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2016 (3) TMI 1021 - ITAT PUNE

2016 (3) TMI 1021 - ITAT PUNE - TMI - Addition made u/s.69B on account of difference in valuation - addition on the basis of the valuation report - Held that:- We find in the instant case the addition has been made by the AO mainly based on the valuation report of the DVO. The Hon’ble Delhi High Court in the case of Punnet Sabharwal (2010 (12) TMI 846 - Delhi High Court ) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of c .....

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by the revenue authorities that the assessee has paid anything beyond whatever has been disclosed we find no infirmity in the order of the CIT(A) deleting the addition - Decided in favour of assessee

Deduction u/s 80IA(4)(i) in respect of profit earned by the assessee from development of infrastructure facilities - Held that:- We find merit in the submission of the Ld. Counsel for the assessee that netting of interest should be allowed for computation of deduction u/s.80IA in the lig .....

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the advances were made to the sub contractors namely Sunil Construction and Ashok Chipre since 2001-02 and 2002-03 and therefore disallowance, if any, could have been made in those years and not in this year also could not be controverted by the Ld. DR. Further the finding given by the Ld.CIT(A) that the own capital and free reserves of the assessee company is much higher than the amount of advances given and no interest bearing funds were utilized to carry the load of these advances in the fut .....

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wed the claim - Held that:- In our opinion the expenditure incurred in Pooja could not be treated as expenditure wholly and exclusively for the purpose of business or profession of a company and the assessee could not be allowed any deduction u/s.37(1) of the Act towards such expenditure. For the above proposition, we find support from the decision of Hon’ble Bombay High Court in the case of Kolhapur Sugar Mills Vs. CIT [1977 (8) TMI 19 - BOMBAY High Court ] wherein it has been held that expense .....

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7. The contents on page no. 5 arc details of various expenses including those which are written as 'K' expenses. The total of 'K' expenses is ₹ 26,13,500/- which is incurred on various dates between 26/12/2008 to 24/01/2009. Page no. 7 contains working of interest payment on purchase of tender documents, bank guarantees for EMDs, FDs to be kept for EMDs and EMDs required for procuring mobilization advances. It appears that this is a working or estimate of money required by Mahalaxmi Constr .....

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in favour of assessee - ITA Nos.451 to 455/PN/2013, ITA Nos.228 to 231/PN/2013 - Dated:- 9-3-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Satish Mody and Shri O.S. Prabhu For The Department : Shri S.K. Rastogi, CIT ORDER PER R.K. PANDA, AM : ITA No.451/PN/2013 filed by the Revenue is directed against the order dated 29-11-2012 of the CIT(A), Kolhapur relating to Assessment Year 2005-06. ITA Nos.452/PN/2013 to 455/PN/2013 filed by the Revenue and ITA Nos.228/PN/2 .....

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d.CIT(A) erred in deleting the addition made u/s.69B on account of difference in valuation to the tune of ₹ 4,15,196/-. 3. Facts of the case, in brief, are that the assessee is a company engaged in the business of infrastructure construction, civil engineering and contractors etc.. It filed its original return of income for the impugned assessment year on 28-10-2005 declaring total income at ₹ 1,45,66,216/-. A search u/s.132 of the I.T. Act was carried out in this case on 23-10-2009. .....

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the DVO and the difference : Asst.Year Details of property Value declared by appellant (Rs.) Value estimated by DVO (Rs.) Difference added to total income (Rs.) (1) (2) (3) (4) (5) 2005-06 Flat No.7, Star tower, at CTS No.8/1,8/2, 8/3 & 8/4, Khanapur Rd, Belgaum 8,61,304/- 12,76,500/- 4,15,196/- 2007-08 Flat No.8 at the above address 10,69,509/- 11,23,000/- 56,676/- Flat No.10 at the above address 4,87,415/- 4,90,500/- 2010-11 Flat No.401, 4th floor, Siddhivinayak Classic, CTS No.2141, E-Qa .....

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revailing in the market. It was argued that the Ist sale instance taken by the DVO is a shop on the ground floor whereas the assesse s office premises is on the first floor. Further, in the second instance the rate paid by the assessee per sq.ft. is more than the rate per sq.ft. of the sale instance for which the DVO ignored the sale instance. It was further submitted that the assessee being a company provisions of section 56(1)(vii)(b) are not applicable. 6. However, the AO was not satisfied wi .....

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mount spent on making the investments and the amounts reflected in the books as provided u/s.69B. Relying on various decisions it was submitted that the additions made by the AO should be deleted. 8. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition made by the AO u/s.69B. While doing so he held that the AO is entitled to and had correctly referred the property for valuation to the DVO u/s.142A. He, however, held that the addition has been made by the AO without .....

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s for the purpose of sections 69 or 69A or 69B of the Income-tax Act. The appellant has pointed out that the DVO has not compared the rates of property available in the same building and has relied on comparable rates in other buildings in the same vicinity to arrive at the valuations. The appellant has pointed out that in respect of flat no.7 a comparison with flat no.201 in the same building would show that the appellant has made payment of a higher amount than what is paid by other purchasers .....

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ng these examples, the appellant has made a case that the valuation made by the DVO is on presumptions and not on the basis of comparative rates prevailing in the same building or in the vicinity. I find that the assessing officer was also apprised of these facts. However, the contentions were not accepted without assigning any reason. Under these circumstances, I hold that the additions have been made without rebutting the evidences put forth by the assessee in respect of its contention that th .....

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l for the assessee on the other hand while supporting the order of the CIT(A) submitted that the DVO instead of considering comparable cases in the same building has considered sale instances in some different buildings. According to the Ld. Counsel for the assessee a comparison has to be made between an apple and apple and it cannot be made between an apple and an orange. Referring to the decision of Hon ble Delhi High Court in the case of CIT Vs. Puneet Sabharwal reported in 328 ITR 485 he sub .....

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d that the order of the CIT(A) being based on factual findings be upheld. 12. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee during the impugned assessment year has purchased flat No.07 at Star tower, Khanapur Road, Belgaum for a consideration of ₹ 8,61,304/-. We find the AO on the basis of the valuat .....

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case the addition has been made by the AO mainly based on the valuation report of the DVO. The Hon ble Delhi High Court in the case of Punnet Sabharwal (Supra) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. There is no other material available with the revenue to show that assessee has paid anything more than what has been stated. Since the Ld.CIT(A) has given a factual finding that the price paid by the .....

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d raised by the revenue is dismissed. ITA No.228/PN/2013 (A.Y. 2007-08) (By Assessee) : 13. Grounds raised by the assessee are as under : 1.0 On the facts and in law, Ld. CIT(A), Kolhapur eared in confirming the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 2,75,17,600/- for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalakshmi Infra-projects Limited, Pune during the acti .....

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on basis and as such the control & management of the partners over finance & administration is independent. 1.2 Ld. CIT(A) also erred in upholding the AO's baseless assertion in para 10.4.2 " Page No's 31, 28, 22, & 17 of bundles no.1 seized from residence of Shri. D.A. Bhat are infact documents of M/s B.T.Patil & Sons Belgaum Construction Pvt. Ltd. These documents were sent to Shri D.A. Bhat for the purpose of reconciliation as per periodical reconciliation is very .....

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e to earlier years on the basis of evidence seized from a third party. 14. Facts of the case, in brief, are that the assessee company is in the business of construction and development of irrigation projects. A search action u/s.132 of the I.T. Act was conducted on 23-09-2009 in the case of Mahalakshmi Infra projects Ltd. ( MIPL in short). During the course of search concrete evidences of speed money payments in Ghodzari project amounting to ₹ 4383.64 lakhs were found. Ghodzari project is .....

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case of MIPL. The AO, therefore, held that the evidences found with MIPL, which is Joint Venture partner of the assessee, are very important in the case of the assessee also. He therefore examined the evidences of speed money payments related to Ghodzari project seized during search in the case of MIPL. 15. The AO noted that during the course of search certain loose papers marked Bundle No.1 containing 40 loose sheets were found from the residence of Shri Dhirendra Anant Bhat, Technical Director .....

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ndertaken by joint venture comprising of Mahalaxmi Infra Projects Pvt. Ltd. and B.T. Patil and sons, Belgaum Construction Company Ltd. The said seized documents contain details of total speed money paid in respect of Ghodzhari project upto 04-02-2009. The total speed money paid in respect of Ghodzhari Project as on 04-02-2009 amounts to ₹ 43,83,64,000/-. 50% of the above amounting ₹ 21,91,82,000/- relates to MIPL and the balance 50% of ₹ 21,91,82,000/- to B.T. Patil and sons, B .....

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f the assessee company and its J.V. Partner that the unexplained payments mentioned in the documents seized from Shri D.A. Bhat, technical director of the assessee company are only projected payments and not payments actually been made. Therefore, according to the AO, the only dispute in respect of unexplained payments relating to Ghodzhari project is the year of taxation and nature of payments. The AO analysed the year wise break up of speed money paid by MIPL and its J.V. Partner, B.T. Patil a .....

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t. Ltd. These documents were sent to Shri D.A. Bhat for the purpose of reconciliation is very important in these matters related to cash payments. If not reconciled periodically, it may lead to misunderstandings between JV partners at a later date. (ii) Shri D.A. Bhat is a trusted and loyal employee of assessee company working for nearly 2 decades. (iii) He is involved in the project right from awarding of the contract till the completion, including release of payments etc. (iv) The seized docum .....

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residence of Shri D.A. Bhat fortifies this fact. Had Shri D.A. Bhat not been maintaining accounts related to speed money there was no need to send speed money statements by B.T. Patil & sons to Shri D.A. Bhat for reconciliation from time to time. (vii) There are irrefutable evidences to prove that the speed money payments have actually been made and they are not projected expenses. (viii) Infact, there are evidences to prove that speed money payments have been made at pre-tender stage in or .....

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which showed that unexplained expenses were actually incurred and paid. The said file was created on 21-10-2009, i.e. two days prior to the date of search. Cash of ₹ 2 crores was deposited in Mahavir Cooperative Bank on 21-10-2009. The statement recorded on 23-10- 2009 u/s.132(4) of Shri B.B. Patil, Managing Director of the assesseecompany was a verbatim repetition of the statement of Shri R.D. Shinde, Managing Director of appellant s JV partner, Mahalaxmi Infraprojects Ltd. (statements re .....

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ed from Shri R.D. Shinde, at his residence and evidences of payment of speed money were confronted to him. He admitted categorically that speed money payments were made. He also referred to the statement u/s.132(4) recorded from Shri Ajit R. Gurjar, Project Manager and Mr. B.T. Patil, Accountant of MIPL at the office premises of the assessee. When the evidences related to speed money found at office premises were placed before them both of them admitted that speed money payments were made. 20. T .....

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search in the case of Mahalaxmi Infra projects Ltd. (MIL) showing the dates of payments etc. These are as under: Sr.No. Seized papers Date of Speed money paid Amount a. 39 & 40 04/02/2009 ₹ 43,83,64,000 b. 38 (Various dates) ₹ 2100.87 lakhs Paid by MIL c. 18 07/08/2008 ₹ 1867.57 lakhs - do - d. 34 16/06/2007 Rs.1337.63 lakhs Paid by MIL & the assessee, B T Patil & Sons e. 32 26/02/2008 ₹ 2226.31 lakhs Paid by MIL 21. The assessing officer has also included sc .....

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it was mentioned that the reverse side of page no. 16 also indicated that payments were actually made and were not projected expenses. Based on the above evidences, the assessing officer, worked out the year-wise allocation of the assessee's share out of the total speed money payments which is as under: A.Y.2007-08 A.Y.2008-09 A.Y.2009-10 Total Total speed money paid 550.35 lakhs 2981.35 lakhs 851.94 lakhs 4383.64 lakhs Assesee s share,i.e.50% 275.175 lakhs 1490.675 lakhs 425.97 lakhs 2191. .....

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er his analysis the speed money for A.Y. 2007-08 comes to ₹ 550.35 lakhs out of which share of the assessee company is ₹ 275.175 lakhs. He therefore asked the assessee to explain as to why the amount of ₹ 275.175 lakhs should not be added to the total income of the assessee. Similarly, he noted that for A.Y. 2008-09 the assessee s share comes to ₹ 1490.675 lakhs and ₹ 425.97 lakhs for A.Y. 2009-10. 24. It was submitted by the assessee that Shri D.A. Bhat, Technical .....

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only in respect of Ghodzhari project and therefore payment of ₹ 43 crores is highly unreasonable. 25. However, the AO was not satisfied with the explanation given by the assessee. He observed that the Mahalaxmi-B.T. Patil, J.V. is formed for the purpose of Ghodzhari project and Koyna projects. During the course of search loose papers 1 to 40 (Bundle No.1) was found at the residence of Shri D.A. Bhat who is technical director of MIPL. The loose papers depicted date wise details of various .....

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i D.A. Bhat who has categorically stated u/s.132(4) that speed money payments have been made. The statement u/s.132(4) has immense evidentiary value. The seized documents contain quantum, date of payment of speed money, details of payer and recipient. Shri D.A. Bhat was maintaining the accounts related to speed money of Ghodzhari project. Seizure of evidence from his residence proves this fact beyond doubt. Further, seizure of documents of B.T. Patil and sons in respect of speed money from the r .....

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tender stage in order to get the contract allotted. Although Shri D.A. Bhat is the technical director, however, he is also involved in financial matters of the MIPL. The assessee has not submitted any supporting evidence in support of its contention that the said expenses have been paid after receipt of RA bills. According to the AO the paper/document should be read as a whole and all the contents of the papers are presumed to be true and correct unless contrary is proved. The assessee is accept .....

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Admission is a very important piece of evidence and brushing it aside whimsically would distort the whole purpose of the provisions. According to the AO in order to allow a withdrawal or a retraction of the same conclusively, there must be mitigating circumstances making out a case for such retraction, a fact which is completely absent in the facts and circumstances of the present case. To allow retraction without any cogent material would amount to making a mockery and travesty of the search an .....

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s reproduced hereunder : 10.6.8 It is significant to note that all the evidences related to speed money payments in respect of Ghodzari project were found with assessee s JV Partner. Since business relation between assessee and M/s. Mahalaxmi Infraprojects Ltd. is an undisputed fact, the evidences found with assessee s JV partner would be equally applicable to the assessee. Moreover, page Nos. 31, 28, 22 & 17 of Bundle No.1 seized from residence of Shri D.A. Bhat are in fact documents of M/s .....

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abricated evidences seized from assessee on 23/10/2009. Assessee company has admitted 50% of unexplained expenses related to Ghodzari project as additional income for AY 2009-10 & 2010-11. It is a settled law that seized material has to be accepted in full because no genuine seized document can be half true. In the instant case, genuine seized documents are the ones seized from Shri D.A.Bhat and they prove that the speed money has been actually paid on the dates mentioned in the seized docum .....

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. When assessee has admitted additional income of ₹ 69,50,650/- on the issue of unexplained expenses related to Koyna project based on the documents seized from Shri D.A.Bhat. How can assessee contend that the documents seized from Shri D.A.Bhat depicting speed money payments related to Ghodzari project are incorrect and unreliable? As discussed above, seized documents can never be half true. They are either fully true or fully untrue. Just because evidences relate to earlier years which m .....

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t the residence of Shri D.A.Bhat has been summed up at Para 8.7 above. The working of the year-wise speed money payments as per seized material is given at para 8.4 supra. 11.2. The year-wise allocation of assessee's share out of total speed money is tabulated as under: AY 2007-08 AY 2008-09 AY 2009-10 Total Total speed 550.35 2981.35 851.94 4383.64 money paid Lakhs Lakhs Lakhs Lakhs Assessee's 275.175 1490.675 425.97 2191.82 share ie 50% Lakhs Lakhs Lakhs Lakhs 11.3. In view of the fore .....

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dzari project for the AYs 2009-10 and 2010-11 as under: A.Y Additional Income disclosed by the assessee towards unexplained expenses 2009-10 Rs.9,31,00,000 2010-11 Rs.12,60,82,000 Total Rs.21 ,91 ,82,000 11. 5 It may be noted that assessee's share of unexplained expenses for A.Y 2007-08 .is ₹ 275.175 Lakhs. As against this, assessee has disclosed Rs. Nil as additional income. This is because of the fact that unexplained expenses related to A.Y's 2007-08 and 2008-09 were shifted to .....

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of concrete evidences as discussed in earlier paras of this order, unexplained expenses have to be taxed in the year of payment only. 11.7. To conclude, there are irrefutable evidences seized from residence of Shri D.A.Bhat to prove that the speed money payments have actually been made on the respective dates and by no stretch of imagination they are projected expenses. The evidences found at the business premises of assessee company showing the unexplained expenses as payable are fabricated ev .....

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ssee company and Mahalaxmi Infraprojects had formed a joint venture to acquire work from the Government of Maharashtra since they do not individually qualify. The assessee has its own technical and administrative management setup. Shri D A Bhat is a technical director of Mahalaxmi Infraprojects Ltd. and therefore there was no question of sharing information with him. Hence, Shri Bhat's statement and the documents seized from his possession are not reliable and has no evidentiary value. The a .....

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n various decisions it was argued that presumption under section 132(4A)/292C of the Act is not available regarding correctness of contents of books of account etc. recovered from the third party. 30. It was submitted that neither Shri Bhat in his statement record under section 132(4) had stated that the documents belonged to the assessee nor the Investigation Wing had presumed so, otherwise, the provisions of section 153C would have come into force. It was argued that the assessing officer has .....

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which was prepared two days prior to search was only a coincidence, which the assessing officer had presumed to be fabricated and made in anticipation of search action. Had the assessee anticipated search, the excel file and other records would not have been kept in the premises. Moreover, under the law of human probability it would be impossible to anticipate consequential search after a gap of one month. It was argued that the documents seized at the assessee's premises were of superior ev .....

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justified in taxing the additional undisclosed income offered on protective basis for assessment years 2009-10 and 2010-11 after shifting of such income to the earlier assessment years. 32. However, the CIT(A) was not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : 28. I have given careful consideration to the contentions of the appellant with reference to the facts of the case. The issue regarding unexplained expenses in Ghodzhari pr .....

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uced hereunder :- 56. I have given careful consideration to the contentions of the appellant with reference to the facts of the case. This is a case where Shri D A Bhat, Director in appellant company, has retracted from the statement given earlier on 24/09/2009 and Shri Ravindra D Shinde, Managing Director/Promoter of the appellant firm has brushed aside the revelations made by Shri D A Bhat as also the documents pertaining to Ghodzhari project, executed by the appellant firm in joint venture wi .....

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onclusion that Shri D A Bhat was a close confidante of Shri Ravindra D Shinde and not merely a person looking after technical aspects as alleged by Shri Ravindra D Shinde. 57. It is held in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [197]} 91 ITR 18 (SC)that- An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. Earlier also the Hon'ble Supreme .....

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cial decisions that in the absence of rebuttal or retraction the earlier stated facts in most of the cases, may be conclusive and can be acted upon. Specific provisions of the Income-tax Act as contained under sections 132(4), 133A(5), etc., provide that statements recorded m the income-tax proceedings have evidentiary value. Though they have evidentiary value, yet they are not always conclusive proof. The Supreme Court in the case of Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861 has held that .....

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employee Director of the appellant company. This letter is written just a day before the final statement of Shri Ravindra D. Shinde, Promoter and Managing Director of the appellant company, was recorded u/s.132(4) on 12/10/2009. In the letter dated 11/10/2009, Shri D. A. Bhat has intimated that the earlier admission made by him was on a mistaken understanding and misconception of facts. He also stated that he was under mental stress at the time of making the statement. However, what is of releva .....

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to have been obtained by coercion, inducement or threat it must be rejected. On retraction, earlier stated facts or admissions, lose their effect as a binding evidence and it may not be permissible for the income-tax authority to conclude a matter on the basis of earlier statement alone. At the same time, bald retractions of earlier admissions will not be enough and even after retraction such statements cannot automatically become nullities. Merely because a statement is retracted, it cannot bec .....

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, taking note of the fact that ITOs are not Police Officers and, as such, they do not use or resort to, unfair means in recording oath statements during the search operations or during the course of any proceedings before them, it was held that such statements, admissions and confessions are binding and cannot be retracted, unless and until it is proved by legally acceptable evidence that such admission, confession or oath statement was involuntary or was tendered under coercion or duress. Drawi .....

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being any other evidence to support such admissions, can successfully be made use of to assess the income, unless they are proved to be involuntary or are proved to have been taken under duress, coercion, misconception, etc. Further, instead of retracting initial statements or admissions in a bald manner, one has to bring on record cogent reasons or evidences, because In the absence of this even after retraction matters may be decided against him on the basis of initial statement itself. General .....

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arlier stated facts but explaining the reasons for making a statement earlier and giving substituted facts in support of retraction. Total denial of what has been stated in the previous statement cannot be said to be effective and it shall at best be deemed merely as a plea of denial which may not be of much help. 62. The important aspect of the matter is that during the course of search Shri D. R. Bhat came with an explanation that amounts written in the papers and documents discovered from him .....

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at the recordings made by Shri Bhat indicated instances of payment of speed money. What he admitted in the statement made under section 132(4) on 12/10/2009 was that the amounts in question reflected the income of the appellant generated by inflating the expenses of Mahalaxmi Infraprojects Ltd. and RDS Construction Company. Hence, it was stated that the amount in question revealed the concealed business income of the appellant. This part of the explanation was accepted in search and seizure proc .....

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he figures have been generated by Shri Bhat in the loose papers and documents maintained by him. Shri Ravindra D. Shinde accepted the figures written by Shri D. A. Bhat as the amount of concealed income. Significantly, Shri Ravindra D. Shinde did not question the authenticity of documents in respect of the figures mentioned and written therein and accepted the same. In fact these documents have been relied upon to make claims about shifting of expenses incurred in respect of amounts recorded aga .....

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ssing Officer with reference to the documents maintained by Shri D. A. Bhat. The assessing officer has elaborately and ably demonstrated, after a scrutiny of all the seized material at hand, the reasons for not accepting the explanation of Shri Ravindra D. Shinde. 63. As already mentioned, Shri D A Bhat is a trusted and loyal employee of the appellant company apart from being a close confidant of the Managing Director, Shri R D Shinde. It is apparent from the documents seized from his residence .....

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the financial reconciliation statement to Shri Bhat on regular basis. The assessing officer has elaborately discussed the issue between pages no. 3 to 43 of the assessment order for the assessment year 2007-08. This aspect of assessment is repeated in assessment years 2008-09, 2009-10 and 2010-11. The assessing officer has also made the seized documents a part of the assessment order in these pages. The evidences indicate that certain amounts were paid to various persons on specific dates. In al .....

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payment. Similarly, page no. 18 contains the same data. The fact that these pages are contemporaneous documents regarding the payments on a particular date, is evident from page no. 32 and pages no. 1 to 5 and 7 of the Bhat documents. Page no. 32 and reverse of page no. 16 contains entries of overheads as on 26/02/2008 aggregating to ₹ 48.90 crores of which ₹ 26.64 crores was already disbursed to various entities and persons. This page also contains details of site expenses and purch .....

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es the balance of payment as on 14/04/2007. Page 17 has similar contents as on page 28. This was faxed by B T Patil and Sons to Shri D A Bhat and it shows the state of affairs of various payments as on 18/07/2007. Page 16 is a summary sheet of payments made by the partners in the joint venture as on 28/01/2008. As against these overwhelming evidences, the appellant merely states that the payment of ₹ 43 crores is highly unreasonable. Shri Shinde dismissed the evidence gathered during the c .....

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he assessment year 2010-11 (corresponding paragraph 7.7 for assessment years 2007-08, 2008- 09 and 2009-10), I hold that the assessing officer has correctly taken cognizance of the loose papers found in the residence of Shri D A Bhat and accordingly taxed the unexplained expenses in the assessment years 2007-08, 2008-09 and 2009-10. 64. Consequently, the protective additions of ₹ 3.20 crores in assessment years 2009-10 and ₹ 10.55 crores in 2010-11 stands deleted. The decision and th .....

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ojects Ltd. and, therefore, there was no question of sharing of information with him is as also the contention that the material seized from Shri D A Bhat's possession is not reliable and has no evidentiary value because presumption under section 132(4)/292C of the Income-tax Act is not available if the books of account etc. is recovered from a third party, I need to point out that the contract for the Ghodzhari Project was given to the joint venture of B T Patil and Sons Belgaum Constructio .....

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n of the project and all associated legal fallouts is beyond doubt. The papers seized from Shri D A Bhat's residence pertained to payment of on money to certain people for bagging the project by the joint venture. Shri D A Bhat was the nominee of the joint venture partner, Mahalaxmi Infraprojects Ltd. on board of the joint venture and it appears from the loose papers which were found at his residence that he was responsible for keeping a detailed record on all monetary transactions undertake .....

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hat's residence reflect that the appellant had sent speed money statements to Shri D A Bhat for reconciliation from time to time. It is also a fact that the Director of the appellant's company Shri B B Patil and the Director of Mahalaxmi Infraprojects Ltd, Shri R D Shinde have admitted to payment of speed money under section 132(4) on the strength of the papers found in the premises of Shri D A Bhat. However, for the purpose of allocating it to respective assessment years, both partners .....

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ries with the recipient of the unexplained expenditure can be, at best, described as an anecdote. Firstly, the appellant has not provided the full details including names and addresses of the persons who are the recipients of speed money. Secondly, I doubt even if these persons were contacted they would accept the receipt of the aforesaid amounts which is against public policy and which lies in the realm of Prevention of Corruption Act. 31. The contention of the appellant that the excel file was .....

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uential search after a gap of one month cannot be accepted. 32. The contention of the appellant that the documents seized at Shri Bhat's residence was never brought to the appellant's notice is incorrect because all the facts were brought to the appellant's notice vide show cause notice dated 16/12/2011 and 21/12/2011 for which a reply was provided by the appellant on 21/01/11 itself. The assessing officer has dealt with the issues raised in paragraph 10 of the assessment order. 33. .....

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09-10 and 2010-1l. The evidences found in the residence of one of the Directors in the joint venture to whom part of Ghodzhari Project was awarded and on whose behalf speed money was paid to various persons viz. Shri D A Bhat, overwhelmingly overrule the evidentiary value of the documents found in the premises of the appellant who was one of the partners m the joint venture. The evidence found with the appellant is non-contemporaneous and appears to be prepared from the documents seized earlier. .....

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ce of one of the Directors of the joint venture of which the appellant is a partner. The evidences created by the appellant are unreliable and are meant to create confusion and obstruct the judicial process. 34. With these observations, I hold that the assessmg officer has rightly taxed the amounts of speed money in various assessment years as stated in paragraph 23 of this appellate order. 33. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 34. The Ld. Counsel for t .....

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rs. 2007 - 2008, 2008 - 2009 and 2009 - 2010 on the basis of papers found during the course of search at Mahalaxmi Infraprojects Ltd. on 23-09-2009 from the possession of its Technical Director Shri D. A. Bhat and the statement recorded of Shri D. A. Bhat on the basis of such papers. He submitted that the CIT(A) has upheld the order of the AO disregarding the papers found at the premises of the assessee during the course of search and the statement of the assessee s director. 35. The Ld. Counsel .....

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rther, statement of Shri D. A. Bhat is recorded at 1.00 am after a whole day of search for which the statement cannot be considered voluntary. For the above proposition, he relied on the decision of the Hon'ble Gujarat High Court in the case of Kailashben Manharilal Chokshi reported in 328 ITR 411 (Guj) wherein the Hon'ble High Court has held that a statement recorded after midnight cannot be considered as voluntary and the revenue cannot rely on such involuntary statement. He submitted .....

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e mental pressure and state of mind of the person giving the statement which cannot be relied upon. 36. He submitted that at the end of the statement Shri D. A. Bhat has nowhere certified that the statement is not under mental tension and pressure nor any such question was put forward. Further, the statement of Shri D. A. Bhat has no evidentiary value since the same was not recorded in front of any witness. There is no signature of any witness to the said statement appended anywhere in the state .....

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was under mental tension and pressure due to search and the said statement was made on mistaken belief and hearsay basis. 37. Referring to the decision of the Pune Bench of the Tribunal in the case of Jyotichand Bhaichand reported in 139 ITD 10 (Pune) he submitted that the Tribunal in the said decision has held that a statement made under mistaken belief can be withdrawn. Further, no declaration regarding any income or year has been made in the said statement of Shri D. A. Bhat. He submitted th .....

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g what has been mentioned in such loose papers is true. He submitted that it is the settled prposition of law that loose and unsigned papers do not have any evidentiary value unless it is supported by any independent evidence, which is clearly absent in case of the assessee. 38. The Ld. Counsel for the assessee submitted that the statement of Shri D. A. Bhat relied upon by the AO to support such loose papers has been retracted and the AO has failed to bring anything further on record except for .....

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is paid and balance is payable. No further evidence has been brought on record by the AO that the said unexplained expenditure has already been incurred and the amounts are paid. He submitted that the loose papers No. 17, 22, 28 and 31 found at the premises of Mr. D. A. Bhat and alleged by the AO that they belong to assessee and were sent by assessee for reconciliation nowhere mentions the name of the assessee as the sender. It is a mere unproved allegation and presumption. 39. As regards the a .....

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plained expenditure rather than fabricating them as alleged by the AO. Further no cash would have been found nor it would have opened a bank account and deposit substantial cash in it. It is against all human probability. He submitted that even otherwise as per provisions of section292C of the Act it is settled proposition of law that when any document is found in course of search the same is presumed to be true unless it is proved otherwise by the person alleging it to be untrue. It is stated t .....

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hat even on the basis of the cash found in the assessee's premises and deposits in its bank account led credence to the evidence found in the nature of excel file in the assessee's premises and the statement of the Director of the assessee. The said cash found clearly shows that certain sums are still payable. If the version of the AO is accepted that all the amounts are paid then no cash would have been found at the assessee's premises. 41. As regards the allegation of the AO that t .....

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42. He submitted that AO has also not brought on record any evidence that there was inflation of expenses in the years in which the unexplained expenditure is sought to be assessed in spite of accepting the fact that such expenditure is out of inflation of expenditure. Even otherwise also there is no independent evidence on record other than loose papers found at the premises of Shri D. A. Bhat that the money has already been expended. He accordingly submitted that the statement of Shri D. A. B .....

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gly submitted that the said undisclosed income ought to be assessed in the A.Yrs. 2009 - 2010 & 2010 - 2011 as offered by the assessee as against spread over by the AO in A.Yrs. 2007-08, 2008-09 and 2009-10. 43. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO. 44. We have considered the rival arguments made by both the sides. We find identical issue had come up before the Tribunal in the case of the Joint Venture partner of M/s. Mahalaxmi Infra Pro .....

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ant case the AO made the addition on the ground that these loose papers indicate the dates of payments of various amounts as speed money paid to different persons date-wise with the names of the payers and the recipient. Based on the bifurcation of payments of alleged speed money at page 30 of the assessment order the AO taxed the amount of ₹ 2,75,17,500/- being 50% share of the assessee for the impugned assessment year. Similar additions were made in A.Y. 2008-09 at ₹ 1490.675 lakhs .....

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he assessee company especially when Mr. Bhat had retracted his statement immediately at the earliest opportunity. We do not find any substance in the above arguments of the Ld. Counsel for the assessee. The AO has made addition not only on the basis of the papers seized from the premises of Shri D.A. Bhat, but also on the basis of statements recorded from responsible persons of the assessee company namely Mr. D.A. Bhat, Technical Director, Shri R.D. Shinde, Managing Director, Mr. Gurjar, Project .....

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ort the case that the payments indicate speed money. A perusal of the assessment order shows that the AO has not carried out any verification in support his contention that notings conclusively prove that the entries in the loose papers are infact speed money/bribe paid to various persons whose names are mentioned against each figure. On a pointed query raised by the Bench during the course of hearing the Ld. Departmental Representative also candidly admitted that no such exercise has been done .....

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n the seized papers and the CIT(A) is justified in upholding the addition. In this view of the matter and in view of the detailed reasoning given by the CIT(A) we uphold the order of Ld.CIT(A) on this issue and the grounds raised by the assessee are dismissed. 45. Since a view has already been taken in the case of one of the Joint Venture partner, therefore, the same view has to be followed in the case of the other Joint Venture partner. Therefore, respectfully following the order of the Tribuna .....

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nt of infrastructure facilities, Ld. CIT(A) was not justified in rejecting such deduction in respect of interest income of ₹ 25,90,058 received from Bank Guarantee deposits provided to the project authorities, in respect of such projects. 48. Facts of the case, in brief, are that the assessee during the course of appeal proceedings raised a fresh claim of deduction u/s.80IA(4) in respect of interest on bank guarantee deposits held in respect of development of infrastructure projects. It wa .....

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ntitled to deduction u/s.80IA(4) on such interest income. 49. However, the CIT(A) was not satisfied with the arguments advanced by the assessee. He noted that such claim cannot be allowed for the reason that section 80IA allows the benefit of deduction in respect of profits and gains from infrastructural development with the source of the profits eligible for deduction should be the business itself and not any activity which constitutes secondary source of income. Relying on the decisions of Hon .....

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CIT and CIT Vs. Bharat Rasayan Ltd. reported in 343 ITR 89 submitted that netting of interest is permitted for deduction u/s.80HHC. Referring to the decision of Hon ble Gujarat High Court in the case of CIT Vs. Ramchandra S. Patel reported in 41 taxmann.com 446 he submitted that the Hon ble High Court has decided the issue in favour of the assessee and dismissed the appeal filed by the revenue by holding that interest earned on deposit is to be included for the purpose of working of deduction u/ .....

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y set aside the order of the CIT(A) and direct the AO to recompute the deduction u/s.80IA by netting the interest. Ground raised by the assessee is accordingly allowed. 54. Ground of appeal No.4 by the assessee being general in nature is dismissed. ITA No.452/PN/2013 (A.Y. 2007-08 (By Revenue) : 55. Ground of appeal No.1 by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made u/s.69B on account of differen .....

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A.Y. 2005-06. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 58. Ground of appeal No.2 by the revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on diversion of funds for non business purposes of ₹ 10,33,466/. 59. Facts of the case, in brief are that during the .....

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advances could not be established. He held the amount shown as advances to be diversion of funds for non-business purposes and accordingly disallowed interest @ 12.5% on these advances, i.e. ₹ 10,33,466/- in each of the assessment years, i.e. A.Y. 2007-08 to 2010-11 u/s.36(1)(iii). While doing so, the AO relied on the decision of Hon ble Kerala High Court in the case of CIT Vs. V.I. Baby and Co. reported in 254 ITR 248. 60. Before CIT(A) it was submitted that the AO had disallowed the inte .....

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the balance amounts in respect of the sub contractors. The statement of net worth from 1999-2000 to 2000-01 was also filed before CIT(A) which is as under : Asstt. Year Share capital Reserve & surplus Total net worth 99-2000 500.00 983.05 1483.05 2000-01 500.00 1255.43 1755.43 2001-02 500.00 1874.87 2374.87 2002-03 500.00 2242.53 2742.53 2003-04 500.00 1683.36 2183.36 2004-05 500.00 1041.37 1541.37 2005-06 500.00 1572.03 2072.03 2006-07 500.00 1889.88 2389.88 2007-08 500.00 2348.49 2818.49 2 .....

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n to the appellant. Hence, the addition appears to be made on an adhoc basis. The appellant has pointed out that advances were made to Sunil Construction and Ashok Chipre as far as back as 2001-02 and 2002-03. Hence, if there was a diversion of funds for non-business purposes, the same would have been incurred in the relevant previous years. It would be prudent to disallow interest if the nexus is of advances with interest bearing funds was established in the respective years. Having said that, .....

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nces in the future years. If the assessing officer would have confronted the appellant with his intention to make the disallowance then, these facts would have been made available to the assessing officer. Under these circumstances, where the addition has been made on ad hoc basis without considering the financial strength of the appellant which would be available even from the balance sheet of all the years on record, I hold that the additions are made on conjectures and surmises and deserve to .....

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epartmental Representative. Further, the factual finding given by the CIT(A) that the advances were made to the sub contractors namely Sunil Construction and Ashok Chipre since 2001-02 and 2002-03 and therefore disallowance, if any, could have been made in those years and not in this year also could not be controverted by the Ld. DR. Further the finding given by the Ld.CIT(A) that the own capital and free reserves of the assessee company is much higher than the amount of advances given and no in .....

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ised by the revenue is accordingly dismissed. 64. Ground of appeal No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on investment in non business activities of ₹ 11,20,935/-. 65. Facts of the case, in brief, are that the AO during the course of assessment proceedings noticed that the assessee had invested borrowed funds for acquiring equity shares of group com .....

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allowed proportionate interest @ 12.5% on the average borrowings and added the same to total income. Similar additions were also made in subsequent years. The details as appearing in the assessment orders for different years in this regard are as under: Assessment years 2007-08 2008-09 2009-10 2010-11 BTP Infoserver 3000000 3000000 3000000 3000000 Batpasco Patson JV 5967481 4290788 3267697 1968504 Ara Developers, Pune - 1252041 - Total 8967481 8542829 6267697 4968504 Proportionate interest @12% .....

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th the contentions raised by the appellant. I find that Honourable ITAT had vide their appellate orders in ITA No. 1139/PN/2009, 1140/PN/09, 1141/PN/09 and 1142/PN/09 dated 07/04/2010 for assessment years 2003-04 to 2006-07 had decided in favour of the appellant. The relevant portion of this order is reproduced below : ............. Once the admitted factual position is that the assessee had sufficient own capital as also reserves and those were available for advancing to sister concern, then th .....

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e years under consideration also is deleted. This ground of appeal is therefore, allowed. 68. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 69. After hearing both the sides we do not find any infirmity in the order of the CIT(A) who has deleted the addition based on the order of the Tribunal in assessee s own case for A.Yrs. 2003-04 to 2006-07. Since admittedly the own capital and free reserves of the assessee company are far more than the investment in group compan .....

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in allowing deduction on account of proportionate interest on advances for non business purposes of ₹ 18,83,125/-. 71. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee had, on the one hand, advanced certain sums admittedly for non-business purposes and on the other hand, it had claimed expenditure under section 36(1)(iii) on account of interest paid for loans borrowed for business purposes. Under these circumstances, the AO he .....

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e assessee in assessee s own case during A.Y. 2003-04 to 2006-07 and the department has not challenged the order of the Tribunal. It was further submitted that since the assessee had sufficient own funds in the form of reserves and surplus and net profit of ₹ 6.03 cores were earned during the year to absorb the payment made to the above parties, therefore, no disallowance is called for 73. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition by observing as un .....

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payments made to the above parties. Further, I find that the this issue was already covered by the Honourable ITAT had vide their appellate orders in ITA No. 1139/PN/2009, 1140/PN/09, 1141/PN/09 and 1142/PN/09 dated 07/04/2010 for assessment years 2003-04 to 2006-07 and had decided in favour of the appellant. The relevant portion of this order is reproduced below: ............ Considering the facts and figures and the availability of own funds, the impugned amounts advanced to the said three par .....

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such order of the CIT(A) the revenue is in appeal before us. 75. After hearing both the sides we do not find any infirmity in the order of the CIT(A). Admittedly the own capital and free reserves of the assessee company are far more than the advances given to various parties for non business purposes. Identical issue has already been decided by the Tribunal in assessee s own case for A.Yrs. 2003-04 to 2006-07 which has been followed by the CIT(A) while deleting the addition. Therefore, in absen .....

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e AO disallowed an amount of ₹ 74,836/- debited by the assessee under the head pooja expenses on the ground that expenses on account of pooja is not in nature of business expenses. In appeal the Ld.CIT(A) deleted the same on the ground that same can be treated as business expenditure of the assessee. It creates harmony and has positive effect on the morale of the workers. According to him it is customary and established practice in almost every office and factory. He accordingly deleted th .....

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e Act towards such expenditure. For the above proposition, we find support from the decision of Hon ble Bombay High Court in the case of Kolhapur Sugar Mills Vs. CIT reported in 119 ITR 387 wherein it has been held that expenses incurred for Pooja is not an allowable deduction. Similar view has been taken by the Hon ble Chattisgarh High Court in the case of Hira Ferro Alloys Ltd. Vs. DCIT reported in 326 ITR 261 according to which the expenditure incurred in Pooja could not be treated as expendi .....

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per as per the explanation below 80IA(13). 6(b) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing additional deduction u/s.80IA(4) of the additional deduction 80IA(4) of ₹ 2,80,04,066/-, which is the additional income declared during the course of search proceedings, on account of expenses from unexplained sources which attract provisions of S.69C of the I.T. Act which is not an income from the business undertaking referred in section 80IA(4). 81 .....

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ssment year and the profit earned by it is eligible for deduction u/s.80IA(4). Relying on various decisions including the decision of Mumbai Bench of the Tribunal in the case of Patel Engineering Ltd. Vs. DCIT reported in 84 TTJ 646 it was submitted that though the assessee is engaged in construction of infrastructural facilities it is entitled to deduction u/s.80IA(4) of the Act as the term contractor is not essentially contradictory to the term Developer . It was argued that entering into agre .....

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tment of funds by private enterprises and to collect income from operating the facility. (iii) All three functions, i.e. developing, operating and maintaining were to be done cumulative by the assessee to avail benefits of section 80IA(4). But the appellant had failed to carry out functions relating to operation and maintenance of the infrastructure project. (iv) Explanation below section 80IA(3) introduced by Finance Act, 2007 which was further amended by Finance Act, 2009 specifically debars a .....

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aharashtra the details of which are as under : Sr.No. Infrastructure Project Purpose of the project 1 Mhaisal Lift Irrigation Project, Jath, Sangli Irrigation & Multipurpose 2 Jihe Khatapur Lift Irrigation Project Irrigation & Multipurpose 3 Bhima Sina Link Canal tunnel Irrigation Project Irrigation & water supply 4 Godzari Irrigation project Irrigation & water supply 5 Koyna Hydro Power Project Power Generation & Irrigation 6 Koyna Hydro Power Project (for supply, erection & .....

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re projects. Bank guarantees were provided by the assessee as security. Own funds and borrowed funds were utilized in development of these projects. Relying on the decision of the Jaipur Bench of the Tribunal in the case of Om Metals Infra projects Ltd. reported in (2009) 26 DTR (JP)(Trib) 359 and the decision in the case of ABG Heavy Industries Ltd. reported in 322 ITR 323 it was argued that the assessee is entitled to claim deduction u/s.80IA(4). 85. Further, the assessee during the course of .....

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rtion to the total business turnover to eligible turnover. It was submitted that the assessee had raised the above issue during the course of assessment proceedings which was not considered by the AO. Relying on the decision of Hon ble Supreme Court in the case of Goetz India Ltd. Vs. CIT reported in 284 ITR 323 and various other decisions the assessee requested the CIT(A) to consider and allow the claim of the assessee. 85.1 The assessee similarly submitted that if shifting of both undisclosed .....

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e additional ground made during the course of appeal proceedings. 87. The Ld.CIT(A) following various decisions including the decision of Hon ble Bombay High Court in the case of ABG Heavy Industries Ltd. (Supra) allowed the claim of deduction u/s.80IA(4) of the Act. 88. So far as the additional claim made u/s.80IA during appeal proceedings is concerned, he allowed the claim of assessee by observing as under : 83. The appellant contended that on the basis of the loose papers seized from its prem .....

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therefore urged that these fresh claims be considered and allowed in appellate proceedings in view of the decision in the case of Goetze (India) Ltd. Vis CIT (2006) 284 ITR 323 (SC). I have gone through the submissions made by the appellant. In connection with the admissibility of the additional ground the Hon 'ble Bombay High Court has explained the decision given in the case of Jute Corporation of India Limited v. CIT [1991] 187 ITR 688 (SC) in CIT, Central-I v. Pruthvi Brokers & Shar .....

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claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 85. Thereafter, it referred to the observations of the Hon ble Supreme Court on page 694 in the decision given in the case of Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., [1978] 111 ITR 1 (SC), and held as under- The underlined observations in the above passage do not curtail the ambit of the ju .....

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ment order was made .... " "or" if "the ground became available on account of change of circumstances or law" The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The first part viz. "if the ground so raised could not have been raised at that particular stage when the return wa .....

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le on account of change of circumstances or law."[Emphasis Supplied by me] The Hon'ble Bombay High Court has looked into the judgment given in the case of Goetze (India) Limited v. Commissioner of Income-tax, [2006] 157 Taxman 1 (SC) in Central-I v. Pruthvi Brokers & Shareholders (P.) Ltd. (supra) and explained that- It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is not made before .....

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upra) was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the appellate authorities. I have already referred to the decisions in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., [1978] 111 ITR 1 (SC), Jute Corporation of India Limited v. CIT [1991] 187 ITR 688 (SC), Amalgamated Electricity Company Limited v. Commissioner of Income-tax, [1974] 97 ITR 334 (Bom)(FB), and Nation .....

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, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do." [Emphasis supplied by me.] 87. In view of the established positio .....

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the additional business income offered for tax as a result of search and seizure. The claim was not made along with the return filed under section 153A. However, the same was made during the course of assessment proceedings. There is nothing in the assessment order to show as to why the claim was rejected. In all probabilities, the claim was rejected because deduction was disallowed to the appellant in respect of the original claim itself. As a matter of principle, the additional claim in respe .....

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XIVB of the Income-tax Act that where the total income / loss for the block period has to be computed in accordance with the provisions of the said Act and the same would include Chapter VIA of the said Act while computing the undisclosed income for the block period then the respondent assessee is entitled to claim deduction from its income under section 80IB of the Act. The ratio of this decision applies unequivocally to the provisions of section 153A. Similarly, the Honourable Gujarat High Cou .....

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ss income'. Hence, the additional claim is allowed. However, the assessing officer is directed to check the computation of the claim and then allow the same. 88. Regarding the claim of the appellant in respect of entitlement of deduction under section 801A(4) in respect of additional income offered for assessment years 2009-10 and 2010-11, I hold that the claim is untenable because there is no additional income of the appellant derived from business sources except to the extent of ₹ 42 .....

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odzari project to earlier years is confirmed, the additional deduction u/s.80IA(4)(i) in respect of additional income should be given for earlier years. This claim is allowed. (ii) There were certain discrepancies in the figures worked out by the assessing office in respect of shifting of additional income for assessment year 2007-08. The cheque payment of ₹ 1.5 crore and 50% of ₹ 2.00 crores written before the alphabets AB should be deleted from appellant s additional income for ass .....

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ade. Hence, there is no discrepancy in the figures adopted by the assessing officer. (iii) Claim of deduction u/s.80IA(1)(4) be allowed in case additions made on account of unexplained expenditure are confirmed in appellate proceedings. This claim is already allowed. 89. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 90. The Ld. Departmental Representative strongly opposed the order of the CIT(A). He submitted that the assessee is only a works contractor and not a de .....

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as not justified in allowing deduction u/s.80IA(4) on such additional income. He accordingly submitted that the order of the CIT(A) be reversed and that of the order of the AO be restored. 92. The Ld. Counsel for the assessee on the other hand heavily relied on the order of CITA) and the decision of Hon ble Bombay High Court in the case of ABG Heavy Industries (Supra) and the decision of Pune Bench of the Tribunal in the case of Mahalakshmi Infra Projects Ltd.(Supra). He also relied on the decis .....

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er book filed on behalf of the assessee. We have also considered the various decisions cited before us. So far as ground of appeal No.6(a) is concerned, we find the issue stands decided in favour of the assessee by the decision of the Tribunal in assessee s own case for A.Yrs.2000- 02 and 2001-02. We find the Tribunal vide ITA Nos. 1408 and 1409/PN/2003 order dated 28-02-2013 while allowing the claim of deduction u/s.80IA(4) has observed as under : 11. The assessee Company has been included as a .....

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PEC had proposed a joint venture to the relevant authorities for the Execution of the said project. As the project was being financed by World Bank the relevant authorities forwarded the proposal to World Bank. World Bank however did not accept the proposal but they suggested that M/s. Patel Engineering Company Ltd., may employ the assessee company as sub contractor. It was at the suggestion of World Bank that the assessee companies name was included as a sub contractor instead of forming of a .....

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assessee company and PEC. Works completion certificate has been issued in favour of the assessee company for the execution of the Work. Power of Attorney is given by Prime Contractor to Sub Contractor and accepted and exceeded by Project Authorities. 12. The fact that the assessee has a tripartite agreement with the relevant authorities makes the assessee a party to the main contract work itself and which clearly shows that the assessee on their own right are contractors and not just sub contrac .....

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longwith PEC and are not simply sub contractors vis-a-vis the work undertaken by them. As such the assessee is otherwise fulfilling all the conditions they are entitled to deduction under the provisions of section 80IA. Similar view has been taken by ITAT Indore in the case of Ayush Ajay Construction Ltd. vs ITO 79 ITD 213, wherein the entire project was assigned by the party getting the tender to another company. In such circumstances the ITAT Indore, has held as under: "It is a settled po .....

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visions and not to frustrate it. If the facts of the case were put within the above parameter, the assessee, though it not entered into an agreement with the State Government at the initial stage, had obtained the tender/contract by virtue of a valid assignment, which was duly recognised by the State Government. Therefore, it should be deemed to have entered into an agreement with the State Government for construction of the said bridge on BOT basis. It was not the case of the revenue that the e .....

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eholders or the directors. The action of the assigning and the work of construction undertaken by the assessee was recognised by the State Government and a tripartite agreement was executed between the assessee A and the State Government through which the State Government had recognised that the assessee had stepped into the shoes of A and notified authorising the assessee to collect the toll tax for a particular period. Since the assessee company had rectified all act and deeds of its promoter .....

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t, the assessee-company had obtained the status of a tenderer by virtue of a valid assignment, it should not be denied the benefit of deduction provided by the Central Government through introduction of sub-section (4A) of section 80 IA. The action of "A" and the assessee could only be termed as a valid tax planning which was permissible under the law. Therefore, the assessee had fulfilled the requirements provided in section 80IA (4A)(ii) for claiming deduction, and, therefore, the As .....

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o the assessee company on Back to Back Agreement basis for a consideration vide agreement dated 28/04/97. Thus the assessee company had executed 100% of the work. It is further stated that the assessee company were issuing R.A. Bills for 100% of the work done to Joint Venture firm and Joint Venture firm in turn issued R.A. bills to the owners. Joint Venture firm had not executed any portion of work under the Project. The Joint Venture firm has filed its Return of Income with NIL Profit or Loss. .....

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ower of Attorney", Undertaking with Bankers etc. 14. In this background, the assessee could certainly claim the deductions under the provision of Section 80IA. One has to see the substance and not the Form Essentially, though it was a Joint Venture, it was converted into assessee's venture. The Other Venturer withdrew and the entire work was executed by the assessee though in the name of Joint Venture. The Joint Venture is nothing but the venture of the assessee company and the other pe .....

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the case of ITAT, Indore Bench, in case of Ayush Ajay Constructions Ltd. (supra). Thus, while giving effect to the opinion of Third Member u/s.255(4) of the Act, we take view in conformity with order of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra) available at this time though contrary to the opinion expressed by the Third Member. So in view of above discussion, following the ratio of jurisdictional High Court in case of ABG Heavy Industries Ltd. (supra), the Assessing .....

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idated order dated 09-12-2015 (to which both of us are parties) has decided the issue in favour of the assessee by observing as under : 127. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee, in the return filed in response to notice u/s.153A, had claimed deduction u/s.80IA(4) amounting to ₹ 7,88,92,588/ .....

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various decisions on the deduction claimed u/s.80IA(4) in the return as well as on the additional income declared. 128. We do not find any infirmity in the order of the CIT(A) in allowing the claim of deduction u/s.80IA(4) as per the return as well as the deduction on the additional income. So far as the claim of deduction u/s.80IA(4) considering the irrigation project of the assessee as an infra project is concerned we find the issue has already been decided in favour of the assessee in assesse .....

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of the Tribunal in the case of B.T. Patil & Sons Belgam Construction (P) Ltd vs. ACIT 126 TTJ (Mum) (TM) 577. The Hon ble High Court has observed that it is not in dispute that the said decision of the Tribunal in the case of B.T. Patil & Sons (supra) has been recalled by the Tribunal by order dated 18.2.2011 as evident from the order passed by the Tribunal in ITA No.766/PN/2009 dated 8.6.2011. The Hon ble High Court has accordingly quashed and set aside the impugned order of the Tribun .....

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erence. 22. Another submission which was urged on behalf of the Revenue is that under cl. (iii) of sub-sec. (4A) of sec. 80-IA, one of the conditions imposed was that the enterprise must start operating and maintaining the infrastructure facility on or after 1st April, 1995. The same requirement is embodies in sub-cl. (c) of sub-sec. (4) of the amended provisions of sec. 80-IA. On this basis, it was urged that since the assessee was not operating and maintaining the facility, he did not fulfil t .....

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d have been operational after 1st April, 1995. After sec. 80-IA was amended by the Finance Act of 2001, the section applied to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions. Those conditions are : (i) Ownership of the enterprise by a company registered in India or by a consortium; (ii) An agreement with the Central or State Government, local a .....

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harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility should be after 1st April, 1995. In the present case, the assessee clearly fulfilled this condition. 23. In vi .....

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ought about by Parliament by Finance Act of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to sec. 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature. 9. We find from the decision of Hon ble Bombay High Court in aforesaid case of CIT vs. ABG Heavy Industries Ltd & .....

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to observe that qua such a person the condition stated in sub-section (c) of sec.80-IA(4)(i) has to be read harmoniously with the main provision under which deduction is available to an assessee, who develops; or operates and maintain; or develops, maintains and operates an infrastructural facility. In other words a developer who only develops (i.e., constructs) an infrastructural facility is not envisaged to operate and maintain such facility, cannot be accepted to fulfil the condition in clau .....

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favour of the assessee with this finding that assessee is eligible to claim the deduction in question u/s 80-IA (4). The issue is thus decided in favour of the assessee. The related grounds are thus allowed with this direction to the AO to allow the claimed deduction to the assessee. 10. Consequently the appeal is allowed. 129. Therefore, the issue as to whether the assessee being a contractor and not a developer and therefore is not is entitled to deduction u/s.80IA(4) of the I.T. Act has to b .....

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5. The relevant observation of the Tribunal from para 52 to 53 are as under : 52. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We find the assessee in the instant case filed his return of income u/s.139(1) on 31-10-2007. The search took place on 06-10-2009. At the time of search the assessment for the impugned assessment year was not completed. The assessee filed the return of income .....

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CIT(A) upheld the above action of the AO. We find the Pune Bench of the Tribunal in the case of B.G. Shirke Construction Technology Pvt. Ltd. (Supra) had an occasion to decide such an issue. The relevant observation of the Tribunal from para 9 onwards read as under : 9. We have carefully considered the rival submissions. In this case, search u/s 132(1) of the Act was carried out on 18.12.2008. On the basis of the second proviso to section 153A(1) of the Act, which reads as under :- "Provide .....

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e Ld. Counsel for the assessee conceded that assessments for assessment years 2003-04 and 2006-07 were not pending on the date of initiation of search and thus the same do not abate as per the aforesaid proviso to section 153A(1) of the Act. The aforesaid position is not disputed by the Revenue also. 10. In the above undisputed fact situation, now we may examine the scope of assessments to be made u/s 153A(1)(b) of the Act for the assessment years 2007-08 and 2008-09, which have abated and for t .....

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i) undisclosed income or property discovered in the course of search. Of course, the income so determined shall be in addition to the income already assessed in regular assessment proceedings for the said two assessment years. Now, the moot point is as to whether the impugned claim of the assessee for excluding income on account of retention money can fall in the scope and an ambit of an assessment made u/s 153A(1)(b) of theI.T Act for the assessment years 2003-04 and 2006-07. Ostensibly, as obs .....

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ceded the position that impugned claim relating to exclusion of income on account of retention money does not fall in the aforesaid category and thus, it is beyond the scope and ambit of an assessment envisaged u/s 153A(1)(b) of the Act for assessment years 2003-04 and 2006-07. Therefore, on this point itself, we uphold the stand of the Revenue for assessment years 2003-04 and 2006-07 in denying assessee's claim for excluding income on account of retention money. 11. Accordingly, the appeals .....

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officer retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A of the Act. In this context, the preliminary issue is as to whether the scope of assessments u/s 153A(1)(b) of the Act for assessment years 2007-08 and 2008-09 can include consideration of assessee's plea to exclude income on account of retention money, considering the fact the returns of income filed by the assessee for assessment years 2007-08 and 2008-09 u/s 139(1) of the Act did not contain any su .....

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08-09 to be made u/s 153A(1)(b) of the Act, in our considered opinion, as the following discussion would so, such a claim though made for the first time in the impugned assessment proceeding, would fall within the ambit and scope of impugned assessment carried out u/s 153A(1)(b) of the Act. Pertinently, the original jurisdiction vested with the Assessing Officer for the assessment years 2007-08 and 2008-09 empowers him to consider the impugned claim; and, to put it in other words, assessee was c .....

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. So, however, u/s 139(5) of the Act, assessee was competent to furnish a revised return and make such a claim, and thus the Assessing Officer was required to entertain such a claim in the course of exercising his original jurisdiction to make an assessment u/s 143(3) of the Act. Now, consequent to search action, for assessment years 2007-08 and 2008-09, Assessing Officer not only acquires jurisdiction to make additions based on the incriminating material but also retains the original jurisdicti .....

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and 2008-09 are concerned, the income-tax authorities erred in not entertaining the impugned claim of the assessee merely because it was made in the course of an assessment u/s 153A(1)(b) of the Act and was not made in the returns of income originally filed u/s 139(1) of the Act. 14. For the assessment years 2007-08 and 2008-09, another objection raised by the Revenue is to the effect that the claim was not made in the return of income filed in response to notice issued u/s 153A(1)(a) of the Ac .....

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ch has been placed in the Paper Book at page 1 to 2, putting-forth its claim for excluding income on account of retention money, but in the computation of income no specific claim was made because the quantification of the claim could not be made in the limited time period allowed to file a return in response to notice u/s 153A(1)(a) of the Act. In the course of the subsequent assessment proceedings, assessee quantified the claim for the respective assessment years and also filed copies of the a .....

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t to have entertained the impugned claim. Alternatively, it is contended that the CIT(A) enjoys plenary powers of the Assessing Officer, and following the judgment of the Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. vs. CIT, (1991) 187 ITR 688, the claim should have been entertained by him as the complete facts were on record. In this context, the learned counsel referred to the decision of the Pune Bench of the Tribunal in the case of Jain Irrigation Systems Ltd. vide .....

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Court in the case of Goetze (India) Ltd. (supra) does not impinge on the powers of the appellate authorities to entertain a fresh claim which was hitherto not preferred by the assessee in the return of income. In fact, the Hon'ble Delhi High Court in the case of CIT v. Jai Parabolic Springs Ltd. 306 ITR 42 (Del) supports the proposition that the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) was limited to the power of the Assessing Officer to entertain .....

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fresh claim made only during the assessment proceedings and not in the return of income. 18. We have carefully considered the rival submissions. The Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) opined that a fresh claim of the assessee can be entertained at the time of assessment only if it is made by way of a revised return of income; and, the aforesaid proposition has been invoked by the income-tax authorities in the present case to deny assessee's claim for exclusi .....

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tles the customer to retain between 5% to 10% of contract value till the completion of defect liability period contained in the contract which is generally between 12 to 24 months after the completion of the construction. Inadvertently in the original return filed this amount was not excluded while computing the total income. In the short span of time allowed to us to file the return u/s. 153A, the exact quantification of the retention money could not be worked out. Hence we will submit the deta .....

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IT (2007) 105 ITD 485 (Pune) Inadvertently, in the Original Return of Income this amount was not claimed as deduction. We request Your Honour to kindly grant us appropriate deduction while completing assessment. We shall submit the necessary details and quantification of claim during the course of assessment." 20. The aforesaid Note clearly depicts the claim of the assessee to the effect that the retention money in various contracts retained/deducted by the customers is not taxable; and, va .....

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contractees/customers, as is evident from copy of assessee's communication to the Assessing Officer placed in the Paper Book at pages 3-6. In this factual background, can it be said that the assessee made a fresh claim during the assessment proceedings so as to fall within the purview of the ratio laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra)? In our view, the fact situation in the present case is qualitatively different than that considered by the Hon .....

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situation, in our view, the CIT(A) erred in upholding the action of the Assessing Officer in refusing to entertain the impugned claim based on the judgement of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra). 21. In any case, the judgement of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra) does not impinge on the powers of appellate authorities to entertain a fresh claim which was hitherto not preferred by the assessee in the return of income, a .....

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er during the course of assessments and not in the return of income. 23. The third objection which has been raised by the Revenue is in terms of a discussion made by the CIT(A) in para 3.6 of the impugned order. According to the CIT(A), if the claim for excluding retention money was entertained and allowed, it would result in the determination of total income at a figure below the income originally returned/assessed and thus the same was not permissible. This objection of the Revenue, in our vie .....

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on of income on account retention money withheld by contractees/customers has been wrongly rejected by the lower authorities. 53. Since the assessment for the impugned assessment year was pending on the data of search, therefore, respectfully following the decision of the coordinate bench of the tribunal cited (supra) we hold that the CIT(A) was not justified in rejecting the claim made u/s.80IA(4) of the I.T Act merely because the assessee had not made the claim in the original return. We accor .....

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n of income filed before the Assessing Officer. Therefore, the issue regarding a new claim is also decided in favour of the assessee. 132. Now coming to the allowability of deduction u/s.80IA(4) on the additional income declared during the course of search is concerned we find the same issue has also to be decided in favour of the assessee. It is an admitted fact that the assessee company has debited non genuine expenditure in its books of account and generated cash, a fact which has been accept .....

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e non genuine expenditure is disallowed correspondingly the business income of the assessee increased on account of disallowance of such expenditure. Therefore, in that event, the deduction u/s.80IA(4) has to increase correspondingly. The decisions relied on by the Ld. Counsel for the assessee on this issue support the case of the assessee where it has been held that if the income goes up because of the addition made in the assessment, the deduction u/s.10A or Chapter VIA as the case may be, sha .....

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otal income of the assessee and made an addition in the amount of ₹ 71.59 lacs. However, for the deduction under Section 10A, the addition made on account of the employees' contribution was ignored in calculating the profits eligible for deduction on the ground that these receipts were not generated out of the manufacturing activity of the assessee company. 12. By reason of the judgment of the Supreme Court in Commissioner of Income Tax v. Alom Extrusions Limited4 the employer's co .....

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's as well as the employees' contribution towards Provident Fund /ESIC and the only question which is canvassed on behalf of the Revenue is whether on that basis the Tribunal was justified in directing the Assessing Officer to grant the exemption under Section 10A. On this position, in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employee's contribution is that the business profits have to that extent been enhanced. .....

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24)(x) in the case of the employee's contribution which has been deemed to be the income of the assessee. The plain consequence of the disallowance and the add back that has been made by the Assessing Officer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under Section 10A the addition made on account of the disallowance of the Provident Fund / ESIC payments ought to be ignored cannot be accepted. No statutory provision t .....

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ts and circumstances of the case and in law the Tribunal was justified in holding that deductions u/s. 80IB (10) has to be allowed from the income computed as undisclosed income u/s. 69A of the Income Tax Act, 1961? (2) Whether on the facts and circumstances of the case and in law the Tribunal was justified in allowing the claim of deduction u/s. 80IB(10) where no such claim is made by the assessee in the return of income for the block period? 3. The appeal is admitted on Question (1) and (2). 4 .....

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Appellate authorities even if the claim was not made in the return of income filed before the Assessing officer. 6. The facts relevant for the purpose of question (1) are briefly as under: (a) The respondent-assessee carries on business as builders in Mumbai and Thane. On 21/2/2002, the Income Tax Department carried out search operation under Section 132 of the said Act covering the residential and business premises belonging to the respondentassessee s group. During the course of the search pro .....

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als) (hereinafter referred to as the CIT(A) ) the respondent contended that the undisclosed income was declared at ₹ 7.00 crores only because at the time of making the statement the Director of respondent was unaware that deduction under Section 80IB would be available in respect of respondent s housing projects. The CIT(A) by order dated 17/8/2004 found on facts that the respondent was entitled to benefit of Section 80IB of the said Act. Further, CIT(A) held that in terms of clause (a) of .....

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he block period 1/4/1995 to 21/2/2002 under Section 158BB of the said Act after giving the benefit of Section 80IB of the said Act. (c) On appeal by the revenue the Tribunal by order dated 12/10/2009 upheld the order of the CIT(A).On merits, the Tribunal held that the benefit of deduction under Section 80IB of the said Act would be available in respect of undisclosed income which is being offered to tax for block period under Chapter XIVB of the said Act in view of retrospective amendment to the .....

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of the said Act subsequent to the search under the said Act. In support of the above reliance was placed upon the decision of the Gujrat High Court in the matter of Fakir Mohmed Haji Hasan v. CIT [2001] 247 ITR 290. In the above case unexplained gold valued at ₹ 48.72 lacs found in possession of the party was added to the party s income under Section 69, 69A, 69B and 69C of the Act. As the unexplained gold was confiscated the assessee sought a deduction on account of confiscation of gold .....

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Senior Counsel for the respondent states that the decision of the Gujrat High Court in the matter of Fakir Mohmed Haji Hasan (supra) is inapplicable to the present facts. In the present facts no question of application of Section 68, 69 and 69A 69B and 69C of the said Act arises as the same has not been invoked by the appellant- revenue. Further the amount of undisclosed income was neither in the nature of unexplained investment nor unexplained money, expenses or investment which were not fully .....

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nt to the Explanation to Section 158BB(1) of the said Act, the deduction under Section 80IBof the said Act (which is admittedly a part of Chapter VIB of the said Act) is to be allowed for determining the undisclosed income under Chapter XIVB of the said Act. 9. Before considering the rival submissions, it would be convenient to reproduce the amended Explanation to sub section (1) of Section 158BB of the said Act which reads as under: Explanation- For the purposes of determination of undisclosed .....

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r VI or unabsorbed depreciation under sub-section (2) of section 32;] It would be pertinent to note that the words this Act in parenthesis were substituted by the Finance Act of 2002 with retrospective effect from 1/7/1975. Prior to the above amendment the words were Chapter IV . Further the proviso was also added to the explanation by the Finance Act 2002. 10. Chapter XIVB of the said Act provides for special procedure for assessment of search cases and is contained in Section 158B to Section 1 .....

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, according to the explanation the total income or loss was to be computed in accordance with Chapter IV of the said Act. Consequent to the amendment by Finance Act, 2002 with retrospective effect from 1/7/1995 the total income or loss has to be computed in accordance with the provisions of this Act i.e. the said Act. Consequently, with effect from 1/7/1995 the total income/loss for the block period has to be computed in accordance with the provisions of the said Act and the same would include C .....

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on under Chapter VIA of the said Act would not be available to the respondent-assessee is not well founded. In the present facts it is not the case of the revenue that the money found in possession of the respondent assessee could not be explained and/or its source could not be explained to the satisfaction of the Assessing Officer. In the present case undisclosed income found in the form of cash was explained as having been acquired while carrying on business as a builder and this explanation w .....

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he same has not been invoked by the Department. It is an admitted position between the parties as reflected even in the order the Assessing officer that undisclosed income was in fact received by the respondent in the course of carrying out its business activities as a builder. The same was returned by the respondent as income arising from profits and gains of business or profession and the same was accepted by the department unlike in the matter of Fakir Mohmad Haji Hasan (supra). 12. In view o .....

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in the case of Sheth Developers (P) Ltd. (supra) was considering the claim of deduction u/s 80IB(10) of the Act in relation to the undisclosed income declared consequent to the search action. In the case before the Hon ble High Court, it was factually emerging that undisclosed income was earned by the assessee in the course of carrying on his business activity of a builder and the same was accepted by the Department, but the claim of the deduction u/s 80IB(10) was denied in relation to such inc .....

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e Hon ble Bombay High Court in the case of Sheth Developers (P) Ltd. (supra), the claim of the assessee is justified. 18. In-fact, once it is factually explicit that the additional income in question is derived from the housing project, The Crest at Pimple Saudagar, Pune, which is eligible for section 80IB(10) benefits, such an income merely goes to enhance the business income derived from the eligible housing project and shall be entitled for section 80IB(10) benefits, even as per the ratio of .....

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ssessee for assessment year 2008-09 is allowed. 136. In view of the above decisions cited (Supra) , the assessee, in our opinion is also entitled to deduction u/s.80IA(4) on the additional income. In this view of the matter and in view of the detailed reasoning given by the CIT(A) on this issue we find no infirmity in his order. Accordingly, the same is upheld. However, as per the additional ground raised by the assessee, there seems to be some calculation error while computing the deduction u/s .....

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on this issue. The grounds raised by the Revenue are accordingly dismissed. 96. Grounds of appeal No.7 & 8 being general in nature are dismissed. ITA No.229/PN/2013 (A.Y. 2008-09) (By Assessee) : 97. Grounds of appeal No.1 to 1.4 by the assessee are as under : 1.0 On the facts and in law, Ld. CIT(A), Kolhapur eared in confirming the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 14,90,67,500 for the asst. year under appeal, on the basis .....

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n appellant & it's partner Mis Mahalakshmi Infra-projects Limited was on work sharing basis & not on joint execution basis and as such the control & management of the partners over finance & administration is independent. 1.2 Ld. CIT(A) also erred in upholding the AO's baseless assertion in para 10.4.2 " Page No's 31, 28, 22, & 17 of bundles no.1 seized from residence of Shri. D.A. Bhat are infact documents of M/s B.T.Patil & Sons Belgaum Construction Pvt .....

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such evidence is fabricated. 1.4 Ld. CIT(A) erred in confirming the presumption made by AO in shifting the undisclosed in come to earlier years on the basis of evidence seized from a third party. 98. After hearing both the sides we find the above grounds by the assessee are identical to grounds of appeal No. 1 to 1.4 in ITA No.228/PN/2013 for A.Y. 2007-08 filed by the assessee. We have already decided the issue and the grounds raised by the assessee have been dismissed. Following the same reaso .....

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ct of interest income of ₹ 25,90,058/- received from Bank Guarantee deposits given to the project authorities, in respect of such projects. 101. After hearing both the sides, we find the above ground is identical to ground of appeal No.3 in ITA No.228/PN/2013. We have already decided the issue and the ground raised by the assessee has been partly allowed for statistical purposes. Following similar reasonings, this ground by the assessee is allowed for statistical purposes. 102. Ground of a .....

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ring on pages no. 1 to 5 and 7 aggregating to ₹ 94,17,652/-. On being confronted by the AO, the assessee denied of having any connection with the above papers since these were found in the possession of Shri D A Bhatt. Not being convinced with the explanation given by the assessee, the assessing officer added back 50% of such expenses being the assessee's share aggregating to ₹ 21.2425 lakhs under section 69C in assessment years 2008-09 ₹ 8.175 lakhs and in 2009-10 ₹ .....

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r and therefore the documents found in his possession were not connected with assessee. It was submitted that the additions were made in the absence of corroborative evidence and were arbitrary and hence should be deleted. 105. However, the CIT(A) was not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : 97. I have carefully considered the submissions of the appellant. As noted earlier, these expenses are recorded in pages 1 to 5 and 7 o .....

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i) In the absence of dates against the entries shown in these papers it was not possible for them to verify the entries with the entries in the books of account. Hence, it was put that theoretical entries could pertain to a period even prior to 01/04/2002. ii. Expenses on pages 4 and 5 on projects were not actually incurred. iii. The appellant does not concur with the notings on loose papers and diaries from Shri D.A. Bhat s residence. iv. Page No. 7 is an estimation of cost which do not have an .....

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s details of expenses incurred by both Mahalaxmi Construction Corporation Ltd. and B T Patil and Sons and the receivable position as on 11/07/2007. The contents on page no. 5 arc details of various expenses including those which are written as 'K' expenses. The total of 'K' expenses is ₹ 26,13,500/- which is incurred on various dates between 26/12/2008 to 24/01/2009. Page no. 7 contains working of interest payment on purchase of tender documents, bank guarantees for EMDs, F .....

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sum from the total for assessment year 2010-11 and thereafter work out the expenses incurred on the basis of these papers as additional income of the assessee. 106. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 107. After hearing both the sides, we find no infirmity in the order of the CIT(A) on this issue. The Ld. Counsel for the assessee could not give any convincing reply against the factual findings given by the CIT(A). In absence of any contrary material broug .....

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red in allowing deduction on account of proportionate interest on diversion of funds for non business purposes of ₹ 10,33,466/- 110. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.2 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 111. Ground of appeal No.2 by the Revenue .....

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ning the above ground by the revenue is dismissed. 113. Ground of appeal No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing addition on account of proportionate interest on advances for non business purposes of ₹ 10,67,853/-. 114. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.4 in ITA No.452/PN/2013 filed by the revenue. We have already decide .....

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by the revenue. We have already decided the issue and the ground raised by the revenue has been allowed. Following the same reasoning this ground by the revenue is allowed. 117. Ground of appeal No.5 by the Revenue reads as under : 5. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of additional claim u/s.80IA(4) of ₹ 14,96,66,670/- which is the additional income declared during the course of search proceedings on account o .....

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ppeal No.6 and 7 by the revenue being general in nature are dismissed. ITA No.230/PN/2013 (A.Y. 2009-10) (By Assessee) : 120. Grounds of appeal No.1 to 1.4 by the assessee are as under : 1.0 On the facts and in law, Ld. CIT(A), Kolhapur eared in confirming the shifting of undisclosed income for the asst. years from 2007-08 to 2010-11 by bringing to tax ₹ 4,25,97,000 for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalaksh .....

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n work sharing basis & not on joint execution basis and as such the control & management of the partners over finance & administration is independent. 1.2 Ld. CIT(A) also erred in upholding the AO's baseless assertion in para 10.4.2 " Page No's 31, 28, 22, & 17 of bundles no.1 seized from residence of Shri. D.A. Bhat are infact documents of M/s B.T.Patil & Sons Belgaum Construction Pvt. Ltd. These documents were sent to Shri D.A. Bhat for the purpose of reconcili .....

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n made by AO in shifting the undisclosed in come to earlier years on the basis of evidence seized from a third party. 121. After hearing both the sides we find the above grounds are identical to grounds of appeal No. 1 to 1.4 in ITA No.228/PN/2013 for A.Y. 2007-08. We have already decided the issue and the grounds raised by the assessee have been dismissed. Following the similar reasonings the above grounds by the assessee are dismissed. 122. The Ld. Counsel for the assessee did not press ground .....

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es, in respect of such projects. 124. After hearing both the sides, we find the above ground is identical to ground of appeal No.3 in ITA No.228/PN/2013. We have already decided the issue and the ground raised by the assessee has been allowed. Following similar reasonings, this ground by the assessee is allowed. 125. Ground of appeal No.4 by the assessee reads as under : Ld.CIT(A) not justified in confirming the addition of ₹ 13,06,750/- made by AO on the basis of evidence seized from prem .....

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the assessee reads as under : Ld.CIT(A) erred in confirming interest u/s.234A levied by the Assessing Officer without realizing that after search action u/s.132, provisions of section 139 gets merged with section 153A and the appellant is required to file the return of income within the time limit allowed in the notice u/s.153A and not within the time limit specified in provisions of section 139(1) of the Act. 128. Facts of the case, in brief, are that the assessee during the course of hearing b .....

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satisfied with the explanation given by the assessee and held that the assessee is liable to pay interest u/s.234A by observing as under : 102. The contention of the appellant cannot be entertained. There is nothing in section 153A or section 139 which allows the assessing officer to extend the time limit for filing of income-tax returns during the regular course. If the contention of the appellant is accepted then, even if the appellant had not filed a return of income for any of the six years .....

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enefits to a delinquent assessee. Therefore, it is held that in respect of the assessment year 2009-10, the appellant should have filed the return of income on or before 31/10/2010. Since this was not done, the appellant was liable to pay interest under section 234A and the same has been rightly charged. This ground of appeal is therefore, dismissed. 130. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 131. The Ld. Counsel for the assessee submitted that the search i .....

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s.153A to the date of completion of the assessment u/s.143(3). He accordingly submitted that the issue stands covered in favour of the assessee by the decision of the Chennai Bench of the Tribunal. 132. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 133. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the decisions re .....

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It is the submission of the Ld. Counsel for the assessee that interest u/s.234A is chargeable from the date of expiry of the notice period given u/s.153A to the date of completion of the assessment u/s.143(3) and the AO cannot charge interest from the expiry of due date prescribed u/s.139(1). We find the above issue has been decided in favour of the assessee by the Chennai Bench of the Tribunal in the case of ACIT Vs. V.N. Devadoss (Supra). We find the Tribunal has observed as under : 45. The se .....

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s of income within the due date under section 139(1) and hence the provisions of section 234A(1) is applicable. It is also the case of the Revenue that the Commissioner of Income-tax(Appeals) has failed to note that the order of the Income-tax Appellate Tribunal, B-Bench, Chennai in the case of Dr. V.Jayakumar vs. ACIT, Circle I, Madurai, in ITA Nos.520 to 529(Mds)/2010 is not applicable to these cases since the facts are distinguishable. In the case of Dr. V.Jayakumar, the assessee had paid tax .....

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interest is chargeable under section 234A from the date of expiry of the notice period given to the assessee under section 153A. It is because the return filed under section 153A would be deemed to be a return of income under section 139 as per the express language of the provisions of section 153A(1)(a) and therefore the return of income filed under section 153A also is to be processed under section 143(1) and the income determined thereof. These are all consequences of search conducted under .....

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ls) is justified in holding that the interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3). This issue is decided in favour of the assessees. 134. Respectfully following the decision cited (supra) we hold that the CIT(A) is not justified in directing the AO to levy interest u/s.234A of the I.T. Act in the instant case. We accordingly set aside the order of the CIT(A) and direct .....

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des we find the above ground raised by the revenue is identical to ground of appeal No.2 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 138. Ground of appeal No. 2 by the revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing addition on account of proportionate interest on .....

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n law, the Ld.CIT(A) erred in allowing addition on account of pooja expenses of ₹ 78,457/-. 141. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.5 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been allowed. Following the same reasoning this ground by the revenue is allowed. 142. Ground of appeal No. 4(a) and 4(b) by the revenue reads as under : 4(a) On th .....

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₹ 4,39,41,503/- which is the additional income declared during the course of search proceedings, on account of expenses from unexplained sources which attract provision of S.69C of the I.T. Act which is not an income from the business of undertaking preferred to in sec.80IA(4). 143. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.6(a) and 6(b) in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and th .....

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8377; 69,60,650 for the asst. year under appeal, on the basis of papers seized from Technical Director of Joint Venture partner M/s Mahalakshmi Infra-projects Limited, Pune during the action u/s 132( 4) held on. 24-09-2009 instead of allowing appellant's appeal by accepting undisclosed income offered by it for the asst. year 2009-10 & 2010-11 on the basis of papers seized from it's own premises during the course of search conducted on 23-10-2009 1.1 Ld. CIT(A) ought to have appreciat .....

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documents of M/s B.T.Patil & Sons Belgaum Construction Pvt. Ltd. These documents were sent to Shri D.A. Bhat for the purpose of reconciliation as per periodical reconciliation is very important in these matters related to cash payments." The appellant submits that no opportunity of the hearing was given by the AO with regard to these presumptions. 1.3 Ld. CIT(A) was not justified in concurring with the finding of the AO rejecting the evidence in the form of loose papers seized at the of .....

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Following the similar reasonings the above grounds by the assessee are dismissed. 147. The Ld. Counsel for the assessee did not press grounds of appeal No.2 and 3 for which the Ld. Departmental Representative has no objection. Accordingly, the above grounds are dismissed as not pressed . 148. Ground of appeal No.4 by the assessee reads as under : Having allowed the deduction u/s.80IA(4) in respect of profit earned by the assessee form development of infrastructure facilities, CIT(A) was not jus .....

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appeal No.5 by the assessee reads as under : Ld.CIT(A) not justified in confirming the addition of ₹ 24,94,826/- made by AO on the basis of evidence seized from premises of technical director of Mahalakshmi Infra-projects during the course of assessment proceedings stating that those were not considered during the course of search. 151. After hearing both the sides we find the above ground is identical to ground of appeal No.5 in ITA No. ITA No.228/PN/2013 for A.Y.2007-08 filed by the asse .....

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rence in valuation to the tune of ₹ 26,02,596/-. 154. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.1 in ITA No.451/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Following the same reasoning this ground by the revenue is dismissed. 155. Ground of appeal No.2 by the revenue reads as under : 2. On the facts and in the circumstances of the case and in la .....

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No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction on account of proportionate interest on advances for non business purposes of ₹ 6,21,063/-. 158. After hearing both the sides we find the above ground raised by the revenue is identical to ground of appeal No.4 in ITA No.452/PN/2013 filed by the revenue. We have already decided the issue and the ground raised by the revenue has been dismissed. Foll .....

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by the revenue has been allowed. Following the same reasoning this ground by the revenue is allowed. 161. Ground of appeal No.5 by the revenue reads as under : 5. On the facts and in the circumstances of the case and in law, ths Ld.CIT(A) erred in allowing addition on account of unexplained money u/s.69A of ₹ 4,95,00,000/-. 162. Facts in brief, are that the AO during the course of assessment proceedings asked the assessee to explain the cash found at the assessee s premises of ₹ 2.9 .....

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ther, he had already held that the document seized at the assessee's premises was fabricated. Therefore, he held that since the unaccounted funds were already utilized, these could not be the source of cash found during search. Based on the above observation the AO brought to tax the amount of ₹ 4,95,00,000/- in the assessment year 2010-11. 163. Before CIT(A) it was submitted that the cash found at its premises as well as in bank stood explained as the same was reflected in the source .....

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his addition on the ground that since the speed money payments were already made and the assessee has not made any declaration of an amount over and above the money already expensed out, the source of ₹ 4,95,00,000/- found in the course of search and seizure was unexplained. In appellate proceedings, the assessee has given a chart showing the source and application of money while working out the disclosure of undisclosed income of ₹ 21.91 crores. The assessee has tried to imply that .....

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n giving effect to this order. The observation / remark of the assessing officer is not incorrect when he states that the entire unexplained expenses were spent in making various payments. Therefore, the assessing officer is directed to prepare the source and application statement in respect of the undisclosed income in the form of inflation of construction expenses and additions made. Thereafter, the same shall be applied as per the details found during the course of search at various places (S .....

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ed. 165. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 166. After considering the rival arguments made by both the sides we do not find any infirmity in the order of CIT(A). Admittedly, the AO made addition of ₹ 4,95,00,000/- to the total income of the assessee on the ground that since the speed money payments were already made and the assessee has not made any declaration of amount over and above the money already expended out, therefore, the source of this m .....

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plication statement in respect of the undisclosed income in the form of inflation of construction expenses and additions made and if any surplus remains after comparing the source and application of income, then to apportion the same towards excess cash found during the course of search. He has directed the AO to tax the unexplained cash found if any surplus is not available. The above reasoned finding of the CIT(A) in our opinion does not call for any interference. Accordingly, we uphold the or .....

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