TMI Blog2019 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that Ld CIT has not confirmed the addition based on any evidence of utilization of cash only by assessee but heavily relied on the human probabilities and presumptions. Since there is certain element of uncertainty in utilization of such funds only in the sub-contract activities, we are inclined to direct the A.O, for the sake of justice, to disallow 5% of the total cash withdrawn by the sub-contractor with the assistance of assessee. Further, we propose to freeze the income earned by the sub-contractor @ 5% as the normal profit in this line of business. By this, we are technically upholding 10% of the sub-contract revenue as income. Accordingly, grounds raised by the assessee on this issue are partly allowed. Deduction u/s 80IA denied - returns were not filed within the period specified in the notice given u/s 153A - assessee filed a revised return on 6.2.2014 making a claim u/s 80IA - AO held that the return filed u/s 153A was not a valid return because it was filed belatedly and further that the AO did not have the power to condone the delay - AO held that the fresh claim u/s 80IA made in the revised return filed u/s 153A of the Act on 14.02.2013 is therefore, not ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings for the assessment years under consideration AY 2008-09, AY 2009-10 and AY 2010-11. The assessee made available the relevant audit report at the time of assessment, this is clearly evident from the fact that the audit had taken place before the date of filing return of income and the same was within the provisions of sec 44AB. With regard to AY 2011-12, the assessee has not completed the books and proper books are not maintained even though the turnover crossed the prescribed limit requiring the assessee to get its accounts audited. Since, it is clear violation of section 44AB, we are inclined to sustain the addition made by the AO. Accordingly, the appeals filed by the assessee for the AY 2008-09, 2009-10 and 2010-11 are allowed and for AY 2011-12 is dismissed. - ITA No. 1132-1136/Hyd/2017, 1382-1385/Hyd/2017, 222-226/Hyd/2019, 1390-1402/Hyd/2017, 1359-1369/Hyd/2017, 1408-1411/Hyd/2017, 1351-1354/Hyd/2017, 1405-1406/Hyd/2017, 1316-1321/Hyd/2016 - - - Dated:- 30-8-2019 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER Assessee by: Shri S. Rama Rao Revenue by: Shri Y.V.S.T. Sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14/02/13 32253520 100662648 3 2008-09 30/09/08 116365140 - 14/02/13 116365140 325778267 4 2009-10 30/09/09 389144809 - 14/02/13 (revised on 06/02/14) 392330310 (revised to 160886990 744975993 5 2010-11 15/10/10 524622770 - 14/02/13 (revised on 05/02/14) 524622770 (revised to 359066330) 1352080062 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2011-12, and secondly, rejection of claim of deduction u/s.80IA for A.Yrs. 2009-10 to 2012-13. The facts noticed in the assessment, briefly, are as under. 3. The assessee in the course of its business operations of executing various civil contracts, recorded expenditure claimed to be on account of payments made to subcontractors. The Assessing Officer, relying on the findings of the Search, identified significant improbabilities in the expenditure claimed by way of execution of contract works allotted to M/s. Spectrum Infrastructures Ltd (represented by Sri A. Chandrakanth Reddy), M/s. Sushi Udyog Construction Company (Prop. Sri S. ]anardhan Reddy) and M/s. J.K. Enterprises (represented by Sri S. Janardhan Reddy). Similar features were noticed in payments made to M/s. Gee Constructions, M/s. Surya Erectors, M/s. Prasad Reddy Co, M/s. Siri Engg. Enterprises, Sri B. Narasimha Reddy, Sri M. Krishna Reddy and Sri T. Srinivas. The Assessing Officer noted that RTGS payments made by the assessee-company to these parties was immediately withdrawn - in cash, by employees of the assessee company (and not the payee), at the instance of the Managing Director or CFO of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad Reddy co. 67611858 - - - - 2. T. Srinivas 797270 10045741 19785257 82842331 33633072 3. Sushi Udyog Const. - 98123862 70614926 127123160 112238997 4. Gee Constructions - 3855810 26892814 50980547 - 5. Surya Erectors - 24716736 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the claim u/s.80IA was belated and hence invalid. He further held that the revised return filed on 06/02/2014 was no return of income, since Section 153A did not provide for revision of returns. In response, the assessee submitted that Section 153A(1)(a) provided for treating a return filed u/s.153A as if it was a return filed u/s.139(1). Being so, the assessee possessed the rights vested in terms of Section 139(5). It was further submitted that wherever the Act intended to deny such right it was specifically stated - as for example in the second proviso below Section 158BC(a). It was also pointed out that there was no statutory time limit provided under the Act for filing a return u/s.153A. On an analogy, the assessee relied upon the case of ITO v. Banarsilal Satyanarain (1995) 55 ITD 372 (Patna) which held that a return filed in response to a notice u/s.148 can be validly revised u/s.139(5). The assessee also relied on AClT Vs. Cavikare (P) Ltd (2009), 120 ITD 126 (Chennai) to suggest that Section 139(5) is partly substantive and partly procedural in nature and, therefore, the right given to the assessee under this sub-section should be extended to a return filed in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons Pvt Ltd. ln the said case, the concern made payments to the sub contractors. The Assessing Officer was of the view that certain payments were not genuine. The CIT(A) found that the works were actually completed; all the payments were offered to tax by the sub contractors. If such disallowance is accepted the profit rate would be 19%. lt was also found that the said company had a sub contract agreement and the work as per the sub contract agreement was found completed. ln such circumstances, the CIT(A) held that the disallowance is not justified. The Department filed an appeal before the Hon'ble ITAT and the Hon'ble ITAT confirmed the order passed by the CIT(A). Similar are the circumstances in the case of the assessee In the case of assessee, the assessee received the amount from other companies on sub contract basis. 95% of the work was given on sub contract to outsiders. If such sub contract payments were to be disallowed, the net profit from the said activity would be about 95%. Therefore the assessee submits that the facts of the case decided by the Hon'ble ITAT are applicable to the facts of the assessee The Hon'ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. 7.1.1 A statement was recorded from Sri D. Sreedhar Reddy, the M.D of the assessee Company, where inter alia the following was noticed in respect of two persons recorded in the books of the assessee Company as sub-contractors: 18. During the course of Search Seizure operation u/s 132 today- it is seen from the books of accounts that SSIL, has paid the following amounts in F.Y 2007-08 to 2010-11 to M/s Sushi Udyog Constructions Company on sub-contract basis. Financial Year Amount Rs. 2007-08 9,81,23,862 2008-09 7,06,15,319 2009-10 12,52,31,641 2010-11 10,75,25,000 As per your records the address of M/s Sushi Udyog Constructions Company is No.21,1st Floor, Madhuvan Complex, Highway way Road, Mehsana-384 002. Today, on verification, it has come to the notice of the Department th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d where it is avaIlable? Ans. I would like to state that M/s Spectrum Infrastructure is a proprietary concern of Mr. A. Chandrakanth Reddy He has approached us for sub contract works. In the process we have examined his capabilities in execution of works and found satisfactory. Based on that we have given sub contract to M/s Spectrum Infrastructure after obtaining PAN card. 22. In which sites M/s Sushee Udyog Constructions Company executed works and what is the nature of work Ans: The basic records are maintained. I will submit the same later. 7.2 The CIT(A) observed that it would appear from the above that both 'sub-contractors' - to whom substantial works were allegedly assigned, were not found at the address as per the records of the assessee, even as on 30/11/2011. It was claimed that works were entrusted to them based on their execution capabilities, and the fact that they possessed a PAN. The details of the basis on which the execution capabilities of such persons was assessed, is not available. The credibility of these persons having execution capabilities to handle multi-crore contracts is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, he stated that originally he did not file any returns but found it necessary to do so upon being prompted by the assessee Company. In his answer to Question No.21 of the statement recorded u/s.131 on 13/01/2012, he stated that, Originally, I have never filed IT returns in the name of MIs. Sushi Udyog Constructions Company and also in my individual name. Few months, MIs. Saisudhir people have asked me about my IT returns. I realized that my returns are not filed. Immediately, I consulted Mr. Gopal of Nandyal, Income-tax Practitioner and filed returns of MIs. Sushi Udyog Constructions Company for A.Y. 2008-09 to 2010-11 and my individual returns for two years A.Y. 2009-10 and 2010-11... 7.5 CIT(A) noted that it is further claimed that books of account were not maintained by Sushi Udyog Constructions Company as well as J.K.Enterprises. When asked about how control was exercised over works done and the receipts and payments of the business he stated in his answer to Question No.15 (on 11/02/2012) that I used to make payments as and when required never kept record of any thing. He, however, could recollect details of works executed in January, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawals aggregating to ₹ 21.01 crores from Corporation Bank, Jubilee Hills Branch on various dates from July, 2010 to April, 2011, and withdrawal of ₹ 12.90 crores on various dates from December, 2008 to June 2010 from Karnataka Bank, Raj Bhavan Branch, and withdrawal of ₹ 7.76 crores on various dates from December, 2010 to June, 2011 from Corporation Bank, Film Nagar Branch showed that RTGS credits from the assessee company were followed by cash withdrawals. These cash withdrawals are by bearer cheques containing the signatures of Sri M.S.Reddy, or Sri Ajay Kumar or Sri T. Shankar affixed on the reverse side of the instrument. Sri Janardhan Reddy stated that all of them were employees of the assessee company including Sri M.Chandra Sekhar Reddy - who signed as 'M.S.Reddy'. It was stated that MIs. Sai Sudhir Infrastructures Ltd. (the assessee company) had faced liquidity problems, because of which he handed over signed blank cheques to Sri N.Chandra Sekhar Reddy who would withdraw cash whenever possible, and keep it with him so that it could collected and carried to Paradip. Sri Janardhan Reddy was also confronted with the fact that supplies at Paradip w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing no immovable property, and little or no movable assets. He is seen to have earned his livelihood as a Head Over Man at Singareni Collieries, at their Godavarikhani mines on a monthly salary of ₹ 11,000/- till 1996, and as a real estate commission agent at Siddipet till 2008, when he claims to have started 'sub-contract' work and labour supply work for Sai Sudhir Infrastructures Ltd (the assessee Company). Like Sri Janardan Reddy, supra, Sri Chandrakanth Reddy was a dedicated 'sub-contractor' executing works exclusively for the assessee Company, and nobody else. Like Sri Janardan Reddy, he did not find it necessary to file a return of income till he was prompted to do so by Sai Sudhir Infrastructure people and did not maintain any books of account. He was, however, able to recollect details of work executed for the assessed Company, including identical instances of 'purchase' and supply of stone and stone dust for works at Paradip. The circumstances of the transactions - including supply of material at Paradip, were identical. He claimed to have met one Mr. Sahoo and Mr. Mohanti at Paradip who agreed to provide the required quantities of ston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the assessee company are seen to have been withdrawn by bearer instruments endorsed to the same employees of assessee company viz., M.S.Reddy / Ajay / T. Shankar. In many instances the signature is accompanied by the mobile number of these employees. These six persons are a. Gee Constructions (HDFC Bank Naeharam Branch, a/c No. 3682000006177) b. Surya Erectors (HDFC Bank Naeharam Branch, a/c No. 3682000006184) c. Prasad Reddy Co. (Karnataka Bank Raj Bhavan Road, a/c No.33420001 00035901) d. B Narsimha Reddy (Karnataka Bank Raj Bhavan Road, a/c No.3342000100035001) e. M Krishna Reddy (Karnataka Bank Raj Bhavan Road, ale No.3342000100036301) f. T. Srinivas (Corporation Bank Film Nagar, a/c No. 27530200000163 a/c No. CBCA 101100019). 7.10 The CIT(A) observed that the above 8 persons referred to at para 7.2.4, 7.3 and 7.4 above had 9 business entities which operated between them 12 bank accounts. These details are tabulated as under: S.No. Name of the subcontractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1383791291 CIT(A) noted that the internal breakup of these transactions contains an analysis of the debit instruments pertaining to the above 12 bank accounts. The tabulation of these debit instruments shows that as per evidence recovered during Search and post-Search operations 430 bearer instruments drawn on the above 12 accounts were encashed thereby withdrawing a total amount of ₹ 138,37,91,291/- in the financial years 2008-09 to 2011-12. Almost each and everyone of these bearer instruments are seen to be endorsed to one or other of the above three names identified as employees of Sai Sudhir Infrastructures Ltd. (the assessee company). The inescapable conclusion that emerges, therefore, is that almost the entire expenditure booked in the name of the above entities have been collected in the form of cash by the employees of the assessee company. 7.11 The CIT(A) observed that the statements of the employees, including the CFO of the company Sri A.V.K.S.Prasad referred to in the assessment order would show that this was with the consent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated by these two persons have been confirmed by Mr. A VKs Prasad in his statement recorded u/s 132(4) today Please go through these statements and explain as to why the employees of SSlL have withdrawn cash from the bank accounts of the above so called sub-contractors and what do you have to say in this matter? Ans: I have gone through the statements of Mr. T. Shankar, Mr. M S. Reddy and Mr. A VKs Prasad recorded u/s 132(4) during the course of search proceeding, which have been shown to me. I have already stated that MIs Spectrum Infra and MIs Sushi Udyog are sub contractors of MIs SSIL. It is a Fact that my employees have withdrawn certain amounts from the bank accounts of these two subcontractors. The amounts so withdrawn have been used for the purpose of business of SSIL. However, I am unable to substantiate the expenditure right now. Therefore, to avoid any litigation and to buy peace with the department and to take care of all the discrepancies which might be found in this premises or in the premises covered under search/ survey conducted by the department in my group companies, I voluntarily admit an additional undisclosed income of ₹ 75,00,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that all the sub-contracts were genuine and accordingly the works given on sub-contract were duly executed by such sub-contractors. However; some of them were small contractors who used to rely on our staff for their day-to-day administrative works, including bank works. Thus, though some of our staff members had facilitated in smooth execution of their works, the company had no role to play. However, to buy peace with the department and to avoid protracted Litigation and thereby to settle all the matters amicably and to cover up all the deficiencies In the books of account and other documentation I admit additional undisclosed Income of ₹ 5517 lakhs in the hands of M/s Saisudbir Infrastructures Ltd for FY 2007-08 to 2011-12. This disclosure is made with a prayer that no further additions are made under any other head in the hands of the company oi' under any head in the hands of the sub-contractors as most of the disclosure is on account of deficiencies in respect of such sub-contract expenses. With the above, I summarize the additional income admitted as below: (Rs. In lakhs) In the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and again on 19/04/2012. 7.17 The CIT(A) observed that in appellate proceedings, however, it was stated by the Ld. A.R. that the statements recorded were made available only on 15/01/2015, and hence the submissions before the Assessing Officer were incomplete, and opportunity extended was not adequate. In the affidavit notarised on 01/06/2015 and introduced as additional evidence, the Managing Director contradicted his admission during Search and post-Search proceedings by stating that the Search proceedings initiated on 30/11/2011 continued till 8.00 a.m. the next day and, therefore, the deposition was made under confusion , It was also stated that facts were not fully recorded in the statement and that the statement was signed under pressure and duress. On the merits of the expenditure claimed it is stated as under: l state that the sub contract payments are genuine. The amounts paid by the company were paid to the contractors through cheques. Tax deducted at source at regular Intervals. The sub contractors maintained separate bank account The amounts were drawn by the sub contractors. The company- the Chief Finance Officer and other staff mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn (filed in response to the notice u/s 153A dated 05/12/2012) is not maintainable. 7.19 In view of the above observations, the CIT(A) rejected the cases relied upon by the assessee, and held as under: 9.3 On a conspectus of the above facts and consideration of various submissions made, it is seen that the assessee claims the expenditure booked in the name of the various subcontractors described herein-above, is admissible business expenditure. The Assessing Officer on the other hand, relied on the information collected during the Search and post Search verifications, that bank accounts belonging to certain 'sub-contractors' were operated by employees of the assessee company, to withdraw cash by presenting the 'self' cheques signed by these persons, to hold that the expenditure was not genuinely incurred. The assessee contested this conclusion, urging that the transactions are 'properly' documented with regard to agreements, work orders, cheque payments and taxes deducted at source on such payments. It is further stated in its defence that such sub-contractors are assessed to tax and that there is no evidence that work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng facts and circumstances of the case is well settled, and for which the Revenue relies on the decision in the case of Durga Prasad More (supra). What is relevant, more so where the genuineness ofthe transaction is in issue, is the truth of the document/s furnished in substantiation, as well as the substance of the transaction and not its form, and which is to be determined on the basis of and on the conspectus of the entirety of the facts and circumstances of the case .... [EMPHASIS SUPPLIED] 4.5 ... We find the observations by the AO as valid and relevant; to no satisfactory answer or explanation by the assessee, i.e., to the questions, incidents or the phenomenon observed dismissing the same as mere suspicions, as does the ld. ClT(A), is, to our mind glossing over the many attendant facts and incidents, the most vital, and on which We observe complete silence or absence of any explanation is the absence of any credentials of the investee-company, The Id. CIT(A) picks up one incident or aspect of the transaction at a time to note of it being backed by documentary evidence/s and, therefore, genuine. The approach is fallacious. First documentary evidences, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case noticed herein above the assessee is liable to explain the utilization of cash seen to have been mopped up by its employees. The onus in this case does not get discharged by merely claiming that the cash was in turn handed back to the payees, for utilization at respective work sites in the neighboring states. It is also noteworthy that such payees who needed the assistance of the assessee to encash cheques in Hyderabad, for expenses to be defrayed in Karnataka and Orissa were in the first place persons who had no demonstrable execution capabilities. It is held, therefore, that the assessee has not been able to make out a case that the impugned amounts have been laid out or expended wholly and exclusively for the purpose of the business. The disallowance of business expenditure made in the assessments for AY 2007-08 to 2011-12 is therefore upheld. 8. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous to the extent it is prejudicial to the assessee. 2. The learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered as not genuine, the profit rate would be abnormal which fact clearly indicates that the sub contract payments are genuine. 12. The learned Commissioner of Income-Tax (Appeals) erred in confirming levy of interest u/s 234A, u/s 234B and u/s 234C of the I.T. Act. 13. Any other ground that may be urged at the time of hearing. 9. Before us, ld. AR of the assessee filed written submiIssions, which are as under: 1. The appeals filed by the assessee are for the assessment years 2007-08 to 2011-12; whereas the appeals filed by the Department are for the assessment years 2009-10 to 2012-13. 2. In so far as the appeals filed by the assessee are concerned they are against the disallowance of the payments made to some of the sub contractors against the works entrusted by the assessee to its sub contractors. The details of the sub contractors and the works entrusted to them are separately furnished in a statement annexed. The said details were already filed in the paper books earlier filed by the assessee and are part of the submissions made before the CIT (A). The assessee is furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) According to the Assessing Officer, the sub contractors received the cheques from the assessee and deposited the same with the bank. At the time of withdrawal, the said sub contractors issued the cheques but on the back side, the assessee s employees and the sub contractors signed. c) The Assessing Officer mentioned that the cheques drawn by the sub contractors were shown to the employees and the employees confirmed that they signed on the backside of the cheques. d) The Assessing Officer also referred to the statements of Sri D.Sridhar Reddy, M.D. and the employees of the company. According to the Assessing Officer, the MD accepted for admission of additional income of ₹ 75 crores. e) The Assessing Officer mentioned that the cash withdrawal from out of RTGS credits amounted to ₹ 65 crores. f) The Assessing Officer is of the view that the sub contracts have come into existence to provide bogus bills to siphon off the money. Accordingly the assessing officer made the following additions: 2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions made in this regard are in the paper books submitted. 9. As the assessee filed affidavit retracting from the statements earlier made and as the assessee submitted returns of income filed by the sub contractors; agreements entered into with the Principal Contractors and the sub contractors, the learned CIT (A), referred the matter to the Assessing Officer for remand report. He forwarded copies of the affidavits and the written subMIssions filed before the learned CIT (A). The remand report is at pages Nos75 to 85 of the consolidated paper book. 10. In the remand report, the Assessing Officer mentioned that a) Proper opportunity was given by the Assessing Officer at the time of completion of the assessment proceedings. b) That the enquiry was not limited to 3 sub contractors but was extended to 7 sub contractors. The aggregate of which works out to ₹ 62,54,61,833/-. c) The Assessing Officer at para 5.4 accepted the contention of the assessee that the work was entrusted to the assessee as per the agreement and that the work was completed through the work orders or the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer and the Additional Commissioner of Income Tax refer to the statements recorded without referring to the affidavits filed. 13. The learned CIT (A) relied on the statements recorded from Sri D.Sridhar Reddy, MD wherein additional income of ₹ 75 crores was offered by the Managing Director (Company ₹ 55.17 crores; Smt. Aparna ₹ 11.61 crores and Sri D. Sreedhar Reddy ₹ 8.22 crores) and the statement of the employees. The learned Commissioner of Income Tax (Appeals) brushed aside the statement recorded from Sri S.Janardhan Reddy who was produced. The learned CIT (A) discounted the statement of Sri Janardhana Reddy without any basis. Similarly, the learned CIT (A) did not accept the statements of Sri Chandrakanth Reddy, Proprietor, Spectrum Infra. He did not consider the affidavits of the employees of the assessee company and the affidavits of the sub contractors filed before him. On the other hand, the learned CIT (A) mentioned that the retraction made by the M.D. is not acceptable. He referred to various decisions which are distinguishable. He held that the retraction is not acceptable at this point of time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03. M. Krishna Reddy 2008-09 12,64,950 04. B. Narsimha Reddy 2008-09 14,70,650 05. A. Chandrakanth Reddy 2009-10 21,50,000 06. Sushi Udyog Ltd. 2008-09 1,56,61,180 They possessed substantial capitals and the observations made by the learned CIT (Appeals) are not correct. 16. The assessee submits that the learned Commissioner of Income Tax (Appeals) ignored various facts brought to his notice by the assessee and also ignored the remand report submitted by the Assessing Officer duly forwarded by the Addl. Commissioner of Income Tax. 17. The assessee, in the following paragraphs, submits as under:- a) The sub contractors ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the sub contractors. The employees explained that they signed the cheques only to facilitate the sub contractors to draw the amount. 19. The cheques issued by the sub contractors were encashed by the sub contractors themselves. They deposited the cheque issued by the assesee in their favour in their respective bank accounts. While withdrawing the amounts, the sub contractors required the help of the officials of the company who facilitated such withdrawals by affixing their signatures. The sub-contractors signed the cheques issued even on the back side of the cheques. 20. The persons who have allotted the work to the assessee i.e. the Principal Contractors are either the reputed concerns or the government agencies and the Assessing Officer did not bring on record any information that the principal contractors did not get the work done through the assessee. Therefore, the Assessing Officer cannot tax 60% to 95% of the receipt as income. 21. The Addl. CIT in his remand report categorically mentioned that there was no evidence in the seized material to show that the amount was paid back to the assessee. In the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 ITD page 102 Video Master Vs JCIT - In the said case the disclosure was ₹ 3 crores. The Hon ble ITAT found that the disclosure was fully supported by various documents seized during search. The seized documents, pass books revealed several crores of rupees. The addition of ₹ 1,83,50,000/- was found to be insignificant number compared to the figures found in the documents. The admission of ₹ 75 crores in the case of assesee is not based on any as mentioned by the Addl.CIT in his remand report. (3) 75 ITD 75 Ramesh T Salve Vs ACIT In the said case the assesse accepted in a statement that on money was paid at the time of purchase of the flat. In addition to the statement, the Department was in possession of a confession by the sellers that 40% of the consideration was paid as on money. As both the purchaser and the seller declared that additional amount was involved, the addition made was sustained. (4) 6 SOT 18 (Mumbai) Man Mohan Singh Vig Vs Dy. CIT In the said case, the Hon ble ITAT found that whatever the assessee stated u/s 132(4)and admitted as concealed income w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: a) Copies of the statements were provided on 02.01.2015 and not before the assessment was completed. b) The Assessing Officer did not confine to the amount disclosed in the statements. The admission in the case of the company was ₹ 55.17 crores and the AO. Made addition of ₹ 161,90,90,222/-. c) The statement of the Managing Director is not based on any material facts found during search. In view of the above, the assessee submits that the learned CIT (A) is not justified in not deleting the additions made. 26. The learned DR filed two paper books on 16.11.2018 and one of the paper book contained written submissions. The learned DR taken some arguments which were not earlier discussed either by the Assessing Officer or by the learned CIT (A). Therefore, the assessee is required to file further explanation and in the following paragraphs is submitting the detailed explanation. 27. The learned CIT DR referred to various seized material in the initial part of written submission. He mentioned that there was credible information or incriminating material to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. These cheques are to be in possession of the bank and not with the assessee. They would not be supplied by the banker to any other outsider. The Assessing officer, while passing the assessment order extracted the statements of the employees wherein a question is referred to the encashed cheques. There the DDIT mentions that the cheques were obtained from the bank. Therefore, the authorities first obtained copies of the cheques from the bank on 30.11 2011. and questioned the employees. Therefore, it is not correct to say that the encashed cheques were available with the assessee and were seized from the preMIses of the assessee. 33. The learned DR referred to the statements recorded. It is submitted that the copies of the statements were provided to the assessee only on 02.01.2015. 34. On receipt of the statements, it was found that such statements were recorded by either from the employees or from the Managing Director. The content was clarified by filing affidavits. Copies of the affidavits were filed before the CIT (A) along with an application for admission of additional evidence. The said evidence was admitted by the CIT (A) and was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37. The CIT DR relied on various statement to say that the amounts were given back to the assessee. It is submitted that the observations of the learned CIT-DR are not correct. Sri A. Chandrakanth Reddy in his statement dated 23.2.2012 (Page No. 334 of the DPB) stated that I Submit that I supplied stone and dust at the site office of IOCL at Paradip and paid my suppliers by drawing cash from my Hyderabad bank account. I therefore, deny your conclusions . This would clearly indicate that the sub contract given to Sri Chandrakanth Reddy is true. 38. Similarly, the statement of Sri S. Janardhan Reddy may please be examined. In response to a question No.33 put to him, he stated (page No.320 of DPB )as under : I submit that I supplied stone and stone dust at the site office of IOCL at Paradip and paid my supplies by drawing cash from my Hyderabad bank account. I, therefore, deny your conclusions . The above facts are obtained from the statement recorded on 27.2.2012. 39. The fact that the assessee sent (the amount through RTGS is not in dispute. This fact was stated by them in the affidavits which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal contractors and the payments made to sub-contractors. This fact also shows that the statement of Sri Sridhar Reddy was taken when he was in a confused state Therefore, he filed an affidavit before the CIT (A) explaining the circumstances in which the statement was recorded and the circumstances under which the additions accepted cannot be considered as correct. This is particularly so, when the Assessing Officer and the Addl.CIT in their remand reports did not counter the contents of the affidavit. 43. The learned CIT-DR at para 6 of the written subMIssions mentioned that anomalous features are noticed with regard to payments made to the sub contract works and suppliers. They are discussed in the follow8ing paragraphs. 44. In clause (a) of para 6, the learned CIT-DR mentions that the alleged sub contractors are men of meagre means. 45. The sub contractors are separately assessed to tax. They filed returns of income. The Assessing Officer resorted to estimation of income from the sub contract receipts. He is satisfied with the sources of funds available with them and also satisfied himself about the figures contained in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. 51. In clauses (d) of para 6, the CIT-DR expressed doubt about the purchase of stone and stone dust from different concerns. In this regard it is categorically mentioned by the sub contractors that they supplied the goods; that they withdrew the amount and paid the same to the suppliers. Both the persons were examined on oath. They stated categorically all the details. Further, a suggestion was made to them by the ADIT regarding the statement that the transaction is not genuine. In response they stated that the transaction is genuine. These facts clearly indicate that the observations made by the learned CIT-DR are incorrect. 52. In clause ( c) of para 6, the learned CIT-DR doubted carrying of huge cash from Hyderabad to work spot. The persons have explained as to how they carried the money after withdrawal from bank at Hyderabad to the work spot. It is possible that a person has withdrawn the money and carried the money to the work spot. The doubt of the CIT-DR is without any basis. 53. In clause (f) of para 6, the learned CIT-DR mentions that the sub contractors did not maintain any books of account. In this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of the supplies to the sub contractors. Firstly, the principal contractor accepted the fact that he ordered for stone and stone dust; rate was fixed by the principal contractor; the assessee placed the order on the sub contractors for supply of the said stone and stone dust by adding his margin. Such supply was made; the principal contractor paid the amount and the assessee in turn paid the amount to the sub contractor. In the circumstances, it is humbly submitted that the observations of the learned CIT-DR are MIsplaced and do not constitute any supporting evidence for his subMIssions. 57. The learned CIT-DR mentions that the supplies were made on credit basis on the credibility of IVRCL. This is a hypothetical view of the learned CIT-DR and the real facts are on record. The learned CIT-DR cannot sit in the judgment seat of the principal contractor and say what he should have done. What was done is required to be examined by the authorities for determining the income and cannot visualise or imagine what should have been done. 58. In clause (h) of para 6, the learned CIT-DR mentions that no evidence for purchase or supply of the material of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT-DR is not justified in mentioning that the withdrawals made by the sub contactors were utilized for the purpose of making cash payments. This is not justified as neither the Assessing officer nor the CIT (Appeals) made any comment about the same. 61. The learned CIT-DR mentions that the amounts paid to the persons should be treated as income u/s 69C of the I.T. Act and deduction u/s 80IA(4) shall not be allowed on the said amount. In this regard the assessee humbly submits that no payments as presumed by the CIT-DR were made by the assessee. Further, the assessee company did not debit any expenditure which is not allowable as a deduction. 62. The Assessing Officer at the time of assessment did not find any expenditure which was not explained by the assessee and no such addition u/s 69C was made by the Assessing officer. The learned CIT-DR cannot make a new case for the department but has to argue the issues raised by either the Assessing officer or the CIT (Appeals), no fresh issue can be raised before the Hon ble ITAT by the learned CIT-DR. 63. The learned CIT-DR submitted a list of cases in support of his arguments. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com158: This decision has no relevance to the facts of the assessee s case. It is distinguishable on facts. In the said case, the assessee is required to prove the purchases. The assessee failed to prove the genuineness of the purchases. In so far as the assessee is concerned, it is a sub contract payment made as per the agreement and the assessee proved the fact that the work entrusted to the sub contractor was completed and the principal contractor paid consideration. (5) Decision of ITAT Mumbai in the case of Soman Sun City in ITA No.2960/Mumi2016 dated 23.10.2017: This decision has no relevance to the facts of the assessee s case. It is distinguishable on facts. In the said case, the assessee is required to prove the purchases. Assessing Officer made the addition by applying the provisions of Sec.69C of the I.T. Act. It is not a sub contract. In so far as the assessee is concerned, it is a sub contract payment made as per the agreement and the assessee proved the fact that the work entrusted to the sub contractor was completed and the principal contractor paid consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.Act. The Hon ble High Court is of the view that no question of law arises when the Tribunal found that based on the evidences the claim that certain parties advanced amounts is found to be non genuine. The burden of proof as required u/s 68 is totally different than the claim of expenditure. In the case of the assessee the question is allowability of the sub contract payments made. The assessee proved beyond any amount of doubt that the sub contracts were given and the works entrusted were all genuine. Therefore, the facts are distinguishable. (10) The decision of the High Court of Madras and the Supreme Court in the case of B. Kishore Kumar Vs DCIT, Chennai. In this case, addition was made by applying the provisions of Sec.69A of the Income-Tax Act. The assessee admitted that he had separate business income which was not disclosed to the department and that the investments were made from out of the same. The facts in the said case are different to the facts ascertained in the case of the assessee. The said person also agreed that the income remained in the outstanding loans which has to be recovered alongwith interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icro Systems (India) Ltd. Reported in (2014) 47 taxmann.com 375 dated 2.1.2014. In the said case, the addition was made by applying the provisions of Sec.69C of the I.T Act. In the said case, the assessee did not retract at the time of assessment. He admitted additional income by making voluntary disclosure. He paid tax. Before the CIT (Appeals) the issue was raised without even raising a ground of appeal. The circumstances in the said case are totally different. 64. In view of the above submissions, the observations made by the Assessing officer, the learned Commissioner of Income-Tax (Appeals) and learned CIT-DR may please be rejected and the addition made by the Assessing officer towards disallowance of sub contract payments may kindly be deleted. 10. Ld. DR, on other hand, also filed written submissions, which are as under: 6. It is humbly submitted that the following anomalous features are noticed with regard to payments made to the alleged sub-contract works and suppliers: a) The alleged sub-contractors are of men of meagre means and there is no proof that they executed any sub-con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and the cash was duly handed over to Shri D. Sreedhar Reddy, MD of the assessee and Mr. AKVS Srinivas, CFO of the assessee. There is a serious contradiction in the statements of the employees of the assessee as well as Mr. Sreedhar Reddy/Mr. AVKS Prasad on one hand and the sub-contractors on the other hand. While it is admitted by the first side that the amounts were withdrawn and handed over to the MD/CFO at their directions, the sub-contractors claim that the employees withdrew the amounts at their request and handed over cash to them. Which of the statements was correct was not explained by either side except for retractions in February, 2015 which are an afterthought as already submitted. e) The alleged sub-contractors/suppliers claimed to have carried huge amounts of cash to distant locations to make payments to the vendors and service providers several months after the purchases or execution of labour work. Except for stating that they travelled by train and road, no proof is shown for carrying the cash and even the dates of travel are not specified. f) Admittedly, the sub-contractors did not maintain any books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j) In case of remaining concerns also the fact that there were cash withdrawals immediately after making payments through RTGS was confronted to Shri D. Sreedhar Reddy in the course of his Statement u/s 132(4) on 29-12-2011. He did not produce the sub-contractors for verification. These alleged sub-contractors are also shown to have executed works at Karnataka, waited for payments for more than one year and immediate after payments are made into their accounts, the employees of the assessee withdrew the amounts in cash and handed over to the MD and CFO of the assessee. In the assessment proceedings also, the details were confronted to the assessee. k) The material impounded during survey conducted at the office of the assessee at Bangalore on 30/11/2011, the statement of Shri K. Ramachandra Rao, director recorded during the survey as well as the statement recorded on the same day from Mr. Gani Verma during search clearly reveal that the assessee is engaged in systematic activity of inflating the expenditure to meet inadmissible cash payments. In his statement during survey, Mr. K. Ramachandra Rao, Technical director of the assessee admitted that paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, who confirmed the sametime and again. The subsequent retraction before the learned CIT(A) stating that the admission was under confusion is a mere afterthought to avoid taxes. This is because firstly, one cannot be in a confused state for months and secondly, no evidence is produced countering the evidence confronted to the assessee by the Department in the search, post-search and assessment proceedings. On the contrary, there is credible evidence to the fact that the assessee was making in adMIssible payments in cash for obtaining contracts and for release of payments. Also, when the transactions were confronted, there was clear admission that the money was used for expenditure which cannot be explained. It is humbly submitted that considering the quantum value of the transactions and the fact that they occurred over a long period of time, there is no way the persons behind these transactions like the MD and CFO would be in confused state as the activity is systematic and conducted with a view to siphon off cash. 8. In the face of mounting evidence of huge cash withdrawals by the assessee from the accounts of sub-contractors after transferring huge am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court held (at para 37 of the decision) that v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings . 13. Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Sun Engineering Works Pvt Lt (198 ITR 297) and in the case of Chettinad Corporation Pvt. Ltd. Vs. CIT reported in (200 ITR 320) on the point that fresh claim of deductions cannot be made in reassessment proceedings. In the present case, the proceedings are in the nature of reassessment proceedings because the original assessments were concluded earlier for most of the years.The return in response to notice u/s 153A is also not filed within the time specified. In light of the above, it is submitted that a search assessment cannot be used for the benefit of the assessee to make new claims of deduction in case of completed assessments because the search assessment is only a reassessment on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 449 (Mad. HC) 10.2 Also relied on the following cases: 1. N.K. Proteins Ltd., [2004] 83 TTJ 904 2. N.K. Proteins Ltd., 84 Taxmann.com 195 (SC) 3. Gujarat Ambuja Exports Ld., [2017] 86 Taxmann.com 69 (Guj. HC) 4. Bright Future Gems, Jaipur II, 88 Taxmann.com 476 5. Kalyani Medical Stores, 80 Taxmann.com 158 6. Soman Sun citi, ITA No. 2960/Mumi16, dt. 23rd October, 17 7. Shoreline Hotel (P) Ltd., [2018] 98 Taxmann.com 234 8. Sun Steel Industries (P) Ltd., ITA No. 531/Kol/2016, dt. 19.02.18 9. Narender Kumar Gupta, [2015] Taxmann.com 371 10. RB Mittal, [2000] 112 Taxman 480 11. B. Kishore Kumar, [2015] 62 Taxmann.com 449 (Mad.) 12. Hotel Kiran, [2002] 82 ITD 453 (Pune) 13. Kermex Micro Systems (India) Ltd., [2014] 47 Taxmann.com 375 14. Jai Steel (India), Jodhpur, [2013] 36 Taxmann.com 523 15. Plastiblends India Ltd., [2017] 86 Taxmann.com 137 (SC) 16. K. Venkataramaiah Vs. A. Setharam Reddy Ors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub contracts work depends upon the industry to industry, in infrastructure, sub contractors role is only a part of bigger project. It is important to note that contract work in infrastructure business is always huge and it requires extensive planning and execution team. In this line of business, huge contracts are divided into smaller contracts and these contracts are awarded to sub-contractors. Mostly it involves working with unorganized sector. The assessee has completed the contracts themselves and some contracts were awarded to sub-contractors on back to back basis. It is pertinent to note that the contracts awarded to sub-contractors are always relating to execution of excavation or filling of land, which are always regarded as work of unorganized sector. And the work executed by the sub-contractors are categorized of this nature. The assessee has submitted before tax authorities that all these works were completed and the assessee has raised respective bills and got compensation for the same. The execution of the work is important and how they executed is the issue before us and the facility extended by the assessee to sub-contracts in withdrawing the cash is also under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks allotted to the sub-contractors were executed and certified by the respective engineers of the assessee. The work was compensated to the assessee by their respective contractee. This shows that works were executed by the dependent sub-contractor. Since, the works involve settlement by cash only. Therefore, it can be presumed that this cash was utilized in executing the work contract. The contract involves both work as well as supply of stone and stone dust. Since all these transactions are carried out in remote areas, the sub-contractors commonly would settle only for cash payments. It cannot be ruled out that cash were supplied to such places by the sub-contractor themselves or was helped by the assessee. 11.6 Assessee has submitted a combined statement for execution of contract work, the same are given below for the sake of clarity: Project: a) Megha for earthwork excavation for laying MS Pipeline concrete pedestals at required intervals and back filling of trench. b) Krishnapatnam Port c) Ratna SRMC Executed in AY 2008-09; Value : ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handed over to the respective sub-contractor and utilized by them in executing the work. 11.8 It is not the case of revenue that assessee has not completed the contract work, which was allocated to sub-contractors but for the cash management of the sub-contractors requirement, the whole sub-contract payments were disallowed. But as per records, assessee has executed the works assigned to sub-contractors and got the compensation. We further observe that Ld CIT has not confirmed the addition based on any evidence of utilization of cash only by assessee but heavily relied on the human probabilities and presumptions. 11.9 However, since there is certain element of uncertainty in utilization of such funds only in the sub-contract activities, we are inclined to direct the A.O, for the sake of justice, to disallow 5% of the total cash withdrawn by the sub-contractor with the assistance of assessee. Further, we propose to freeze the income earned by the sub-contractor @ 5% as the normal profit in this line of business. By this, we are technically upholding 10% of the sub-contract revenue as income. Accordingly, grounds raised by the assessee on this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 153A of the Act. Thus, the AO did not allow the claim of deduction u/s 80IA of the Act. Aggrieved, the assessee preferred an appeal before the CIT (A) who allowed the same and the revenue is in appeal before us by raising the following grounds of appeal: 1. Whether on the facts and in the circumstances of the case, and in law, Id CIT(A) was correct in granting deduction u/s.80IA of the Income Tax Act, 1961 disregarding the fact that such claim was made for the first time in the Return of Income filed in response to notice u/s.153A of the Income Tax Act, 1961 being not a legitimate claim. 2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) failed to appreciate that the provisions under section 80AC requiring the assessee to furnish the return of income before due date specified under section 139(1) is mandatory and not directory and same cannot be extended to return filed u/s 153A. 3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in holding that there is no legal sanction for the time limit prescribed by the AO in the notice u/s 153A without appreciating that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even adverting the findings of the Aa on the issue. 10. Whether the Ld.CIT(A) erred in law in not adjudicating the matter and directing the AO to examine the issue afresh with reference to each contract with regard to drawing, design and implementation, etc. though the same was already verified by the Aa in remand report. 11. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary . 13. The learned DR supported the order of the AO while the learned Counsel for the assessee supported the order of the CIT (A) and also placed reliance upon the following case law: i) ITAT Hyderabad Bench in the case of ACIT vs. P. Madhusudan Reddy in ITA Nos.1070 to 1075 and 1373 to 1375/Hyd/2012 ii) ITAT Hyderabad in the case of KNR Constructions vs. DCIT in ITAT Nos.946 to 948 and 983 to 986/Hyd/2015. iii) ITAT Chennai in the case of ACIT vs. V.N. Devadoss (2013) 157 TTJ 165 (Chennai Trib.) iv) Hon'ble Kerala High Court in the case of Chirakkal Service Coop. Bank Ltd vs. CIT (2016) 384 ITR 490 (Ker.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim in the return of income filed on 6.2.2014. Thus, according to the assessee, as long as the assessee has filed the return u/s 139(4) and subsequently has filed the revised returns making the claim in response to the notice u/s 153A of the Act, the assessee s claim is maintainable. Let us, therefore, consider the case law relied upon by the assessee and the applicability thereof to the facts of the case before us. 17. In the case of ACIT vs.P. Madhusudan Reddy (Supra), the Tribunal at Paras 8.4 and 14 of its order has held as under: 8.4. With reference to the contentions of assessee that the returns filed in response to Section 153A are invalid, it was submitted that the return of income filed in response to notice issued u/s. 153A subsequent to time limit provided therein cannot be considered as invalid return of income as there is no statutory requirement as in the case of return required to be filed u/s. 139(1). In respect of return to be filed u/s. 153A, the AO has power to extend the date of filing the return or the return filed beyond the time limit provided in the notice shall be considered for the purpose of completing assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. It was submitted that for AY. 2006-07, assessee filed originally return of income u/s. 139(1) on 31-10-2006 admitting income of ₹ 4,89,088/- and the taxes have been paid, the same computation was reiterated in the revised computation filed. For AY. 2007-08, assessee filed computation of income declaring loss of ₹ 3,35,01,000/- and no tax could be payable. For AY. 2008-09, assessee has revised the computation to NIL but paid the tax of ₹ 10,04,650/- which was claimed as refund . It was the contention that since the returns were filed beyond the time limit given, the returns are to be considered as invalid returns. Therefore, subsequent proceedings are null and void ab-initio. Consequently, the provisions of Section 249(4) do not apply. 10.2. It was also contended that even though revised computations were filed along with retraction letter in the course of assessment proceedings, the AO has neither discussed about the retraction nor considered the revised computation and the orders are totally silent on that. Therefore, AO computed wrongly from the income of so called invalid returns. It was submitted that if assessee s revised computati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these judgments have been expressly referred to in detail by the CIT(A) and by the Tribunal. iii. M/s. Vivera IT Applications Consulting (P) Ltd., Vs. Income Tax Officer, Ward-3(2), Hydreabad; 129/Hyd/2014 the Hon'ble jurisdictional ITAT held that only issue arising for consideration before us in the present appeal is whether CIT(A) was justified in not entertaining assessee s additional ground claiming exemption u/s. 10A. As can be seen, CIT(A) has dismissed assessee s additional ground only for the reason that the claim of deduction u/s. 10A was not raised by assessee by filing a revised return relying upon a decision of Goetz India Ltd., and Hindustan Housing Development Corpn (supra). However, we find force in the contention of learned AR that ratio laid down in the aforesaid two decisions are restricted to the proceedings before the AO and will not apply to the appellate authorities. iv. Mumbai ITAT in the case of Lok Housing Construction Limited [27 taxmann.com 15] it was held that wrong statement which was corrected by the assessee by filing the revised return and the AO as well as the learned CIT(Appeals), in our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has held as under: 3. We have heard the arguments of both the sides and also perused the relevant material on record. At the time of hearing before us, the learned representatives of both the sides, besides strongly relying on the relevant portions of the orders of the authorities below which are in their favour, have also cited various case laws in support of their respective stand on the issue relating to the assessee's claim for deduction under section 80IA. We have carefully gone through and deliberated upon the judicial pronouncements cited by the ld representatives of both the sides. 3.1. As regards the preliminary issue as to whether the assessee is entitled to make a new claim for deduction under section 80IA in the returns of income filed in response to notices issued under section 153A as involved in six out of seven years under consideration i.e., A.Ys. 2006-07 to 2011-12, the Ld. Counsel for the assessee has relied on the decision of the Mumbai Bench of this Tribunal in the case of DCIT vs. Eversmile Construction Co. P. Ltd., (supra), wherein while dealing with a similar issue, the main features of the relevant provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total income has to be done afresh without any reference to what was done in the original assessment. Of course, the AO is entitled to make any addition in the fresh assessment, which he made in the original assessment, provided he is satisfied with the merits of the addition. But the mere fact that there was some addition in the original assessment, would not preclude the assessee from Contesting the addition in the subsequent proceedings. As it is going to be a fresh exercise of framing assessment or reassessment of the total income at the end of the AO, the assessee cannot be stopped from not even arguing about the merits of his case qua the addition which was made in the original assessment. Debarring the assessee from making a claim about the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income. 8. The reliance of the learned Departmental Representative on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd [ (1992) 198 ITR 297 (SC)] is misconceived. The reason for the same is that in that case the Hon'ble Supreme Court was considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered powerless to even lodge a claim in respect of which deduction was not allowed earlier. In the said case before the Tribunal, reliance was placed by the learned D.R. in support of Revenue's stand on the decision of Hon'ble Supreme Court in the case of Sun Engineering (supra) as in the present case, but the same was found to be misconceived by the Tribunal for the reasons given in paragraph No.8 of its order which are already extracted above. 4. Besides the decision of Hon'ble Supreme Court in the case of Sun Engineering (supra), the A.O. has relied upon the decision of Hon'ble Rajasthan High Court in the case of Jai Steel (India) vs. ACIT (supra) to hold that assessee is not entitled to claim deduction under section 80IA for the first time in the returns filed in response to notice issued under section 153A for the relevant six years i.e., A.Ys. 2006-07 to 2011-12. The Ld. CIT(A) has also relied on the said decision of Hon'ble Rajasthan High Court to uphold the decision of the A.O. on this issue in so far as the A.Ys. 2006-07 to 2008-09 are concerned where the original assessments under section 143(3) had already been completed prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 153A when the original assessment had already been completed by observing that if the same is taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the Ld. CIT(A), ITAT and the High Court, on a notice issued under section 153A of the Act, the A.O. would have power to un-do what has been concluded up to the High Court. It was held that any interpretation which leads to such conclusion has to be repelled and/or avoided. It is pertinent to note here that when any new claim is made by the assessee for deduction in response to the notice under section 153A which was not made in the original assessment proceedings as in the present case, the situation as contemplated by the Hon'ble Rajasthan High Court would not arise at all as there is no occasion in such case for the A.O. to un-do something which has been concluded up to the High Court as the assessee having not made any such claim during the course of original proceedings, there would not be any conclusion arrived at on the said issue even up to the High Court level arising from the original assessment proceedings. In our opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the notice, the return of income in respect of each assessment year falling within six assessment years in the prescribed form and verified in the prescribed manner and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. It was held by the Tribunal that it is because of this provision of law stated in section 153A(1)(a) that a statutory presumption is made that a return filed under section 153Ais a return required to be filed under section 139(1) of the Act. The Tribunal also took note of the non- obstante clause contained in section 153A and held that said provision over-rides all other provisions stated in the Act in matters of filing of return of income consequent to a search and therefore, the return filed in pursuance of notice issued under section 153A is as good as a return filed under section 139(1). It was also held that where an assessee has filed its return of income as prescribed by law, even if as a consequence of search carried out under section 132 and in consequence of notice issued under section 153A, the assessee is obviously entitled for claiming corresponding deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on ground referable to belated filing of return, that is to say, returns filed beyond the period stipulated under section 139(1) or section 139 (4), as the case may be, as well as section 142 (1) or section 148, as the case may be. There are no cases among these appeals where returns were not filed. There are cases where claims have been made along with the returns and the returns were filed within time. Still further, there are cases where returns were filed belatedly, that is to say, beyond the period stipulated under subsection 1 or 4 of section 139; and, there are also returns filed after the period with reference to sections 142(1) and 148 of the IT Act. 19. Section 80A(5) provides that where the assessee any deduction, inter alia, under any provision of Chapter VIA under the heading C.-Deductions in respect of certain incomes , no deduction shall be allowed to him thereunder. Therefore, in cases where no returns have been filed for a particular assessment year, no deductions shall be allowed. This embargo in section 80A(5) would apply, though section 80P is not included in section 80AC. This is so because, the inhibition against allowing deduction is wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under section 80P of the IT Act. We thus answer substantial questions of law B and C formulated and enumerated above. 20. ITAT Ahmedabad Bench in the case of Parmeshwar Cold Storage (P) Ltd vs. ACIT has held that, for claiming deduction u/s 80IB, only condition is that the original return should be filed in time. 21. In the case of CIT vs. Mahalakshmi Rice Factory (2007) 294 ITR 631 (P H), the Hon'ble Punjab Haryana High Court has held that to claim deduction u/s 80IA, it would be sufficient if the audit report is filed during the course of or before completion of the assessment proceedings. 22. We find that these decisions were followed by the CIT (A) to consider the assessee s claim of deduction u/s 80IA of the Act in the revised return filed in response to notice u/s 153A of the Act and that such a claim can be entertained. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ITA Nos. 1408 to 1411/H/17 in the case of B. Narsimha Reddy, ITA Nos. 1399 to 1402/H/17 in the case of Sushi Udyog Constructions Co., ITA Nos. 1405 1406/H/17 in the case of S. Janardhan Reddy, and 1397 1398/H/17 in the case of Prasad Reddy Co. and 1394 to 1396/H/17 in the case of A. Chandrakanth - All these appeals are filed by assessees. 23. The only issue of addition in all the AYs 2008-09 to 2011-12 is estimation of income on protective basis @ 12.5% on the alleged sub-contract receipts by the AO. Against the above, the revenue is in appeal objecting for the deletion of estimation and CIT(A) should have treated the addition as commission even if it is not treated the revenue from Sub Contract. Similarly, Assessees (Sub contractors) in appeal pressing that their revenue is out of sub contract business only and the income declared by them should be accepted as income from sub contract business. 23.1 In the case of M/s Prasad Reddy Co, the assessee has filed its original return of income on 28.10.2007, and subsequently, the assessment was also completed u/s 143(3) on 26.11.2009 and accepted the return of income filed by the assessee. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the said section that there should have been some material relating to the assessee at the preMIses of Sai Sudhir Infrastructures Ltd No such information was found or no such information was referred to in the assessment order. Therefore, the assessee submits that the Assessing Officer has no jurisdiction to issue a notice u/s 153C of the I T. Act The Ahmedabad Bench of the ITAT in the case of A CIT Vs Gamhhir Silk Mills reported in 61 ITR (Trib.) 376 held that where no material was found during the course of search and seizure operations, the AO could not assume jurisdiction for framing the assessment u/s 153C of the Actg. It was, therefore, submitted that the initiation of proceedings u/s 153C of the Act is not valid. 25. The CIT(A), after considering the submissions of the assessee, observed that the assessee claims to be a sub-contractor for M/s Sai Sudheer Infrastructure Ltd. He noted that in the case of MIs Saisudhir Infrastructures Ltd., while adjudicating the grounds relating to non-genuine expenditure claimed by the company, it was held in a common order dated 30/03/2017 for AYs 2006-07 to 2012-13, that the expenditure claimed in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to the transactions that took place between the assessee and M/s Sai Sudhir Infrastructures Limited were found and seized. Subsequently, notice u/s 153C was issued to the assessee to file the Returns of Income. But the assessee did not file the Returns of Income. Hence, the Assessing Officer has issued a show cause notice to the assessee proposing to complete the assessments estimating income @ 12.5% on the works apparently executed each year. The Assessing Officer noticed that the turnover of the assessee exceeded the specified limit of ₹ 40 lakhs (AY 2008-09: ₹ 9,81,23,862/-; AY 2009-10 : ₹ 7,06,14,926/-; AY 2010-11: ₹ 12,71,23,160/-). In AY 2011-12 also the specified limit of ₹ 60 lakhs was exceeded as a result of the turnover of ₹ 11,22,38,997/- noticed. As per the provisions of section 44AB of the Act, the assessee is statutorily required to get his accounts audited by a duly qualified accountant for these years. The Assessing Officer completed the assessment by estimating the income on a protective basis @ 12.5% for the assessment years under consideration. A show cause notice was also issued to the assessee as to why penalty shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was under the bonafide impression that the return of income need not be filed u/s. 139(1) of the I. T. Act. The Assessing Officer issued notice u/s. 153C of the IT Act and by then the return of income along with the audit report was available before the Assessing Officer. It is submitted that once notice u/s. 153C was issued, the earlier proceeding got abetted and no penalty proceedings can be initiated for the delay in filing the audit report along with the return of income. However, such audit report was available with the Assessing Officer at the time of initiation of proceedings u/s. 153C and, therefore, the Assessing Officer cannot hold that audit report was not available with him at the time of compliance of assessment proceedings. 31.1 Further, it was submitted that the assessee had audited its accounts vide certificates in Form 3CB and Form 3CD dated 25-09-2008 (AY 2008-09), 25-09-2009 (AY 2009-10) and 20-09-2010 (AY 2010-11). It was further submitted that these tax audit reports were furnished before the Assessing Officer in returns of income filed on 15/09/2011 for AY 2008-09 and AY 2009-10, and on 30/06/2011 for AY 2010-11. Copies of Return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income. In view of this factual position, the requirements of section 44AB cannot be seen as being fully complied with. It is also not the case of the assessee that though belated, the Assessing Officer had the benefit of perusing the report in question, and therefore, the delay is a mere technicality. The provisions of section HAB do not envisage part compliance. On facts, therefore, It has to be held that even if the purported tax audit did take place by the prescribed date, it cannot be seen as having been furnished before the Assessing officer by the prescribed date, as required for the purposes of section 44AB. Being so, the penalty provisions under 271B are validly invoked, and the order of penalty dated 12.03.2014 does not call for any interference. 7.1 In A.Y.2011-12 it is stated that no proper books of account were maintained because of which it was not possible to get a tax audit conducted. In the decision reported at 58 SOT 264 relied upon by the Assessee, books of account were never maintained by the assessee because of which it was not possible to insist upon an audit of such books. In this connection, it is noticed that it has been the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied by the Assessing Officer. 3) The learned CIT(A) ought to have considered the fact that the assessee filed the audit report along with the return of income filed on 15.9.2011 and the same was available with the department. 4) The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that by the time the notice u/s 153C was issued by the Assessing officer, the audit report for the year under consideration was available with the department. 5) The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that there is no such default of non filing of audit report while completing the assessment u/s 144 r.w.s. 153C of the I.T. Act and that the penalty proceedings were initiated during the assessment proceedings u/s 153C of the I.T. Act. 6) Any other ground that may be urged at the time of hearing. 34. Considered the rival submissions and perused the material on record. We notice that the assessee filed the return of income belatedly but before the search proceedings for the assessment years under consideration AY 2008-09, AY 2009-10 and AY ..... X X X X Extracts X X X X X X X X Extracts X X X X
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