TMI Blog2023 (4) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... by ld. AO on this account with the finding that that ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated but the same was not done by ld. AO - HELD THAT:- In order to disallow expenses, rather than making a bald assertion without any enquiry to assail the so called exaggerated expenses of the assessee, ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated. However, no independent third-party enquiries were conducted by ld. AO and no comparisons were made by ld. AO. In the absence of relevant enquiries and relevant comparisons, no part of the expense claimed by the Appellant could have been treated as exaggerated expense' or not reasonable expense . The onus is on the Revenue to establish that the expenses claimed by the assessee has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns filed pursuant to section 153A of the Act when the same has not been claimed in original returns u/s 139? - HELD THAT:- In the instant case, since the Returns of Income filed u/s 153A(1) of the Act for the impugned assessment years substituted the original Returns filed u/s 139(1) of the Act, the said Returns u/s 153A(1) of the Act would be construed as the one filed u/s 139(1) of the Act and as specifically laid down u/s 153A(1)(a) of the Act, all the provisions of the Act [including Chapter VI-A and the impugned deduction u/s 80IA(4) of the Act] would apply to such Returns u/s 153A of the Act and the assessments u/s 153A of the Act framed pursuant thereto. We are, thus, of the considered view that the assessee in the instant case was entitled to all legitimate claims of deduction, including its claim u/s 80IA(4) of the Act, in its Returns filed pursuant to Notices issued u/s 153A for the impugned A.Ys although the same were not claimed in its original Returns u/s 139 of the Act. Assessee in the instant case was very well within its rights to claim deductions u/s 80IA(4) of the Act in its Returns filed in compliance to Notices issued u/s 153A of the Act in respect of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore this Tribunal in ITA No. 43/GTY/2022 raising the following grounds: 1. That on the facts and in the circumstances of the cases, the Ld. C.I.T. (A) acted illegally in disallowing and adding back to the total income of the appellant, the cost of material consumed on estimate basis amounting to Rs. 2,15,53,154/- being 0.64% of the Gross receipts of the appellant for the AY 2014-15 of Rs 3,36,76,80,365/- 2. That the Ld. CIT(A) wholly erred in appreciating the fact that the accounts of the appellant have been duly audited by a qualified auditor u/s 44AB of the Act and therefore the disallowance made amounting to Rs. 2,15,53,154/- on estimate basis without specifying the exact bills is totally incorrect and uncalled for. 3. That the Ld. CIT (A) wholly erred in appreciating the fact that the appellant year after year, assessed under section 143(3) of the Act and no such additions (estimated addition) was made in the case of the appellant for any of the preceding or subsequent assessment year. 4. That the appellant craves leaves to amend, alter, modify, add to, abridge and/or rescind any or all of the above grounds in future. 4. The Revenue is in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. Assessment was completed vide order u/s 143(3) of the Act dated 30.12.2016 and Income assessed by the ld. AO at Rs. 33,38,89,830/- inter alia making following additions: 1. Cost of material consumed @ 5% of Rs. 1,91,65,43,6828/- Rs. 9,58,27,184/- 2. Vehicle running expense: Rs. 84,89,594/- 3. Repair and Maintenance Rs. 1,79,36,625/- 4. Additional depreciation amounting to Rs. 3,23,72,494/- 5. Deduction amounting to Rs. 78,01,892/- 6. Disallowance u/s 14A Rs. 3,05,471/- 6. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. Ld. CIT(A) granted part relief by partly sustaining the disallowance of cost of material consumed at Rs. 2,15,53,154/- and deleted the following additions made by the ld. AO: Vehicle running expense: Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, then he has power to reject the books and complete the assessment accordingly. But non-rejection of books of accounts by ld. AO clearly shows that the books of accounts in the case of the assessee as per the opinion of ld. AO are genuine and correct. 12. Ld. Counsel for the assessee submitted that the assessee was conducting its business at more than 25 sites and multiple branch offices and the vouchers and bills were kept at different sites and branch offices where the relevant expenses were incurred and the assessee s books and records are very voluminous in nature and bills and vouchers are more than lakhs in number. The assessee year after year is assessed u/s 143(3) of the Act and such type of additions of disallowing expenses on estimated basis was never made in the case of the assessee for any of the preceding or subsequent assessment year. The books of accounts of the assessee are regularly audited under the provisions of the Companies Act, 2013 and tax audit has also been carried out in accordance with the provisions contained u/s 44AB of the Act. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 2,73,21,11,988.00 14. Ld. Counsel for the assessee submitted that the assessee had made due compliances to all the notices and provided the required details. As regards the cost of materials consumed amounting to Rs.1,91,65,43,682/-, the breakup of the same is as under: Particulars Amount (Rs.) Opening stock 14,33,30,441.40 Less: Purchases (as per tally) 1,73,44,011.87 Less: Discount Received 20,62,941.40 Activity at site 1,91,86,06,623.29 Closing stock 12,59,86,429.53 Total 1,91,65,43,681.89 15. In regard to the above, ld. Counsel for the assessee submitted that the assessee is engaged in the construction business undertaking infrastructure projects on turnkey basis from Govt. Department/Govt. Agencies. The nature of business is quite different from trading concern and manufacturing concern. The cost centres a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce (TDS) but no addresses were given for verification of the genuineness of those payments. In this regard, from a very perusal of the aforesaid observation of ld. AO, it is clear that the assessee has made payments to Tribal workers. Being tribal worker, it is obvious that the income of such tribal people would have been exempt by virtue of the provisions of Section 10(26) of the Act and thus, in the absence of any tax liability of such Tribal People, it would be a fruitless exercise to first deduct TDS on payments to such Tribal People and thereafter requiring these Persons to furnish their Returns of Income to claim refund of the TDS. 17. We also take note that ld. CIT(A) has recorded the following finding in the impugned order partly sustaining the estimated disallowances: It is yet further noted that the Assessing Officer had also averred that the Appellant had not furnished party-wise details and their addresses (of the parties to whom payments claimed under the expense head Other Expenses were made), as a result of which the genuineness and reasonableness of the claim of expense could not be established. In this regard, it is noted from a perusal of the impugned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act, year after year. In the instant case, without rejection of the Books of Accounts, without identification of any specific defects, without placing on record facts of any other comparable case, it is not proper to make an estimated disallowance. It is noted from a perusal of the impugned Assessment Order as well as from the Submissions of the Appellant that the corresponding ledger accounts of all the above expenses were furnished by the Appellant during the course of assessment proceedings. It is further noted that Books of Accounts of the Appellant have been audited by a Chartered Accountant under the Companies Act, 2013 as well as under the provisions of Section 44AB of the Income Tax Act, 1961. It is an admitted fact that the Assessing Officer has not pointed out any specific discrepancies in the audited Books of Accounts of the Appellant and disallowed the above expenses merely on the basis of conjectures and surmises. It is further noted that the above disallowance is more on the basis of suspicion i.e. purported attempt of the Appellant to suppress its profit than on the basis of any tangible evidence or purported deficiency. It is noted that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer cannot estimate the profits of the Appellant without rejecting the Books of Accounts. For these reasons alone the impugned disallowance warrants deletion. 18. After going through the finding of ld. CIT(A) and examining the facts of the case we found that the only reason for disallowance is that the reasonableness and genuineness of the expenses could not be ascertained due to non-submission of party wise details and their addresses. Ld. AO has neither rejected books of accounts, nor has recorded any valid reasons for alleging that the expenses are not reasonable and genuine. The books of accounts of the assessee are audited under Companies Act and Income Tax Audit and all books of accounts and all supporting documents are subject to test check. It has been consisted held by Hon ble Courts that assessment cannot be made simply on the guesswork. Reliance in this regard is placed on the decision of Calcutta High Court in the case of Chevoit Co. Ltd. vs. Commissioner of Income-tax, West Bengal-VI, Calcutta [[2011] 11 taxmann.com 276 (Calcutta)[25-04-2011]]. 19. We also notice that the ld. Counsel for the assessee during the course of argument has contended that ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. 4. It was observed by Hon ble Court in case of Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Guwahati) that additions to the profits of the assessee made solely on the ground that it was low without giving a specific finding that the accounts of the assessee were not correct and complete, or that the income could not be properly determined and deduced from the accounting method employed by the assessee, is not justified. The mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition. 5. In case of Income-tax Officer v. Oswal Emporium [1989] 30 ITD 241 (Delhi) (TM)/[1989] 35 TTJ 225 (Delhi) (TM)[03-05-1989], the Delhi Tribunal held that addition made on account of profit margin because assessee s gross profits in relevant assessment year were marginally less as compared to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Order of which is reproduced hereunder for reference: There are discrepancies which are claimed twice or shown differently, as below a. Vehicle running expenses Rs. 84, 89,594 and Rs. 1, 79, 36,625. b. Machinery repair and maintenance Rs. 5,71,21,796 and 1,86,95,467 c. Sub- contract expenses Rs. 44,38,17,132 and Rs. 18,25,36,116/- d. Contract Operation and Execution Expenses Rs. 69, 62, 07,198/- and again claimed under different heads in the name of the projects under Material Consumed . As these expenses are not found to be reasonable, the assessee was asked to show cause as to why a considerable amount should not be added back to its income as unexplained expenditure. 23. In this regard, during the course of the assessment proceedings, the assessee had furnished the copies of the corresponding ledger accounts. The assessee had also explained to ld. AO that, owing to multiple sites especially in remote areas of North-Eastern India and owing to lack of competent staff at such sites, there is no uniformity in various accounting heads. The assessee had further explained that owing to the aforesaid reasons, some accounting heads for similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n perusal of the assessment order we observe that ld. AO has not pointed out any instance of claim of expense twice. Ld. AO has also not given any proper finding in respect of the claim made by the assessee on this account. The assessee has duly furnished ledger copies of the aforesaid expenses before him and also explained with the reason why such expenses were appearing twice in the accounts. However, no such finding is on record which could adduce the claim of the Revenue that any of the transaction in respect of the aforesaid expenses in the books of accounts are recorded twice by the assessee. 29. We also note that ld. AO has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Running Maintenance Expense of Rs. 84,89,594/- of Rs. 1,79,36,625/- and pertaining to the Machinery Repair Maintenance Expense of Rs. 5,71,21,796/- of Rs. 1,86,95,467/-) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Ld. AO failed to consider the fact that the Books of Accounts of the assessee are duly audited not only under the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an what it might have incurred for same work at a place which is geographically situated. However, there is no observation of the ld. AO that the impugned expenses were not incurred by the assessee for the purpose of its business. In order to disallow expenses, rather than making a bald assertion without any enquiry to assail the so called exaggerated expenses of the assessee, ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated. However, no independent third-party enquiries were conducted by ld. AO and no comparisons were made by ld. AO. In the absence of relevant enquiries and relevant comparisons, no part of the expense claimed by the Appellant could have been treated as exaggerated expense' or not reasonable expense . 31. Further, since the said appeal is a Revenue appeal and so it is upon the Revenue to bring evidence on record to show that the expenses have been inflated or exaggerated by booking it twice in the books of accounts. The assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery disclosed under the Block 30%, came to a conclusion that that the assets stated to be under 30% block are actually eligible for depreciation @ 15%. Ld. AO observed that since these plant and machinery which mostly consists motor vehicles are eligible for depreciation @ 15% as per IT Act, 1961 and therefore, claim of 30% is not allowable and thus, he made a disallowance of Rs. 3,23,72,494/-. Ld. AO further, observed that in its return of income, the assessee has not declared the purported claim of Additional Depreciation . In reply assessee submitted that, the assessee is engaged in the business of Construction in various places in India particularly in North-Eastern Region and since construction work is normally carried on in hilly terrain, the wear and tear to vehicle in such region is higher. Further, since all these heavy vehicles are not used by the assessee for substantial part of the year and therefore, the assessee gives such vehicle on hire to other contractors carrying civil construction work in nearby places and the assessee earns more income. It was also submitted that some of the heavy vehicles including tippers are exclusively given by the assessee on hire. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been clearly mentioned that the case has been selected under CASS for Limited Scrutiny. However, the issues are not defined in the notice u/s 143(2) of the Act. Thereafter, ld. Counsel for the assessee referred to the notice u/s 142(1) of the Act dated 22.04.2016 wherein ld. AO had issued several questionnaires. It is the submission of the assessee that ld. AO cannot travel beyond the issue as specified in the notice u/s 142(1) of the Act read with notice u/s 143(2) of the Act as the case of the assessee is selected in Limited Scrutiny. 38. Further, whether the issue regarding disallowance of depreciation was part of Limited Scrutiny or not, ld. CIT(A) has directed ld. AO to give a specific finding on this issue at the time of passing the order giving effect to the order of the undersigned in the instant appeal. However, since the said issue stands already adjudicated and decided by this Tribunal in the case of the assessee in order passed in ITA No. 269/Kol/2018 dated 29.03.2019, therefore, whether the said issue was part of limited scrutiny or not becomes irrelevant. Hence, the direction by ld. CIT(A) to give specific finding on this issue with scope of the limited scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)-16,Kolkata Yes Allowed on Merits 2008-09 30-03-2016 143(3)/147 4 20,24,680 27.07.2022 CIT(A), Guwahati Yes Allowed 2009-10 30-06-2014 143(3)/263 3.3 21,73,214 20-07-2016 CIT(A)-16,Kolkata Yes Allowed on Merits 2010-11 27-12-2016 143(3)/147 3 85,17,966 03-11-2017 CIT(A)-8,Kolkata Yes Allowed on Merits 2011-12 27-12-2016 143(3)/147 3 1,44,44,778 14-03-2018 CIT(A)-5,Kolkata Yes Allowed on Merits 2012-13 31-03-2015 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41. Thus, from the aforesaid table, it is seen that in all the aforesaid years the Department filed an appeal before Coordinate Bench, Kolkata against the relief granted by ld. CIT(A) on account of excess depreciation allowed. Except for AYs. 2010-11 and 2012-13, in all the years appeal was dismissed by the Tribunal as the tax effect of appeal in all the years was below limit. The finding of the Tribunal adjudicating the issue of excess depreciation in the case of the assessee in ITA No. 269/Kol/2018 dated 29.03.2019 (order enclosed at page 1143 to 1151 of the paperbook) is reproduced below: i) Ground No. 1: The ld. CIT(A) erred in deleting the disallowance of depreciation of Rs. 85,17,966/-(being the difference of depreciation claimed by assessee @30% and allowance of depreciation by the Assessing Officer @ 15% on the vehicles). 3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs. 85,17,966/-. 5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on such vehicles at 30%. All the heavy vehicles are not used by the assessee company for substantial part of the year and therefore, it gives such vehicles on hire to other contractors carrying construction work in nearby places to earn more income. Some of the heavy vehicles including tippers are exclusively given on hire. However, the Assessing Officer rejected the contention of the assessee and made the addition to the tune of Rs. 85,17,966/- being the difference between 30% and 15% of depreciation rates. 7. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us. 8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: We are aware of the fact that, strictly speaking, res judicata does not apply to income `tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olving proceedings u/s 143(3)) of the Income Tax Act, 1961; in short 'the Act'. Heard both the parties. Case file(s) perused. 2. For the reasons stated Revenue's petition 21.05.2017 seeking condonation of thirteen days' delay and assessee's no objection thereto, we condone the impugned delay attributable to various procedural formalities and compilation of records. The case is now taken up for adjudication on merits. 3. The Revenue's first substantive grievance reads that the CIT(A) has erred in law and on facts in deleting depreciation disallowance of ₹84,86,809/- made by the Assessing Officer in assessment order dated 31.03.2015. The assessee's depreciation claim was on its commercial depreciation @ 30% on hire and other vehicles which stood restricted to 15% only during the course of assessment. The CIT(A)'s detailed discussion deleting the impugned depreciation disallowance reads as under:- Ground No.3 is regarding disallowance of depreciation at the rate of 30% to the extent of Rs.8486809/- claimed by the assessee. The basic facts are that the assessee is carrying on the business of civil construction in the North East ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts. Secondly, regarding hire charges, the A/R of the assessee has submitted that the AO had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The A/R of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the AO. This method of accounting has been followed by the AO in previous year and no doubt were raised by the AO even in scrutiny assessment. In this connection reference may be made to the decision of the Apex Court in CIT vs. Excel Industries 358 ITR 295, where the court reiterated that the principal of consistency should be followed. The AO could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle tougher rate of depreciation. The Assessing Officer's contention, that the explanation given by the A/R of the assessee, is an after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.1,70,28,233/- @ 30%. The allowable depreciation rate as per assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs.3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/ is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over- claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases. 10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in areas including North East. The assessee had made the same claim in assessment year 2009- 10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the assessee under consideration. 11. We note that the A.O. could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision of the Punjab Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P J). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs.85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Rule 8D of the Income Tax Rules, 1962 cannot exceed the exempt income i.e. Rs. 11,600/-. He accordingly restricted the disallowance to the extent of exempt income earned by the assessee. 46. Aggrieved, the Revenue is now in appeal before this Tribunal. Ld. D/R relied on the finding of ld. AO and ld. Counsel for the assessee supported the finding of ld. CIT(A). 47. We have heard rival contentions and perused the records placed before us. Disallowance u/s.14A of the Act is in dispute before us. We find that the exempt income earned by the assessee during the year is Rs. 11600/- and the same is suo moto disallowed by the assessee. We also find that this issue is no more res-integra as the Hon ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dated 20.07.2022, has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Since the assessee has earned exempt income of Rs.11,600/- during the year therefore, we deem it fit to restrict the disallowance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as per the following details: AYs. Date of filing return Amount disclosed in Return (Rs.) 2017-18 31.10.2017 21,63,53,010/- 2018-19 31.10.2018 29,14,82,150/- 2019-20 31.10.2019 61,80,49,170/- (post search which took place on 20.09.2019) 53. Subsequently, a search and seizure operation u/s 132(1) of the Act was conducted at the registered office of the assessee at Knowledge Hub, DN 23, 2nd floor, Sector V, Salt Lake, Kolkata - 700 091, at its Corporate Office at Club Road, Silchar - 788 001 as well as at various branch offices of the assessee at Guwahati, Delhi Aizawl etc. on 20.09.2019. The search and seizure operation was finally concluded on 18.11.2019. Statedly, during the course of the search, no unaccounted cash, jewellery or any unaccounted/undisclosed asset was found or seized by the Search Team from the assessee. Prior to the search, the assessee was regularly assessed to income-tax at Kolkata. Consequent to the search and seizure operation, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,03,35,25,768 33,92,20,310 Yes 69,43,05,460 153A 13/02/2021 55. While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the impugned A.Ys, the assessee filed the corresponding forms (being Report of Audit of the Eligible Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021). In course of the search assessment proceedings, ld. AO raised various issues regarding the fresh claim of deduction made by the assessee u/s 80IA(4)(i) of the Act in the Returns of Income filed in compliance to Notices issued u/s 153A of the Act and finally passed the impugned Assessment Orders dated 29.09.2021 u/s 153A/143(3) of the Act disallowing the assessee s claim u/s 80IA(4)(i) of the Act. [as per the details in Table 3 (supra)] for each of the impugned assessment years. The reasons cited in the Assessment Orders u/s 153A/143(3) of the Act for disallowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Infrastructural Facilities and the Assessee had developed Infrastructure like Roads, Railway Bridges, Railway Tunnels etc. The Assessee also placed reliance on the Orders of Hon ble ITAT Kolkata passed in the case of the Assessee for the AY 2003-04 to AY 2006-07 as well as on the other Orders passed by the Hon ble ITAT Kolkata and the Hon ble Courts and other Hon ble Benches of the ITAT. The Assessee also referred to the Contract Agreements filed by the Assessee before the A.O and stated that merely because TDS was being deducted in respect of the Contract Revenue received by the Assessee, the Assessee could not be treated as a Works Contractor . Detailed explanations in this regard were filed by the Assessee along with supporting case laws on the subject. 58. Ld. CIT(A), after considering the submissions filed by both the sides, the various provisions of the Income-tax Act, 1961 and the relevant case-laws on the impugned subject, passed an elaborate Order u/s 250 of the Act dated 27.07.2022 running into 1017 pages allowing the deduction claimed u/s.80IA of the Act and the crux of his finding is summarized as under: (i) That, in respect of an assessment year whose pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 4,34,49,829 2018-19 35,43,62,432 35,43,62,432 - 35,43,62,432 2019-20 33,71,04,495 33,71,04,495 12,78,15,656 (two projects commenced after 04.04.2017, therefore no deduction allowed) 20,92,88,839 60. The above Order dated 27.07.2022 passed by ld. CIT(A) u/s 250 of the Act in respect of AYs 2017-18, 2018-19 and 2019-20 constitutes the subject matter of the impugned appeals filed by the Department before us. On a perusal of the grounds of appeal urged by the Department (reproduced in earlier part of this Order), it is seen that the Department has challenged the impugned order of ld. CIT(A) only qua his findings on following two issues: (i) That the Ld. CIT(A) erred in accepting the fresh claims of deduction u/s 80IA(4) made in Returns of Income furnished by the Assessee in response to Notice u/s 153A although such claim had not been made in original Return of Income furnished u/s 139 resulting in paradoxical situation whereby being a sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act to these projects. Hence, ld. CIT(A) s findings on the above are left undisturbed. In the above backdrop, the grounds of appeal urged by the Department are decided. 64. Ground nos. 1 3 of the departmental appeal challenges the deletion of disallowance of fresh deductions claimed by the assessee u/s 80IA of the Act in returns filed pursuant to notice issued u/s 153A of the Act. 65. The relevant grounds are reiterated hereunder: 1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 but which claim has been made in the return for assessment of search case furnished consequent to notice u/s 153A, thus thereby arriving at paradoxical result that being a search case the assessee had derived more benefit which was not claimed in the original return furnished u/s 139. 3) The Ld. CIT(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA. 66. As stated above, in the instant case, the dispute in the impugned appeal revolves around the fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost one and a half years after the search was conducted on the Assessee was an after thought and mischief on the part of the Assessee to take wrongful advantage of opportunity to e-file return u/s 153A. (iii) That, if the Assessee was allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier in the original return, then it would mean that even in cases where the appeal arising out of the completed assessment had been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O. would have the power to undo what had been concluded up to the High Court. (iv) That, the decisions of the Hon ble Kolkata ITAT in the Assessee s own case for AYs 2005-06 and 2006-07 were based on significantly different facts inasmuch as in those cases, the Assessee had claimed deduction u/s 80-IA in the original return of income whereas, in the present case for the impugned years, the Assessee had not claimed deduction u/s 80-IA in its original return of income. (v) That, for the A.Y. 2017-18, the Assessee e-filed the original return of income on 31.10.2017. The ITAT order in respect of A.Ys 2005-06 and 2006-07 were passed during December 2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed 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; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years] : Provided that the Assessing Officer shall assess or reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , loans and advances, deposits in bank account. (2) If any proceedings initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceedings, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner. Provided that such revival shall cease to have effect if such order of annulment is set aside. Explanation- For removal of doubts, it is hereby declared that (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 71. Firstly, analysing the provisions of Section 153A of the Act, ld. CIT(A) in his appellate order for the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eprobate simultaneously. (viii) That, while completing assessment u/s 153A, ALL provisions (including provisions of Chapter VI-A etc.) of the Act, so far as may be , are applicable to the proceedings u/s 153A of the Act. The words so far as may be has been used to restrict the applicability of those provisions which are inconsistent with the provisions of section 153A. Meaning thereby that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A) will apply to a Return filed u/s 153A. (ix) That, unlike the erstwhile provisions of section 158BC which contained a clear embargo on filing the revised return, current provisions of section 153Ado not contain any specific restriction. Rather, the current provisions are drafted in a way so as to align with the provisions contained in section 139 provided, they are not inconsistent with the provisions of section 153A. Thus, in the absence of specific restriction u/s 153A, it will be wrong to hold that the Assessee will be barred from filing even a revised return assuming he satisfies the conditions for filing such revised returns. (x) That, from a perusal of the Explanation to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assess or reassess the income strictly based on incriminating material found during the course of search or requisition. (xv) That, however, the total income for such AYs (i.e., where the Assessments were pending i.e. where the Assessments had abated) will have to be computed by the A.O as a fresh exercise. Thus, in abated Assessments, the A.O retains the Original Jurisdiction as well as the Jurisdiction conferred on him u/s 153A. In order words, in case of abated assessments, the jurisdiction to make the original assessment and the assessment u/s 153A merges into one. 72. Ld. CIT(A), has thereafter gone on to demonstrate that the pending assessments for the impugned AYs 2017-18, 2018-19 2019-20 had abated in terms of Section 153A of the Act in the manner as follows: TABLE-5 AY Date of filing the Original ITR Section under which the Original was ITR filed Date on which the Time limit as per the Proviso to Section 143(2) expired Whether on the Date of search any assessment was pending? (Yes/No) Section of the Notice by virtue of which assessment was pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have furnished any Income Tax Act, 1961 in respect of the Assessment Year 2020-21 (relevant to the financial year 2019-20 during which the Search was conducted) since the relevant Financial Year had not expired and therefore the assessment proceedings for the aforesaid Assessment Year (i.e. AY 2020-21) were the Original/Regular Assessment Proceedings and could be said to pending. 74. Ld. CIT(A) (at pages 223 to 233 of his Order) has also taken note of the fact that the ld. AO, vide letter no. 88 dated 07.07.2022 had admitted that the original/regular assessment proceedings initiated u/s 143(3) of the Act for AYs 2017-18 2018-19 had abated and further for AY 2019-20, since the Income-tax Returns had not been furnished till the date of search (since the due date as referred to in section 139(1) of the Act had not expired), therefore, the assessment proceedings for AY 2019-20 were also pending (i.e., were abated assessment). Based on the above, ld. CIT(A) has concluded that on the date of assuming jurisdiction u/s 153A of the Act, the prior pending assessments on the basis of original returns filed u/s 139 of the Act for AYs 2017-18, 2018-19 and 2019-20 got abated. 75. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd C.O. NO. 215/DEL/2016, order dated 06/06/2018] - ITAT DELHI (ix) A. Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - TA.No.975/Hyd/2015, order dated 19/08/2016] - ITAT Hyderabad 77. Next, ld. CIT(A) has placed reliance on the following judgments which are directly relevant to the issue at hand, wherein the Hon ble Courts have opined and held that fresh claim of deduction u/s 80IA of the Act can be made in Returns of Income filed in response to notice u/s 153A of the Act although the same was not made in the original Return of Income filed u/s 139 of the Act: (i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956 - Income Tax Appeal No. 29 of 2016, judgment dated 12/07/2017] - Allahabad High Court - SLP filed by the Department against the aforesaid Judgment of the Hon ble Allahabad High Court was dismissed by the Hon ble Supreme Court of India [SLP (Civil) Diary No. 10863 of 2018, order Dated 13/04/2018] (ii) DCIT vs. MBL Infrastructure Limited [2020 (1) TMI 457 - ITAT KOLKATA; IT(SS) No.77/Kol/2016 C.O No.22/Kol/2019 IT(SS) No.78/Kol/2016 IT(SS) No.46/Kol/ 2016, order dated 23/12/2019] Kolkata ITAT (iii) DCIT vs. Megha Engineering Infrastru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961, an assessee was entitled to make Fresh/ New/ Revised Claim in the aforesaid Returns (i.e. under Section 153A), notwithstanding that the aforesaid claims were not made by the assessee in earlier income tax returns filed prior to /after the Search. 80. Ld. CIT(A) has also opined (at page 367 of his order) that even if the assessee, at the time of filing the Returns of Income u/s 139(1) of the Act was under a mistaken belief that he was not entitled to the said deductions under Section 80IA of the Act and, subsequently, on a re-think or on legal advice came to believe that he was actually entitled to the said deductions, the deductions permissible to the assessee would depend on the provisions of Law and not on the view which the assessee might have taken of his rights to be entitled to such deductions. Similarly, looking from the stand point of ld. AO, the deductions permissible to the assessee would again depend on the provisions of Law and not on the view or the interpretation which ld. AO might have taken of the rights of the assessee to avail of such deductions. Ld. CIT(A) has relied upon the following judgments in support of the proposition that cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jai Parbolic Springs Ltd. [(2008) 306 ITR 42 (Del.)] -Delhi High Court (iv) CIT vs. Ramco International [221 CTR 491 (P H)] -Punjab and Haryana High Court (v) CIT vs. Bharat Aluminium Ltd. [303 ITR 256 (Del.)] -Delhi High Court (vi) CIT vs. Jindal Saw Pipes Ltd. [(2010) 328 ITR 338 (Delhi)]- Delhi High Court (vii) Pruthvi Brokers Shareholders Pvt. Ltd. [[(2012) 349 ITR 336 (Bom.); ITA No.3908 of 2010 decided on 21/06/2012] Bombay High Court (referred to at page 927 of the CIT(A) s Order) (viii) Giridharlal Parasmal v. State of Mysore [(1967) 20 STC 64 (Mys)] Mysore High Court (at page 928 of the CIT(A) s order) 82. Referring to Article 265 of the Constitution of India which provides that no tax shall be levied or collected except by the authority of law , ld. CIT(A) (at page 925 of his order) has averred that in terms of Article 265 of the Constitution, tax can be levied only if it is authorized by law. The taxing authority cannot collect or retain a tax that is not authorized. Any retention of tax collected, which is not otherwise payable, will be illegal and unconstitutional. He has relied upon the following case laws in support of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the years under appeal. Vide his written submissions, apropos the impugned grounds of appeal, ld. D/R has further stated as follows: (i) That the Ld. CIT(A) has failed to appreciate that the A.O hasno power to entertain a claimmade by the Assessee otherwise than by filing a revised return the Ld. DR has placed reliance on the judgment of the Hon ble Supreme Court in Goetze (India) Ltd.Vs. CIT (2006) 284 ITR 323 (ii) That, since the Assessee had not filed the return of income within the due date prescribed/s 139(1) of the Act, the right course of action for the Assessee would be to file condonation of delay u/s 119(2)(b) (c) of the Act with the Appropriate Authority for filing of return of income, which was not done. (iii) That the Hon ble Jodhpur ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 had held that the assessments or reassessments made pursuance to notice u/s 153A of the act were not de-novo assessments and therefore no new claim of deduction or allowance could be made by the assessee. (iv) That, in the case of Charchit Agarwal Vs. ACIT [2009] 34 SOT 348 (Del), the Hon ble ITAT, Delhi Bench had held that since the search pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the impugned assessment years, the assessee filed the corresponding forms (being Report of Audit of the Eligible Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021) [this aspect has been dealt with later on in this Order while deciding Ground No. 2]. The details of assessment year-wise Form 10CCB e-filed and the corresponding amount of deduction claimed by the assessee in respect of the corresponding eligible undertakings are tabulated at page 153 of ld. CIT(A) s order. 87. Admittedly, as on the date of search i.e., 20.09.2019, the assessments for the impugned AYs 2017-18, 2018-19 2019-20 were pending on account of the following reasons: (i) A.Y. 2017-18 Assessment proceedings initiated vide Notice u/s 143(2) dated 24.09.2018 (i.e., issued prior to the date of search) were pending. (ii) A.Y. 2018-19 The original return of income had been filed on 31.10.2018 and the time limit for issuance of Notice u/s 143(2) (available up to 30.09.2019) had not expired as on the date of search. Notice u/s 143(2) qua the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined under the Income-tax Act, 1961, the said expression has been judicially explained vis- -vis section 153A of the Act by the Hon ble Courts in the several judgments, few of which are extracted hereunder: (i) Pr. CIT vs. JSW Steel Limited [422 ITR 071; ITA No. 1934 of 2017, judgment dated 05/02/2020], it was held/averred, as follows, by the Hon ble Bombay High Court: 8.3. The second proviso says that any assessment or re-assessment proceedings falling within the said period of six assessment years pending on the date of initiation of search under Section 132 or making of requisition under Section 132-A shall abate. The third proviso mentions that the Central Government may frame rules to specify such class or classes of cases in which the assessing officer shall not be required to issue notice for assessing or re-assessing the total income for the said six assessment years. 8.4. Reverting back to the second proviso what is to be noticed is that as per this proviso, any assessment or re-assessment in respect of any assessment year falling within the said period of six assessment years is pending on the date of initiation of search or making of requisition, thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 31st day of March, 1947 a sum which bears to a sum equal to: (a) in the case of a company, not being a company deemed for the purposesof Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having(i) nor more than two working partners, one lakh of rupees, or (ii) three working partners, one and a half of rupees, or (iii) four or more working partners, two lakh of rupees, or (c) in the case of a Hindu undivided family, two lakhs of rupees, or (d) in any other case, one lakh of rupees, The same proportion as the said period bears to the period of one year and, in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. [Business Profits Tax Act (21 of 1947), S.2 (1)] Removal or destruction, (as) of a nuisance; failure; premature end, suspension or diminution, (as) of an action or of a legacy. The action of abating; being abated. [O.XXII, R.1, CPC (5 of 1908)]; decrease [S.12 (3) (b) (i), Specific Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed u/s 139 of the Act for the impugned years for the purpose of assessment which were pending on the date of search, were to be treated as non-est (i.e., a nullity) in law [see para 11 of the judgment of the Hon ble Bombay High Court in CIT vs. B.G. Shirke Construction Technology Ltd. (395 ITR 371)] 92. Upon a conspectus of section 153A(1)(a) of the Act, it is seen that it provides that the provisions of this Act [i.e., the provisions of Income-tax Act, 1961, which impliedly includes the deduction under Chapter VI-A], shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act thus, implying that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A of the Act) shall apply to a Return filed in compliance with the Notice issued u/s 153A of the Act. The Explanation to section 153A(2) of the Act further, lays down that save as otherwise provided in this Section, Section 153B of the Act and section 153C of the Act, all other provisions of this Act shall apply to assessment made under this section. This, to our mind, clearly implies that for the purpose of maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. In other words, when a search is initiated under Section 132 of the Act, the assessee is not required to file the assessee's return till such time that the assessee receives a notice under Section 153A(1)(a) thereof. Once such notice is received the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. To boot, the second proviso to Section 153A(1) of the Act, insofar as it is material for the present purpose, mandates that any assessment or reassessment ... relating to ... the relevant assessment year or years ... pending on the date of initiation of the search under Section 132. ... shall abate . It goes without saying that since the search operations in this case were initiated on September 2, 2004, it was no longer necessary for this assessee to file his regular return by October 31, 2004 notwithstanding the mandate of Section 139(1) of the Act. The obligation to file the return remained suspended, in view of the clear opening words of Section 153A(1) of the Act, till such time that a notice was issued to him under clause (a) of such sub-section. If such is the meaning of Section 153A(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956- ITA No. 29 of 2016, judgment dated 12/07/2017] The Hon ble Allahabad High Court held as under: 3. It was admitted on the following substantial questions of law: (i) Whether the Income Tax appellate Tribunal was justified in allowing the deduction u/s 80IA to the assessee on the basis of return filed after the issue of notice u/s 153A of the Act. (ii) Whether the Income Tax Appellate Tribunal was justified under the facts and circumstances of the case in confirming the order of CIT (A) who has travelled beyond the statutory provision of Chapter VIA, u/s 80A(5) of the Income Tax Act, 1961 which clearly provides that if assessee fails to make a claim in his return of income of any deduction; no deduction shall be allowed to him thereunder . 4. Tribunal has justified deduction under Section 80IA on the basis of return filed under Section 153A by observing that for the assessment year 2009-10 and onwards, the time for filing revised return has not expired and, therefore, claim for deduction under Section 80IA if not made earlier could have been made in the revised return. Once it could have been claimed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had finally considered itself as eligible for the deduction in question as per various judicial pronouncements at that point of time. 19. The Assessing Officer s assessment order dated 22.03.13 declined assessee s section 80IA deduction claim on multiple grounds. He observed that this relief could not be allowed in absence of a revised return as per Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC). That the assessee had also filed a revised return on the same day which was not valid since submitted beyond a period of one year from end of the relevant assessment year. The Assessing Officer went on to quote date of section 153A notice i.e., on 20.07.2011 asking for return within 15 days of service. He observed that assessee s return; which was required to be filed on or before 11.08.11 inclusive of 15 working days; came on 30.09.2011 only. He held that the said return was also a belated one u/s 139(1) which could not be revised. And that section 234A(1) interest provision was also indicative that section 139(1) and section 153 return are identically meted. Case law (1996) 86 TAXMAN 122(SC) Jagdish Chandra Sinha vs. CIT that only a return u/s 139(1) and (2) could be revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery well explained the reasons of having not raised the impugned scheme due to the corresponding legislative amendments in section 80IA followed by CBDT s explanatory memorandums. This tribunal in (2012) 22 taxmann.com 2(Hyderabad) ITO vs. S. Venkataiah also holds that an assessee s legally allowable claim which could not be raised owing to circumstances beyond its control and pressed later on by way of belated return, could not be declined on account of mere technicality. 29. Coming to the statutory aspect viewed from various legislative developments right from block to search assessments applicable up to 31.05.03 and w.e.f. 01.06.03 onwards; respectively, we find that the same sufficiently answer the Revenue s arguments. The former scheme of block assessment in section 158BCA(i) and (ii) read with 2nd proviso thereto made it clear that a person; who had furnished a return under this clause, would not be entitled to file a revised return. The legislature has nowhere employed such a restrictive expression in the new scheme of search assessment in section 153A to section 153C applicable w.e.f. 01.06.03. More particularly u/s 153A(1)(a) reads that the provisions of this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the primary question that arose before the AO was whether the claim which was not made in the earlier original return of income filed under Section 139(1) of the said Act, could be filed and considered in the subsequent return filed by the assessee in pursuance to notice under Section 153A of the said Act (which was consequent to search action conducted under Section 132 of the said Act). AO held that the assessee could not raise a new claim in the return filed under Section 153A which was not raised in the original return of income filed under Section 139(1). Thereafter, the claim was disallowed and was treated as revenue receipt 5.1. By order dated 15.04.2013, the first appellate authority i.e. the Commissioner of Income Tax (Appeals) (hereinafter referred to as CIT(A) ) upheld the order passed by the A.O. In further appeal, the I.T.A.T., however, by the impugned order dated 28.09.2016, allowed the assessee s appeal and set aside both the orders passed by the A.O. and C.I.T.(A). 5.2. Hence the appeal by the revenue. .. 6.1. Mr. A.R.Malhotra drew our attention to the proposed question of law in the present appeal which reads thus : Whether on the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of income shall be treated to be returns of income furnished under Section 139. Once returns are furnished, income is to be assessed or re-assessed for the six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, once Section 153-A(1) is invoked, assessment for 6 assessment years immediately preceding the assessment year in which search is conducted or requisition is made becomes open to assessment or reassessment. Two aspects are crucial here. One is use of the expression notwithstanding in sub-section (1); and secondly, that returns of income filed pursuant to notice under Section 153-A (1)(a) would be construed to be returns under Section 139. The use of non obstante clause in sub-section (1) of Section 153-A i.e., use of the expression notwithstanding is indicative of the legislative intent that provisions of Section 153-A(1) would have overriding effect over the provisions contained in Sections 139, 147, 148, 149, 151 and 153. 8.2. Having noticed the above, we may also refer to the second and the third proviso to Section 153-A(1). For the sake of convenience, the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the claim. In Supreme Court on Words and Phrases (19502008), abating has been defined to mean an extinguishment of the very right of action itself ; to abate , as applied to an action, is to cease, terminate, or come to an end prematurely. 9. Therefore, from a critical analysis of the provisions contained in Section 153A(1) of the Act more particularly the key expressions as referred to above, it is evident that assessments or reassessments pending on the date of initiation of search would stand abated. Return of income filed by the person concerned for the six assessment years in terms of Section 153-A(1)(a) would be construed to be a return of income under Section 139 of the Act. .. 12. In this perspective we are called upon to decide the question projected by the revenue as substantial question of law arising from the order of the Tribunal. We have considered the grounds of appeal and the orders passed by the AO, CIT(A) and the Tribunal with the assistance of learned counsel for the Appellant. From a reading of the above it is clear that Section 153A of the said Act, provides for the procedure for assessment in search cases. As alluded to hereinabove, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to Section 153A(1) of the said Act, once assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) which was not claimed in his regular return of income, because assessment was never made/finalised in the case of the assessee in such a situation. 96. Respectfully following the above judgments, we hold that pursuant to the search seizure operation conducted in the case of the Assessee on 20.09.2019, since the pending assessment proceedings for the impugned AYs 2017-18, 2018-19 2019-20 had got abated by virtue of application of the second proviso to section 153A(1) of the Act, it was open for the Assessee to make a legitimate claim of deduction u/s 80IA(4) of the Act which had remained unclaimed in the earlier Returns filed for the impugned years (AY 2017-18 AY 2018-19) u/s 139(1) of the Act and for AY 2019-20 for which no return was filed due to initiation of search before the due date of filing return for AY 2019-20. This was because the assessment was never made in the case of the Assessee in respect of the impugned assessment years. As uniformly opined in the above cited cases, once assessment gets abated, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion, the Hon ble Apex Court ordained that ld. AO had no power to entertain a claim for deduction not made in the return of income otherwise than by filing a revised return. The aforesaid judgment is clearly inapplicable to the disparate set of facts in the present case wherein pursuant to the search and seizure operations u/s 132(1), the original returns of income for the impugned assessment years [wherein no claim of deduction had been made u/s 80IA(4) of the Act] had become non-est (i.e., rendered to a nullity) and the fresh returns filed u/s 153A of the Act [wherein deductions had been claimed afresh u/s 80IA(4) of the Act] had substituted and taken place of the original returns filed u/s 139(1) of the Act. Thus, unlike the factual matrix in the case of Goetze India Ltd. (supra), the present case does not involve any request made by the assessee for allowing fresh claims of deductions not claimed in the original return filed u/s 139(1) of the Act via a letter before ld. AO, but claims of legally tenable deductions in Returns filed u/s 153A of the Act, which substituted the original Returns filed earlier u/s 139(1) of the Act after such Returns u/s 139(1) of the Act and the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of delay does not arise. 100. Next, ld. D/R s reliance on the judgment of the Hon ble Jodhpur Bench of the ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 to the effect that assessments or reassessments made pursuant to notice u/s 153A of the Act are not de-novo assessments and therefore no new claim of deduction or allowance can be made by the assessee is also misplaced. The judgment in the said case was rendered in context of completed assessment proceedings i.e., unabated assessment years which are not covered under the second proviso to Section 153A(1) of the Act. In case of completed/unabated assessment proceedings i.e., where assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee s total income prior to the date of search, such orders shall subsist since there is no question of any abatement since no proceedings are pending. In such a case, ld. AO will assess or reassess the income of the assessee strictly based on incriminating material found during the course of search or requisition i.e., compute the undisclosed income based on incriminating material and simply aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observation of the Delhi Bench in the above case to the effect that - fresh claims cannot be made u/s 153A of the Act which have the result of lowering income returned earlier considering that search proceedings are for the benefit of the Revenue - is concerned, it is seen that other benches of this Tribunal have taken a divergent view in this regard. To cite a few such judgments: (i) Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - ITAT Hyderabad; TA.No.975/Hyd/2015, order dated 19/08/2016]: The Hon ble ITAT Hyderabad held as under: 11. We have carefully considered the rival submissions and perused the record. As could be noticed from the grounds of appeal and the arguments advanced by the Learned Counsel for the assessee, the main contention is not with regard to abatement of proceedings under section 153A of the Act. The limited issue is with regard to claim of deduction in response to notice issued under section 153A of the Act even if such claim was not made in the original return. In fact, the Ld. CIT(A) has not disputed that evidence is already on record but refused the claim of deduction on the limited ground that provisions of section 153A are meant for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice under section 153A of the Act. In para28 of its order, the Bench has observed as under: 28. Next we have to examine the decision of the Commissioner of Income tax(Appeals) rendered on the alternate ground raised by the assessees before him. The alternate ground was whether the returns filed in response to notices issued under section 153A can be taken as returns filed within the time limit stipulated under section 139(1). The Commissioner of Income-tax (Appeals) has decided in favour of the assessees holding that the returns filed under section 153A are to be treated as returns filed under section 139(1) within the time allowed under the statute. 102. Further, the proposition that fresh claims of deductions can be made in returns filed u/s 153A of the Act even though such deductions were not claimed in the original returns has been decided in favour of the assessee in a plethora of judgments by the Hon ble High Courts and various benches of this Tribunal across the country (cited earlier) and hence is no longer res integra. 103. Next, the observation of ld. D/R that if an assessee is allowed to claim an allowance or deduction u/s 153A of the Act not claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see u/s 80IA of the Act in returns filed pursuant to notice issued u/s 153A of the Act on the ground that the assessee did not furnish audit report and particulars for claim of deduction u/s 80IA of the Act within the specified time. 107. The relevant ground reads as under: 2. The Ld. CIT(A) erred in procedural law when the assessee did not furnish requisite audit report and particulars for the claim for deduction u/s 80IA within the specified time. 108. In the instant case, as stated above, in response to Notices issued u/s 153A of the Act dated 04.02.2021 (authenticated by ld. AO on 05.02.2021) for the impugned AYs 2017-18, 2018-19 and 2019-20, the Assessee had filed its Returns of Income u/s 153A of the Act on 13.02.2021 i.e., within the time limit of 10 days permitted in the Notices issued u/s 153A of the Act. Further, prior to e-filing of the aforesaid Returns of Income, the assessee had electronically furnished the Report of Audit (as required u/s 80IA(7) of the Act) in Form 10CCB in support of its claim of deduction u/s 80IA(4)(i) of the Act in respect of the impugned years (as per details set out in the Table at page 383 of ld. CIT(A) s order) on 12.02.2021. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10CCB filed on 12.02.2021 were not only much beyond the due date but also generated 18 months after the date of search operation conducted in the case of the assessee on 20.09.2021. Thus, as per ld. AO, the assessee s claim of deduction u/s 80IA(4) of the Act was not allowable as the Assessee had failed to furnish the requisite audit report in Form 10CCB within the time specified u/s 80IA(7) of the Act. 112. On appeal, ld. CIT(A) vide his impugned appellate order u/s 250 of the Act has held that the Returns of Income filed in compliance with Notices issued u/s 153A of the Act substitutes the original Income Tax Returns [filed u/s 139(1) of the Act] and further since these Returns of Income (u/s 153A of the Act) are treated as Income Tax Returns filed u/s 139(1) of the Act, these Returns of Income are to be taken / treated as having been furnished within the time limit as per Section 139(1) of the Act and hence the corresponding Form 10CCBs filed by the assessee [for the aforesaid Assessment Years (i.e. AY 2017-18, AY 2018-19 AY 2019-20)] are also to be taken as furnished within the time limit as per Section 139(1) of the Act. Further, since these Form-10CCBs, as aforesaid, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, Ground no. 2 of the Department s appeal is dismissed. 116. Before concluding, it will be pertinent to mention that ld. D/R, vide his written submission dated 25.01.2023 has also tried to agitate certain issues which have neither been urged in the original Grounds of Appeal filed by the Department nor challenged vide any additional/supplementary Grounds of Appeal raised before us. In a nutshell, ld. D/R has culled out details of two projects awarded by IRCON International Ltd. to the assessee viz. (i) Construction of Tunnel T-5 (between Km 11 + 604 to Km 13+697 approx) on Sivok Rangpo Rail Link Project (details compiled at page 518 of the CIT(A) s Order) and (ii) Construction of Tunnel T74-R balance work at North Portal from Km 130/950 to Km 133/910 (Approx) on Katra-Banihal Section of Udhampur Srinagar- Baramulla New BG Railway Line Project (Package t-74R-B(N)] (details compiled at page 495 of ld. CIT(A) s order. Ld. D/R has relied upon Circular No. 717 dated 14.08.1995 and the provisions of section 80IA(4)(i)(c) of the Act to aver that the deduction u/s 80IA(4) of the Act should be in respect of income derived from the use of infrastructural facility whereas the above p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee u/s 80IA(4)(i) of the Act is in respect of profits derived from the development of infrastructural facility (which is unconnected to the completion or the commencement or stage of operation of the facility) and not from its operation and maintenance. Thus, ld. D/R s assertion that the impugned project was at its nascent stage becomes irrelevant vis- -vis the Assessee s claim of deduction u/s 80IA(4)(i) of the Act. 119. Next, the contention of ld. D/R that deduction u/s 80IA(4) of the Act is allowable only where the assessee starts operating and maintaining the infrastructural facility in terms of section 80IA(4)(i)(c) of the Act is also contrary to the views taken by the Hon ble Courts and Tribunals in a catena of judgments wherein the Hon ble Courts and various benches of the ITAT have uniformly opined that in order to avail a deduction, the assessee could either (i) develop; or (ii) operate and maintain or (iii) develop, operate and maintain the facility. Per the ratio of judgments rendered in the above cases, the requirement of developing, maintaining and operating an infrastructure facility was never regarded to be cumulative, even prior to the amendment to section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the 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 section 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. 26. In view of the aforesaid observations, the question of law shall accordingly stand answered in favour of the assessee and against the Revenue. 120. Thus, the assessee is entitled to deduction u/s 80IA(4) of the Act only in respect of development of infrastructural facility irrespective of whether it operates and maintains such facility. Similar judgments have been rendered in a plethora of other cases which have been cited by ld. CIT(A) in the impugned appellate order. However, for the sake of brevity and more so, since the impugned issue has not been impinged upon in the grounds of appeal filed by the Department, we are not delving into it any further. 121. Further, apropos ld. D/R s contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. Assessments are certainly quasi-judicial and these observations equally apply. 16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 17. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter- and if there was not change it was in support of the assessee- we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also fortifies the fact that apart from the challenge on the two issues urged in the present appeal before us, the Department is in consonance with the assessee s compliance with the requisite conditions u/s 80IA(4) of the Act. Thus, the re-agitation of an accepted factual and legal position vis- -vis the assessee s eligibility of claim of deduction u/s 80IA(4) of the Act as a developer of infrastructural facilities at this stage via ld. D/R s submissions without raising any specific ground of appeal before us in this regard does not make sense. Even otherwise, ld. CIT(A) has passed a very detailed order wherein he has analyzed the terms and conditions of the various contracts undertaken by the assessee during the years under consideration to conclude that the nature of works executed by the assessee falls within the ambit of development of infrastructural facility within the meaning of section 80IA(4) of the Act and the said issue is no longer res-integra considering the orders passed by the Kolkata Bench of the Tribunal in the Assessee s own case in the past (supra). Thus, all the grounds of appeal raised by the Revenue for AY 2017-18, AY 2018-19 AY 2019-20 are dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
