claimed u/s 80IA of IT. Act 1961 cannot be denied when deduction u/s 80IA allowed in case of appellant in initial achieved finality assessment year has 7.2.14 It is seen that in the profit and loss account the appellant company is in receipt of interest on various deposits. It has been submitted that the aforesaid interest would go to reduce the claim of interest paid in profit and loss account and there is no resultant surplus in interest account for the purpose of exclusion for allowability of deduction under section 80IA of L.T. Act 1961 The H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) made by the A.O. is unjustified and unsustainable. In view of above discussion and finding, the addition made by A.O. at Rs. 623.01 lakhs is hereby directed to be deleted. Thus, these grounds of appeal of appellant are allowed. 2.7. We find that the ld AO while granting deduction u/s 80IA of the Act to the assessee for AY 2009-10 u/s 143(3) of the Act on 16.12.2011 which is enclosed in pages 96 to 105 of the paper book Vol-1, had indeed narrated the entire activity carried out by the assessee and had categorically stated that the assessee is indeed engaged in the business of development of infrastructure facility. There is absolutely no such material which has been found during the course of search to disturb this particular finding of the ld AO. All the documents issued by the concerned regulatory authorities are only favoring the assessee. Similar was the view taken by the ld AO for AY 2010-11 also u/s 143(3) of the Act on 25.03.2013. We find that the ld CIT(A) had granted relief to the assessee both on merits with regard to claim of deduction u/s 80IA of the Act and also on the aspect of absence of incriminating material found during the course of search qua this addition. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 1 raised by the revenue for all the assessment years is dismissed. 3. Addition made on account of illegal payments through ShriGovind Prasad Pandey Ground No. 2 for assessment year 2011 12 Ground No. 2 for assessment year 2012-13 Ground No. 2 for assessment year 2013-14 Ground No. 2 for assessment year 2014-15 Ground No. 2 for assessment year 2015-16 We have heard the rival contentions and perused the materials available on record. During the course of search and seizure operation u/s 132(1) of the Act in the Singhania Group, the residence of Shri Govind Prasad Pandey situated at FF2, Manpreet Vihar Apartment, Kirpal Chowk, Gupteshwar Road, Jabalpur was also covered. Shri Govind Prasad Pandey works in the assessee company and his job profile in the company is management of project and to liaison with other departments with respect toworks and payment of bills. He was also the project in-charge of Damoh Hatta, Gaisabad site in the assessee company. During the course of search operation at the residential premises of Shri Govind Prasad Pandey, loose papers (LPS-1) and a diary (BS-1) were found and duly seized. The said seized documents contained certain notings representing cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Thereafter, the Investigation Wing summoned Shri Govind Prasad Pandey wherein he explained how those notings were made by him in the seized documents and filed a retraction statement on 15.01.2015 before the Investigation Wing itself. The ldAO completely ignored all the aforesaid contentions of the assessee and proceeded to make addition on account of illegal payments made to various Government officials as submitted herein under:- Year wise breakup of illegal payments to various officers/officials of MPRDC S No. Financial Year Asst Year Amount (In Rs. ) 1 2010-11 2011-12 16,75,000/- 2 2011-12 2012-13 50,000/- 3 2012-13 2013-14 1,08,94,000/- 4 2013-14 2014-15 1,37,58,000/- 5 2014-15 2015-16 1,84,58,000/- Total 4,48,35,000/- 3.2. The additions were made by the ld. AO by invoking the provisions of Explanation to Section 37(1) of the Act. This addition was made on substantive basis for various assessment years in the hands of the assessee company and on protective basis in the assessment of Shri Govind Prasad Pandey. 3.3. The ld. CIT(A) appreciated the contentions of the assessee and deleted the addition made on account of payments made for illegal gratification for various a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subsequent statement being contradictory to each other no much credence can be given to same. Noting in diary by itself is not sufficient evidence to conclude that illegal payments like that of gratifications have been made by the appellant. Evidentiary value in respect to notings on loose papers and diaries have come up for consideration before Hon'ble ITAT, Ahemdabad Bench, Ahmedabad in case of M/s Nishant Construction Pvt. Ltd in ITA No. 1502/Ahmd/2015. The Hon'ble ITAT in its order dated 14/02/2017 has held as under: 19. at this stage, we would like to refer to the observations of the lower authorities to the effect that no one makes a loss in real estate business and that the market perceptions indicate that the prices of the immovable properties are always on the upward trend. It appears that both the lower authorities have been carried away with the notorious practice prevailing in real estate circles all property transactions, there is non-disclosure of the full consideration. 20. In Lalchand BhasatAmbica Ram vs. CIT: (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessment on mere suspicion and surmises or by taking no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the business are to be computed. 23. The third is the case of section 92BA inserted by the Finance Act, 2012 w.e.f. 01.04.2013. This section gives power to the Assessing Officer to recalculate the profits shown by the assessee in cases of specified domestic transactions , where the aggregate of such transactions entered into in the relevant accounting year exceeds a sum of Rs. 5 crores. 24. Except in these three situations, the Act does not permit the enhancement of the profits of the business shown by the assessee. 25. Coming to the evidentiary value of the impounded loose sheet mentioned elsewhere, the Hon'ble Supreme Court in the case of Common Cause (A red Society) and Others vs. Union of India and Others in Writ Petition Register Civil Appeal No. 505 of 2015 has observed as under:- 16. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla's case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch evidence no relief can be given to the party who relies upon such entries to support his claim against another In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said, that the rule as laid down in Section 34 of Tie Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with 28 It is apparent from the aforesaid discussion that the loose sheet of papers are wholly irrelevant as evidence being not admissible u/s. 34 so as to constitute evidence with respect to the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments seized from Shri. Govind Pandey. The copies of various statement recorded have been submitted in the appellate proceedings to support the contention made by appellant that notiings found in the seized documents are not evidence of any payment made on account of illegal gratification. The perusal of statement recorded by the Department of various persons indicates that the seized documents along with entries represented by names of such persons were confronted to verify whether any payment has been received by them. The aforesaid persons in the statement given on oath before the Officer of Investigation Wing have clearly stated that no money was received by them from appellant or Shri GP. Pandey. The aforesaid evidence which demonstrates that the notings in seized documents are not in respect to payment made by appellant have not been faulted by the A.O. in assessment proceedings nor any independent evidence has been brought on record to show that the statement given on oath by various person are not correct. Contents of statement on oath on record have been unrebbutted. On above factual position, conclusion of the A.O. that appellant has made payment on account of illegal gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t supported by any other corroborative material or evidence found during the course of search. The Hon'ble ITAT has held as under: 4. During assessment proceedings, the AO observed that as per the seized material Annexure KBR/A/02 and KBR/A/4, assessee was involved in several financial transactions relating to real estate business for the period 2003 to 2008 and these transactions were written in coded form. He observed that in the statement recorded on the date of search, assessee admitted that the seized books contain details of day to day expenditure. In the statement recorded u/s. 131 on 23-7-2008, the assessee further admitted that the seized books contain receipts and payments partly related to him and partly related to others and the entries were written in coded form. He also admitted that these books were written by his managers and his two wives Smt. Sridevi and Smt. Rani. The AO analyzed the entries in the books by entering the same in chronological order in excel spreadsheet and fed the receipts and payments against the names mentioned. He noticed that in every transaction last three digits were omitted while recording. For example, car insurance payment was written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, the seized material (two note books) marked as KBR/A/02 and KBR/A/04 wherein certain entries are found recording arious transactions pertaining to the assessee. These entries in the notebook are unsubstantiated and on that basis the AO reached to the conclusion that the figures mentioned therein are to be read by adding zeros and thereby he came to conclude that there is undisclosed income in these 6 assessment years. In our opinion, the document recovered during the course of search was a dumb document and led nowhere. The CIT(A) rightly came to the conclusion that it cannot be acted upon and deleted the addition. 29. Other than the loose paper, the AO has not brought on record any corroborative material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their relevant evidence has been taken into consideration. The only test that was required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents represent illegal gratification made to various Government officials for and on behalf of the assessee company and he had acted as per instructions of Shri Padam Singhania, the said statement stood retracted by him on 15.01.2015 before the Investigation Wing itself during the post search proceedings. This fact was further corroborated by Shri Padam Singhania s statement wherein he had categorically stated that he had not given any instructions to Shri Govind Prasad Pandey to make any payment in the form of illegal gratification to various Government officials and the assessee company had not made any illegal payments. Further, the Investigation Wing had also conducted independent enquiries with the concerned Government officials mentioned in the seized documents by recording statements on oath from them, behind the back of the assessee, wherein all the parties had denied having received any money from the assessee company directly or through Shri Govind Prasad Pandeyor through any other person. Hence, the seized documents found from Shri Govind Prasad Pandey s premises which is not supported by any corroborative evidence/material cannot be used against the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the assessee company for the year under consideration based on the statement given by Shri Padam Singhania. 4.1. Before the ld CIT(A), the assessee made a preliminary objection that AY 2011-12 being unabated/ completed assessment and no incriminating material was found during the course of search qua the issue of share capital either at par or at a premium, no addition per se could be made in the hands of the assessee company in the search assessment u/s 153A of the Act. Further, the assessee submitted that there was no receipt of any money during the year at all. The receipt of share capital and share premium from Kolkata based companies happened in earlier year, wherein no addition has been made by the ld AO u/s 68 of the Act despite completing the assessment u/s 143(3) of the Act on 06.03.2013. During the year under consideration, the promoters of the assessee company had purchased the shares held by Kolkata based companies in the assessee company at a nominal value. This is purely a transaction that has happened between the promoters of the assessee company and the Kolkata based companies, on which, the assessee company is not at all involved and does not have any contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate shareholders is clearly evident from the evidences on record. Financial Statement of all the corporate shareholders is placed before me and the financial statements clearly substantiated and demonstrated the creditworthiness and genuineness of the transactions. PAN of the corporate shareholders is available on record. Share Capital amount have been received through proper banking channel. Copy of Bank Statement of appellant company is available on record. In view of above, the onus to explain the share capital contribution by the appellant stands explained. Hon'ble Jurisdictional High Court in the case of CIT Vs. People General Hospital Ltd. reported at 365 ITR 65 MP has held as under: 15. In Lovely Exports (supra) the Apex Court considering the question held thus:- 2. Can the amount of share money be regarded as undisclosed income under s.68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al High Court squarely applies to the facts in case of appellant and considering the same addition made by the A.O. is held to be unjustified and unsustainable. 7.5.5 It is also noted that the Hon'ble High Court of Bombay at Goa in case of M/s Paradise Inland Shipping Pvt. Ltd., vide judgment dated 10th April 2017 in Tax Appeal No. 66 of 2016 has dismissed the appeal of revenue challenging the addition in respect to share capital. It is noted by the Hon'ble High Court that the A.O. for making addition in respect to share capital had relied upon statement of two persons one from Calcutta and other from Delhi to show that companies who had subscribed to share capital of assessee company are not in existence. The aforesaid finding were reversed in appellate proceedings being contrary to documents placed on record out of documents available in public domain. The Hon'ble High Court has upheld findings of lower appellate authorities which were recorded on the basis of documents produced which were basically from public offices which maintain the record of the companies. The Hon'ble High Court for its conclusion has relied upon the decision of Hon'ble Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een in the case of appellant regular assessment has been framed pursuance to return filed u/s 139 of I.T. Act 1961 on 24/09/2011. In the course of search no incriminating material or evidence was found to impeach the genuineness of contribution of share capital received by appellant company. It is settled proposition of law that in assessment framed u/s 153A of I.T. Act 1961 the additions in the completed assessment have to be restricted to incriminating evidence or material found during the course of search. In the case of appellant there is no incriminating evidence or material found during the course of search with regard to share capital contribution received which was accepted in the regular assessment framed u/s 143(3) of I.T. Act 1961 during Asstt. Year 2009-10 2010-11 on 16/12/2011 25/03/2013 respectively and has achieved finality. The addition made on account of share capital contribution in the absence of incriminating evidence or material on record came to be considered by Hon'ble ITAT, Delhi Bench, Delhi in case of M/s. Best Infrastructure Pvt. Ltd. reported at 47 CCH 0159 and relevant findings as recorded in said order are reproduced hereunder: 8. We have carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of vii Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 9. In clause (iv) above, their Lordships held Obviously an assessment has to be made under this Section only on the basis of seized material. In clause (v), the same is reiterated by holding In absence of any incriminating material, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion Sometimes statements are corded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 12. Thus, Hon'ble Jurisdictional High Court has held The words evidence found as a result of search would not take within its sweep statements recorded during search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was raised with regard to loose papers found and seized from their premises. Admittedly, none of the loose papers was relating to issue of share capital. The loose papers were pertaining to unaccounted receipt on sale and unaccounted expenditure on construction. In the statement dated 24th October, 2008, though the query was raised with regard to issue of share capital and the statement of Shri Tarun Goyal was confronted wherein he has alleged to have provided accommodation entry to the assessee group, Shri Anu Aggarwal categorically denied to have received any accommodation entries from anybody 24. In view of the above, we hold that the issue of share capital was out of the purview of assessment u/s 153A as the assessment for assessment year 2005- 06 was not pending on the date of search and no incriminating material relating to share capital was found during the course of search. Accordingly, the addition of Rs. 3,60,00,000/- made by the Assessing Officer and sustained by learned CIT(A) for unexplained share capital is deleted. The aforesaid decision has further been upheld by the Hon'ble Delhi High Court vide, its judgment dated 01/08/2017 in ITA No.13/2017. The aforesaid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the A.O. Regular assessment framed has achieved finality. Appellant has established identity, creditworthiness of corporate shareholders and genuineness of transactions by placing sufficient evidences on record. For the detailed reasons recorded hereinabove, I am of the considered opinion that the share capital addition made by the A.O. is unjustified and unsustainable in Asstt. Year 2010-11 and also in Asstt.Year 2011-12 where the A.O. has made the addition under mistake. The observation of the AO at para 7.3.17 of the assessment order for addition for share capital are deleted in assessment year 2010-11 and it is held that no sum at Rs. 137.56 lakhs can be assessed to tax at the hands of appellant in assessment year 2010-11 or in assessment year 2011-12. Hence, this Ground of appeal of appellant is allowed. 4.2. Given the elaborate observations made by the ld CIT(A) reproduced herein above which stood uncontroverted by the revenue before us, we do not find any infirmity in the order of the ld CIT(A) granting relief to the assessee. Accordingly, Ground No. 3 raised by the revenue for assessment year 2011-12 is dismissed. 5. Addition on account of unrecorded cash transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income, in any event, the same would be available for telescoping benefit with the said income. Based on this explanation, the ld AO concluded that the assessee had accepted the contents in the seized documents to be its undisclosed income and rejected the plea of the assessee that the notings are rough estimates. The ld AO however, held that the said payment could also be in contravention of provisions of Section 40A(3) of the Act. With these observations, the ld AO brought to tax the sum of Rs. 137 lakhs and Rs. 70 lakhs as undisclosed income of the assessee representing cash payment to Shri Guddu Rastogi in AYs 2011-12 and 2012-13 respectively. 5.1. At the outset, it was pleaded before the ld CIT(A) that the payment for purchase of cement has been made through proper banking channel and no violation of provision of section 40A(3) of the Act was made by the assessee. It was explained that the loose papers being A-1/ LPS-6/ pages 35-36 does not indicate any cash payment made by the assessee to Shri Guddu Rastogi. In only refer to certain transactions with Shri Guddu Rastogi in respect of purchase of cement. Further, the said loose papers refer to amounts allegedly received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to purchase of cement at the hands of appellant. The addition made by the A.O. for violation of section 40A(3) of Income Tax Act 1961 is unjustified and unsustainable. 7.4.5 The loose papers as found from the appellant are pasted in assessment order at page 95 and 96 of assessment order. Perusal of loose papers being A-1/LPS-6/Page-35 36 do not indicate that any payment has been made by appellant in cash. Loose paper referred to certain transaction with Shri Guddu Rastogi in respect to purchase of cement. Loose paper shows that the appellant has received amount mentioned therein and notings are not in respect to any payment made. The notings on loose paper by itself is not an evidence for making any addition at the hands of appellant. The A.O. has not even examined Shri Guddu Rastogi in connection with loose paper found from the appellant. The notings on loose paper in absence of any further corroborative material or evidence on record do not justify any addition liable to be assessed at the hands of appellant. Notings on loose paper by itself is not sufficient evidence to conclude that any payments have been made by the appellant. Evidentiary value in respect to notings on loose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an assessee would put an end to the procedure that ensued on account of survey or search. The Assessing Officer well can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants Our conclusion find support from the Circular dated 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. The ratio laid down by the aforesaid decisions squarely applies to the facts in case of appellant and respectfully following the same, I am of the considered opinion that the addition made by the A.O. on the basis of statement of ShriPadamSinghania which has been retracted subsequently is unjustified and unsustainable. 7.4.7 The various contention raised by appellant in the submission as referred to hereinabove are fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure operation u/ 132(1) of the Act in the premises of the assessee company on 16.10.2014, consequential search warrant was issued in the case of Shri Sushil Singhal, a sub-contractor of the assessee company. This warrant was executed on the same date at his residence at Khaleswar Road, Umariya (MP). A statement was recorded from Shri Sushil Singhal wherein, he stated that he had executed the work of sub-contract basis for the assessee company only. Shri Sushil Singhal stated that his books of account were kept at head office of the assessee company which was denied by Shri Padam Singhania in his statement. The ld AO observed that the said sub-contractor i.e. Shri Sushil Singhal is a man of small means and declaring meagre income in his return of income and concluded that he is a bogus sub-contractor and has been used to inflate expenses and suppress income of the assessee company. It is pertinent to note that there is absolutely no incriminating documents that were found in the course of search of Shri Sushil Singhal to doubt the genuineness of the transaction of sub-contract payment made by assessee company to him or to doubt the capacity of Shri Sushil Singhal to execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account and vouchers and therefore payment made to Shri Sushil Singhal for assessment years 2012-13 to 2014-15 are disallowed as proved to be bogus. It is seen that the assessment of Shri Sushil Singhal has been framed by the same A.O. on 19/12/2016 ie. 4 days prior to framing of assessment in the case of appellant company. In the assessment framed of Shri Sushil Singhal it is seen that the income as declared by him has been accepted except for assessment year 2012-13 wherein addition of Rs 21,60,150/- has been made by not accepting the opening capital of Shri Sushil Singhal. The perusal of the assessment order shows that the A.O. has noted that Shri Sushil Singal is a sub contractor of the appellant company and receipts declared by him in the return are on account of receipt from appellant company from which income has been declared by him in the return. The returns of income for the assessment years 2012-13 to 2014-15 are supported by financial statements which are duly audited and audited financial statements have been furnished along with returns of income. The financial statements as submitted by Shri Sushil Singhal has been accepted without inviting any adverse observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly considered the arguments of both the sides and have perused the material placed before us. In the case of Kabul Chawla (supra), Hon'ble Jurisdictional High Court has considered all earlier decisions of Hon'ble Delhi High Court and has also considered the decisions of other High Courts and Tribunals and summarized the legal position in paragraph 37 and at the conclusion of the case in paragraph 38, which are reproduced below:- Summary of the legal position. 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial, the completed assessment can be reiterated and the abated assessment or reassessment can be made . In clause (vi), it is stated Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search 10. In the case of RRJ Securities Ltd. (supra), in paragraph 21, it has been held :- In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment However, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possibility of any income that may be remained undisclosed in the relevant assessment years, This Court in Commissioner of Income Tax (Central)-III v. Kabul Chawla 707/2014, decided on 28th August, 2015 has held that completed assessments could only be interfered with by the AO on the basis of any incriminating material unearthed during the course of the search or requisition of the documents. In absence of any incriminating material, the AO does not have any jurisdiction to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd seizure operations Their Lordships further observed However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation In paragraph 24, theu Lordships have mentioned about the prevailing practice of extracting statement by exerting undue influence or coercion by the search party Though the above decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, however, in our opinion, the above observation of Hon'ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the assessment u/s 153A. 23. We have discussed in detail the legal position as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court in various cases. We have also discussed the facts of the assessee's case. Now, applying the law as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court to the facts of the assessee's case, the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment order shows that addition made is not on the basis of any incriminating material or evidence found in the course of search. Regular assessment framed has already achieved finality. The facts and circumstances in case of appellant are similar to that of decision of Hon'ble Delhi High Court. The ratio laid down by the aforesaid decision squarely applies to the facts in case of appellant. The addition made by A.O. is thus unjustified and unsustainable. 7.3.6 Considering the totality of the facts and circumstances in the case of appellant as above, I am of the considered opinion that the addition made by the A.O. on account of sub contract payments to Shri Sushil Singhal is unjustified and unsustainable. I, therefore, direct the A.O. to delete the addition made by him at Rs. 1,23,62,077/ and these grounds of appeal of the appellant are allowed. 6.2. It is a fact that the assessee had made sub-contract to Shri Sushil Singhal. It is a fact that Shri Sushil Singhal also was covered in the search based on the consequential search warrant issued in his name on 16.10.2014 and search assessments were independently framed on him by the very same ld. AO just 4 days prior to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er mine situated at Khasra No. 371/1, Village Banka, Tehsil-Chandiya, Distt. Umaria (MP) spread over 5 acres of land. The same had been leased to assessee company by Government of Madhya Pradesh for a period of 10 years i.e. till 21.07.2018 which is extendable for next ten years. 7.1. During the course of search, evidence was found for unaccounted sale of Gitti from their crushers as per seized document A-1/LPS-22/Page-17. Shri Padam Singhania u/s 132(4) of the Act surrendered the sum of Rs. 12,02,643/- on account of unaccounted sale of gitti for FY 2010-11, 2011- 12 and 2012-13. However, this commitment was not honored by the assessee while filing the return of income u/s 153A of the Act. The assessee during the course of assessment proceedings stated that the seized documents represent only rough notings and which are not supported with any corroborative evidence. The ld AO however, disregarded the same and stated that the seized paper is titled as Gitti Sale Summary, it contains the name of the party, period in which the sale was made and quantity sold thereon. Accordingly, he proceeded to add the sum of Rs. 12,02,643/- as unaccounted sales in the hands of the assessee. The ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e papers are ledger account of Shri Pradeep Khare for FY 2013-14. The said account mentioned cash payments made to Shri Pradeep Khare from Shivangi Oil Pvt. Ltd, Bilaspur for mining work totaling to Rs. 8,62,692/- during the FY 2013-14 relevant to AY 2014-15. Shri Padam Sighania in his statement u/s 132(4) of the Act agreed to offer this as unaccounted cash payment but did not honor his commitment while filing return u/s 153A of the Act for the assessee company. The assessee was show caused by the ld AO as to why a sum of ₹ 8,62,692/- be not brought to tax as unaccounted cash payments made by the assessee. The assessee responded that Shri Pradeep Khare is a liaison agent and the entire cash payments reflected in the ledger account on account of transaction pertains to the assessee company. The assessee submitted that this is nothing but imprest cash given to Shri Pradeep Khare and source for giving for such imprest money were drawn from the regular cash balance available with the assessee company, which are duly reflected in the main cash book maintained by the assessee company. This is also reflected as a contra entry in the imprest cash book/ petty cash book maintained by S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts with supporting documents. The seized document based on which the addition has been made was the ledger account of various imprest cash payments made to Shri Pradeep Khare for meeting expenses for and on behalf of the assessee company. As stated earlier, the imprest cash has been paid to Shri Pradeep Khare out of sufficient cash balance available with the assessee company. On receipt of details of expenditure from Shri Pradeep Khare, the same are reflected in the books of account of the assessee company under the concerned expenditure head. Till the time Shri Pradeep Khare produces the accounts with evidence seeking for replenishment of the imprest account for day-to-day expenses incurred by him, the expenditure incurred gets reflected only in the imprest cash book maintained by him at the site. It is not disputed that the expenditure incurred by Shri Pradip Khare for and on behalf of the assessee company were duly claimed as deduction and allowed by the ld AO in the search assessment proceedings. Hence, it cannot be said that those payments are not recorded in the books of accounts of the assessee company warranting any addition. In these facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company and the transactions reflected in the seized documents are only proforma invoices which were never acted upon between the parties. This argument was appreciated by the ld CIT(A) and the addition was deleted by observing as under:- 7.5.3. DECISION:- I have carefully considered the submission put forth the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material evidences brought on record. The A.O. has made an addition of Rs. 28,76,300/ on the basis of certain invoices found in search of M/s. Om Marketing and M/s. Ishwarı Industries. In the course of search bills of Rs. 13,57,500/- pertaining to M/s. Om Marketing and Rs 15,18,800/- pertaining to M/s. Ishwari Industries were found The A.O. had examined the Fproprietor of the aforesaid concerns Shri Ravi Asudani wherein he has stated that no cash sale has been made to the appellant company The aforesaid invoices found in the course of search was not found recorded in the regular books of account of appellant. The appellant has also not claimed to have received the aforesaid goods for executing work. The indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the A.O. in the course of assessment proceedings substantiate the submission of appellant. Evidentiary value in respect to loose papers have come up for consideration before Hon'ble ITAT, Ahemdabad Bench, Ahmedabad in case of M/s Nishant Construction Pvt. Ltd in ITA No. 1502/Ahmd/2015 and Hon'ble Hyderabad ITAT in case of DCIT Vs. K. Baburao reported at 39 CCH 34. The relevant portion of aforesaid two judgements are reproduced at para 7.2.4 while adjudicating Ground No. 8 to 11. The ratio laid down by aforesaid decisions squarely applies to the facts in case of appellant considering the aforesaid judicial precedent addition made by the A.O. is unjustified and unsustainable 7.5.8 Considering the totality of facts and circumstances in case of appellant, I am of the considered opinion that the addition made by the A.O. at Rs. 28,76,300/- is unjustified and unsustainable. The addition so made by the A.O. at Rs. 28,76,300/- is directed to be delete. These grounds of appeal of appellant are allowed. 9.1. We find that the ld CIT(A) had taken due cognizance of the independent verification carried out by the ld AO from the proprietor of 2 concerns i.e. Om marketing and Ishwari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The assessee also gave the address of the party before the ld. AO. The ld. AO further did not make any effort to verify the facts from the said party as to whether any money has been paid by him to the assessee or not and proceeded to treat the entire sum mentioned in the seized documents of ₹ 1,73,63,660/- as unaccounted receipts in the hands of the assessee based on the initial statement of Shri Padam Kumar Singhania, ignoring the fact that the said statement subsequently stood retracted by him. It has to be understood that the family members of Singhania Group had come forward to offer additional income of ₹ 9 crores for the entire group as a whole. The assessee on its part had denied the aforesaid loose papers and pleaded that the same would only have to be construed as dumb documents as it is not corroborated with any external evidence. Alternatively, the assessee had requested for telescoping benefit with the disclosure made in the total sum of ₹ 9 crore by the entire family members. This benefit of telescoping was not granted by the ld. AO and the addition ultimately was made in the hands of the assessee company herein based on the original statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 410 deleted the addition made in the sum of ₹ 1,73,63,660/- in the hands of the assessee. The ld. CIT(A) also took cognizance of the fact that the statement of u/s 132(4) of the Act which have been heavily relied upon by the ld.AO for framing the addition had been subsequently retracted by him and hence no addition can be made based on such original statement which is not supported by any corroborative evidence. 10.2. Before us, the ld DR was only harping on the original statements recorded from Shri Padam Singhania. As stated in the earlier part of this order, that disclosure has been made by Shri Padam Singhania on the pretext that the same would be available for telescoping benefit with the overall disclosure of ₹ 9 crores made by the family members for the group as a whole on an alternative basis. In other words, the contents of these loose papers had been categorically denied by Shri Padam Singhania at the first instance as not belonging to the assessee and as an alternative measure, had come forward to surrender the sum as income of the assessee with the bonafide belief that the same would be available for telescoping benefit with the overall disclosure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WIP as on 31.08.2014 was reflected at ₹ 32,89,91,000/-. Shri Padam Singhania was asked to explain the difference of ₹ 4,14,08,000/- (32,89,91,000-28,75,83,000). He replied that loose papers in pages 42 to 50 reflect the stock statement submitted before the State Bank of India, Jabalpur with respect to August 2014 and page 51 of LPS-6 is the actual work in progress of assessee company during the August 2014. However, he came forward to offer the sum of Rs. 4,14,08,000/- as undisclosed income for AY 2015-16, but did not honor this commitment while filing the return of income u/s 153A of the Act for the assessee company. Show cause notice was issued by the ld AO as to why the said difference in work in progress be not added as an unaccounted income in the hands of the assessee. The assessee responded by stating that the actual work in progress as on 31.08.2014 of ₹ 32,89,91,000/- and it is always difficult to ascertain the actual WIP in real time as work was always going on and there is purchase of materials and labour payment and other overhead expenses incurred on day-to-day basis. The figure submitted in the stock statement to the bank is an estimated figure which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue in the instant case that the said differential amount of ₹ 4.14 crores has been invested by the assessee towards WIP from sources outside of the books of account. No addition, whatsoever was even sought to be made as unexplained investment or unexplained expenditure by the ld AO. On the contrary, the said investment of ₹ 32.89 lakhs as on 31.08.2014 representing closing WIP as on 31.08.2014 matches with the regular books of account maintained by the assessee. Hence, the source for such investment stands duly explained from the regular books of account itself which had not been rejected by the ld AO. Hence, these facts have been duly appreciated by the ld CIT(A) while granting relief to the assessee on which we do not find any infirmity. Accordingly, we hold that there is absolutely no case for making addition of Rs. 4,14,08,000/- in the hands of the assessee for AY 2015-16. Accordingly, Ground No. 3 raised by the revenue for AY 2015-16 is dismissed. 12. In AY 2007-08, the only issue on merits is with regard to denial of deduction u/s 80IA of the Act, which had already addressed in favour of the assessee in earlier part of this order. We find that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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