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TMI Blog2024 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... . 143(3) 10/JAB/2018 2014-15 CIT(A)-1, Jabalpur 23.11.2017 DCIT (Central) 23.12.2016 153A r.w.s. 143(3) 22/JAB/2018 2015-16 CIT(A)-1, Jabalpur 23.11.2017 DCIT (Central) 23.12.2016 153A r.w.s. 143(3) 82/JAB/2019 2007-08 CIT(A)-15, Kolkata 15/07/2019 ITO, Ward-1(3), Kolkata 19.12.2012 143(3)/ 147 1.1. As most of the issues involved in all these appeals are identical, they are taken together and disposed of by this common order for the sake of convenience. 2. Deduction U/s 80IA of the Act Ground No. 1 for AY 2009-10 Ground No. 1 for AY 2010-11 Ground No. 1 for AY 2011-12 Ground No. 1 for AY 2012-13 Ground No. 1 for AY 2013-14 Ground No. 1 for AY 2007-08 We have heard the rival submissions and perused the material available on record. The assessee is a part of Singhania Group on which search action u/s 132(1) of the Act was carried out on 16.10.2014. The main business concerns of the group are M/s. Tirupati Buildcon Pvt. Ltd., M/s. Shivangi Oil Pvt Ltd. and M/s. Tirupati Construction. The assessee is engaged in the activities of development of infrastructure projects as developer from the year 2004 onwards. The assessee claimed deduction u/s 80IA of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and the quantum of deduction u/s 80IA(4) of the Act had been duly certified by the Chartered Accountants. The deduction has been claimed in respect of profits derived from various development of infrastructure facilities being roads for the State Govt of Madhya Pradesh and National Highway Authority of India (NHAI). It was also submitted by the assessee that deduction u/s 80IA of the Act was indeed allowed by the ld Additional CIT, Range-1, Kolkata u/s 143(3) of the Act dated 16.12.2011 for the A.Y. 2009-10 after examining the claim extensively with the relevant agreements and documents. The assessee also placed reliance on the CBDT Circular No. 4 of 2010 dated 18.05.2010 wherein, it had been clarified that widening of existing roads by constructing additional lane as part of highway project by an undertaking would be regarded as new infrastructure facilities for the purpose of section 80IA(4) of the Act. The assessee has developed in terms of agreement with the state Government. The work executed has resulted into development of infrastructure project. The assessee possesses huge plants and equipment that were deployed for the development of project in addition to possessing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under:- "i) Assessee company has to take possession of all parts of site for executing the development projects. Assessee company is responsible for safety of all injuries at the site. ii) Access to site by the Engineers or any other authorized person has also been provided. The site is under entire control and possession of assessee company. iii) Assessee company has all risk of loss or damages to physical properties and personal injury and death which arises during and in consequence of performance of development contract. iv) Assessee company after development of project has to handover the site to Government and has to obtain completion certificate from the Engineer as to completion of the project. v) Assessee company has to prepare drawings/operating manual "as built" and has to supply the same to the Engineer for approval. vi) Assessee company has defect liability period ranging upto 5 years during which it has to have maintenance of developed project. vii) Scope of work as defined in contract clearly demonstrates work to be development of project. viii) No material is being supplied by Government for making of roads. Assessee has to make own investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her material brought on record. In these grounds of appeal, the appellant's claim of deduction under section 80IA(4) of Income Tax Act, 1961 has been disallowed by the A.O. as discussed at para 6.9 of the assessment order. The A.O. has concluded that the project executed by the appellant is in the nature of works contract and in view of provisions of section 80IA(13) of Income Tax Act 1961, the appellant is not eligible for grant of deduction under section 80IA(4) of I.T. Act 1961. In the case of appellant, it is seen that the appellant company is engaged in development of roads and complete details as to development of roads as well as terms of contract were placed before the A.O.in the course of assessment proceedings. The perusal of various contracts indicates that the appellant company is engaged in development of rural roads under the Pradhan Mantri Gram Sadak Yojana including maintenance of the same in terms of agreement with the State Government. The appellant company in the course of assessment proceedings has submitted a certificate issued by Engineer in Chief of Madhya Pradesh Rural Roads Development Authority, Bhopal (M.P.) dated 18/11/2016 to show that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Road Transport and Highways, PWD National Highway Madhya Pradesh is a wing under which the project of Infrastructure Development and Maintenance of declared various National Highways Projects are executed and above referred works were awarded to Tirupati Build-Con Private Limited, Burhar for the same purpose ie Development and Maintenance of 3 years of National Highway Roads Project being Constructed and Development in mode of Contracts. M/s. Tirupati Buildcon Pvt. Ltd. has successfully completed the projects under NH-78, NH-86, NH-59A for Development Works. Sd/-17/11/2016 Executive Engineer, PWD, National Highway Division, Bhopal M.P." The receipts from this project have been shown in the profit and loss account of the respective assessment year for which deduction under section 80IA of L.T. Act 1961 has been claimed by appellant company. 7.2.5 The appellant company had submitted various contract agreements entered into with the Government Authorities before the A.O. and has submitted the same before me also. The appellant company has invited attention to one of the contract data in respect to work executed for development of roads. The contract data contains various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment project is also with a stipulation that company must possess minimum requirement as regard to plant and machinery for execution of development works. The company should also possess required technical and human resources in order to be eligible for development project to be granted by Government. The aforesaid condition/stipulation strengthens the submission of the appellant company that the contract given by the Government is not merely a works contract. As per contract appellant has to carry out set of activities to develop infrastructure project using its technical expertise, technical and other skilled and non skilled man power and its plant & machineries to execute projects, on this count itself it cannot be said that appellant is merely a work contractor. The facts and evidence on record clearly indicates that the contract executed by the appellant company is not a mere contract for providing labours which is in the nature of works contract In view of above conclusion of the A.O that the contract executed by the appellant company is in the nature of work contract is unjustified. 7.2.7 The issue as to contract being in the nature of work contract or a contract being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor gets the material and other requisites from the client and all he has to do is employ labour. The appellant in the given case was to procure raw material, make arrangements for power, water, plant & machinery, obtain statutory clearances etc., and conduct all the other activities needed for construction to bring into existence an infrastructure facility. Further it was exposed to various risks like risk of damage of property, risk of accidents etc. therefore, having regard to the fact, and emerging legal position, in my view, the Assessing Officer was not justified in holding that the appellant company was merely executing works contract and therefore it was not entitled for the tax holiday benefit under section 80-IA(4) of the Act. It my also be noted here that in the case of Patel Engineering Ltd. V. Commissioner 2004] 84 TTJ (Mum) 646, the Mumbai Bench of the Tribunal has held that the enterprise must carry on the business of (a) developing, or (b) maintaining and operating or (c) developing, maintaining and operating any infrastructure facility. It is not necessary that the entire infrastructure project is to be developed by one enterprise. In another case of CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e foregoing discussion we find that the provisions of Section 80-IA of the Act applies to the enterprise carrying on the business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the following conditions, namely:- (a) It is owned by a company registered in India or by a consortium of such companies or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act; (b) It has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining a new infrastructure facility; (c) It has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995. Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1)." From a plain reading of the above it is clear that deduction u/s 80-IA does not apply to works contract Now the relevant question arises before us for adjudication is that what constitutes a works contract. Section 80-IA nowhere defines the term "works contract", hence the natural meaning of the word shall apply As per the Oxford dictionary the term "work" means application of effort to a purpose or use of energy. Thus going by the dictionary meaning we may say that a works contract is a contract which involves effort or in other words labour of the contractor. Further as per the Black's Law Dictionary, the term "work" means labour or in other words physical and mental exertion to attain an end esp. as controlled by and for the benefit of the employer. Thus as per Blacks's Law also a works contract is a labour contract under which the contractor merely employs his labour as per the directions of the contractee. Further, attention is invited to relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Legislature that the "work" in the sub-section is not intended to be confined to or restricted to "works contract". The issue before the Supreme Court in the aforesaid case was whether the term "work" used in section 194C needs to be restricted to "works contract" The Apex Court laid out that the term "work" used in section 194C need not be restricted to "works contracts" (Le. labour contracts) because the sub-section expressly includes supply of labour to carry out work. In other words, it is implied that works contract means supply of labour to carry out work. Thus from the above we may say that a works contract constitutes a contract under which the contractor is merely employing his efforts or labour. Under such a contract, the contractee provides the material and other requisites (a complete infrastructure) needed to carry out the desired work to the contractor who by applying his labour to the said material turns the material into a desired product. Further, attention is invited to the memorandum explaining the provisions in the Finance Bill, 2007, reported in [2007] 289 ITR (St.) 292 at page 312, which reads as under: "Section 80-IA, inter alia, provides for a ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement eritered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government The Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility It is the assessee's responsibility to do all acts till the possession of property is handed over to the Government. The first phase is to take over the existing premises of the projects and thereafter developing the same into infrastructure facility. Secondly, the assessee shall facilitate the people to use the available existing facility even while the process of development is in progress. Any loss to the public caused in the process would be the responsibility of the assessee. The assessee has to develop the infrastructure facility. In the process, all the works are to be executed by the assessee. It may be laying of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act is available to developers who undertakes entrepreneurial and investment risk and not for the contractors, who undertakes only business risk. Similarly the Chennai Bench of Tribunal in case of R.R. Constructions, Chennai vs Department Of Income Tax 2013) 35 CCH 0547 Chen Trib (2015) 152 ITD 0625 (Chennai) held that "when the assessee makes investment and himself executes development work and carries out civil works he is eligible for tax benefit u/s 80IA of the Act. Accordingly, with the foregoing discussion, we hold that the assessee is entitled to deduction u/s 80IA(4) of the Act, and therefore, we order to delete the addition made in this respect". Thus, the memorandum explaining the provisions in the Finance Bill, 2007, further strengthens the contention of the assessee that a works contract is a contract which involves mere labour of the contractor. However, if under a contract, the contractor employs his capital and enterprise in addition to labour, then the said contract does not constitute a works contract under the Explanation to section 80-IA(13) and the contractor shall be eligible for deduction U/S 80-IA. Now coming to the facts of the case, it is submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the projects were financed by Government. In this regard it is pointed out that under sub-section 4 of section 80-IA, deduction is available to a developer, i.e. if, an assessee, merely develops the infrastructure facility without operating and maintaining the same, it is entitled to deduction. The Bombay High court in case of Commissioner of Income-tax v. ABG Heavy Industries Limited [322 ITR 323] observed that "Parliament amended the provisions of section 80-IA of the Act so as to clarify that in order to avail of a deduction, the assessee could (i) develop; or (ii) operate and maintain; or (iii) develop, operate and maintain the facility. The condition as regards development, operation and maintenance of an infrastructure facility was contemporaneously construed by the authorities at all material times, to cover within its purview the development of an infrastructure facility under a scheme by which an enterprise would build, own, lease and eventually transfer the facility." "This was perhaps a practical realisation of the fact a developer may not possess the wherewithal, expertise or resources to operate a facility, once constructed Parliament eventually stepped in to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structure facility. Sub-cl (c) of cl. (i) of s. 80-IA(4) is obviously applicable to an enterprise which is engaged in 'operating and maintaining' the infrastructure facility on or after 1st April, 1995. It is not applicable to the case of an enterprise which is engaged in mere 'development' of infrastructure facility and not its 'operation' and 'maintenance'. Therefore, the question of 'operating and maintaining' of infrastructure facility by such enterprise before or after any cut off date cannot arise. However, if the contention of the Departmental Representative is accepted, it would obviously/understandably lead to manifestly absurd results. When the Act provides for deduction undisputedly for an enterprise who is only 'developing' the infrastructure facility, unaccompanied by 'operating and maintaining' thereof by such person, there cannot be any question of providing a condition for such an enterprise to start operating and maintaining the infrastructure facility on or after 1st April, 1995. Since the assessee is only a developer of the infrastructure project and it is not maintaining and operating the infrastructure fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 80-IA. Therefore, merely because the present assessee was paid by the Government for development work, it cannot be denied deduction under s. 80-IA(4). A person who enters into a contract with another person will be a contractor no doubt, and the assessee having entered into an agreement with the Government agencies for development of the infrastructure projects, is obviously a contractor but that does not derogate the assessee from being a developer as well. The term "contractor" is not essentially contradictory to the term "developer. On the other hand, rather s. 80-IA(4) itself provides that assessee should develop the infrastructure facility as per agreement with the Central Government, State Government or a local authority. So, entering into a lawful agreement and thereby becoming a contractor should, in no way, be a bar to the one being a developer. Therefore, merely because in the agreement for development of infrastructure facility, assessee is referred to as contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a developer, nor will it debar the assessee from claiming deduction under s. 80-IA(4) Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loper as he is not operating the infrastructure facility. The legislature has provided that the income of the developer of the infrastructure project would be eligible for deduction. It presupposes that there can be income to developer ie. to the person who is carrying on the activity of only development infrastructure facility. Ostensibly, a developer would have income only if he is paid for the development of infrastructure facility, for the simple reason that he is not having the right/authorization to operate the infrastructure facility and to collect toll there from, has no other source of recoupment of his cost of development. The Indore Bench of the Tribunal in case of Sanee Infrastructure Pvt. Ltd. vs. ACIT [138 ITD 433] held that "As per our considered view, after amendment by the Finance Act, 2002 for claim of deduction u/s 80IA(4) infrastructure facility is only required to be developed and there is no condition that assessee should also operate the same. Thus, after amendment, when the assessee is not required to operate the facility, the payment for development of such infrastructure is required to be made by the Government only. "After amendment, when assessee und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity of a contractor but also he is assigned with the duty to develop, maintain and operate such project. (g) That to ascertain whether a civil construction work is assigned on development basis or contract basis can only be decided on the basis of the terms and conditions of the agreement. Only on the basis of the terms and conditions it can be ascertained about the nature of the contract assigned that whether it is a "work contract" or a "development contract. (h) That in a development contract" responsibility is fully assigned to the developer for execution and completion of work. (i) That although the ownership of the site or the ownership over the land remains with the owner but during the period of development agreement the developer exercise complete domain over the land or the project. That a developer is not expected to raise bills at every step of construction but he is expected to charge the cost of construction plus mark-up of his profit from the assignee of the contract. (k) That a developer is therefore expected to arrange finances and also to undertake risk. (1) That in contrast to the rights of a "contractor" a "developer" is authorized to raise funds either by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of work due to cause. It is also provided that in the event of accident to people employed by the assessee resulting in compensation to be paid as per the Workmen's Compensation Act the same shall be paid by the contractor, viz. the assessee only. In view of the various specific clauses in the agreement fastening the risks to be undertaken by the assessee, discussed above, it cannot be said that the assessee has not undertaken any risk. 6.8 From the above, it is clear that the contention of the AO that the assessee had not undertaken any entrepreneurial and investment risk is an incorrect interpretation of the facts. Lastly, with regard to the project O&M, Bangalore (on which a deduction of Rs. 35,16,9411- was claimed), it is submitted that it is an operation and maintenance project, to which Explanation to section 80-IA(13) does not apply. Explanation to section 80-IA(13) merely distinguishes between a developer and works contractor. It clarifies that a works contractor shall not be included in the category of 'developer' u/s 80-IA Thus, the Explanation clearly does not apply to O&M projects. Hence, deduction of Rs. 35,16,9411- claimed for the aforesaid project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the NHAI and UP PWD. This is also noted by CIT(A) that the maintenance of the existing facility during the period of development also was of the assessee company and so also was the risk during this period to maintain the infrastructure and after the completion of development of road and its handing over to the Government, the risk period of the assessee company was of 12 months for maintenance of the road. As per explanation below sub section (4) of section 80IA, infrastructure facility includes a road including toll road, bridge or a rail system. This is not in dispute that the assessee has widened the road and therefore, activity of the assessee falls within the definition of infrastructure. The CIT(A) has also referred to several judicial pronouncements as per which it was held that there is no requirement that the assessee should have been the owner of the infrastructure facility. The facts in the case of Koya& Co. (Supra) are identical. In that case, the relevant paras of the Tribunal Order are Para No. 21 to 28 and the same are reproduced below for ready reference:- 21. We have considered the elaborate submissions made by both the parties and also perused the materials av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any one Even otherwise, the word "it" is used to denote an enterprise Therefore, there is no requirement that the assessee should have been the owner of the infrastructure facility. 23 The next question is to be answered is whether the assessee is a developer or mere works contractor. The Revenue relied on the amendments brought in by the Finance Act 2007 and 2009 to mention that the activity undertaken by the assessee is akin to works contract and he is not eligible for deduction under section 80IA (4) of the Act. Whether the assessee is a developer or works contractor is purely depends on the nature of the work undertaken by the assessee. Each of the work undertaken has to be analyzed and a conclusion has to be drawn about the nature of the work undertaken by the assessee. The agreement entered into with the Government or the Government body may be a mere works contract or for development of infrastructure. It is to be seen from the agreements entered into by the assessee with the Government We find that the Government handed over the possession of the premises of projects to the assessee for the development of infrastructure facility It is the assessee's responsibility to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such entities. The CBDT, on several occasions, clarified that pure developer should also be eligible to claim deduction under section 80IA of the Act, which ultimately culminated into Amendment under section 80IA of the Act, in the Finance Act 2001, to give effect to the aforesaid circulars issued by the CBDT We also find that, to avoid misuse of the aforesaid amendment, an Explanation was inserted in Section 80IA of the Act, in the Finance Act-2007 and 2009, to clarify that mere works contract would not be eligible for deductions under section 80IA of the Act. But, certainly, the Explanation cannot be read to do away with the eligibility of the developer, otherwise, the parliament would have simply reversed the Amendment made in the Finance Act, 2001. Thus, the aforesaid Explanation was inserted, certainly, to deny the tax holiday to the entities who does only mere works contact or subcontract as distinct from the developer. This is clear from the express intension of the parliament while introducing the Explanation. The explanatory memorandum to Finance Act 2007 states that the purpose of the tax benefit has all along been to encourage investment in development of infrastructur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the reasons for introducing the Explanation were clarified as providing a tax benefit because modernisation requires a massive expansion and qualitative improvement in infrastructures like expressways, highways, airports, ports and rapid urban rail transport systems. For that purpose, private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil construction work or any other work contract has been encouraged by giving tax benefits. Thus the provisions of section 80IA shall not apply to a person who executes a works contract entered into with the undertaking or enterprise referred to in the section but where a person makes the investment and himself executes the development work, he carries out the civil construction work, he will be eligible for the tax benefit under section 80IA." 26. The above order was followed in subsequent assessment years 2007- 2008 & 2008-09 in ITA Nos. 1312 & 1313/Mds/2011 vide order dated 8.11.2011 in the case of the same assessee, 27. Further in the case of R.R. Constructions, the Chennai Bench of Tribunal in I.T.A. No. 2061/Mds/2010 for assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of infrastructure project being roads. The aforesaid decision was challenged by the revenue before Hon'ble Allahabad High Court in Income Tax Appeal No. 29 of 2016 and the Hon'ble High Court has upheld the order of ITAT, Lucknow Bench by dismissing the appeal of revenue vide its judgement dated 12/7/2017. The aforesaid decision of the Hon'ble Allahabad High Court fully supports the submission of the appellant company that deduction under section 80IA(4) of I.T. Act 1961 ought to have been granted as claimed. In view of above action of A.O. in disallowing the deduction under section 80IA(4) to the appellant company is unjustified and unsustainable. 7.2.9 It is seen that appellant has submitted regular return of income for Asstt. Year 2009-10 u/s 139 of I.T. Act 1961. The regular assessment came to be made pursuance to return filed u/s 139 of 1.T. Act 1961 before the date of search by accepting claim of deduction u/s 80IA(4)as shown in return except for some modification in quantum of deduction. In the course of search no evidence or material has been found warranting disturbance to claim of deduction u/s 80IA(4) as allowed in the case of appellant in regular assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". w. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v In absence of any incriminating material, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la: ITA 707/2014, decided on 28th August, 2015 has held that completed assessments could only be interfered with by the AO on the basis of any incriminating material unearthed during the course of the search or requisition of the documents. In absence of any incriminating material, the AO does not have any jurisdiction to interfere in concluded assessments." 11. In the case of HarjeevAggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference:- "19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20 In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee alone without hindrance to the regular traffic. Therefore, it is clear that from an un-developed area, infrastructure is developed and handed over to the Government and as explained by the CBDT vide its Circular dated 18-05-2010, such activity is eligible for deduction under section 80IA (4) of the Act. This cannot be considered as a mere works contract but has to be considered as a development of infrastructure facility. Therefore, the assessee is a developer and not a works contractor as presumed by the Revenue. The circular issued by the Board, relied on by learned counsel for the assessee, clearly indicate that the assessee is eligible for deduction under section 80IA (4) of the Act. The department is not correct in holding that the assessee is a mere contractor of the work and not a developer. 24. We also find that as per the provisions of the section 80IA of the Act, a person being a company has to enter into an agreement with the Government or Government undertakings. Such an agreement is a contract and for the purpose of the agreement a person may be called as a contractor as he entered into a contract. But the word "contractor" is used to denote a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine him. (iv) In the statement of ShriAnuAggarwal dated 15th September, 2008, the query was raised with regard to loose papers found and seized from their premises. Admittedly, none of the loose papers was relating to issue of share capital. The loose papers were pertaining to unaccounted receipt on sale and unaccounted expenditure on construction In the statement dated 24th October, 2008, though the query was raised with regard to issue of share capital and the statement of ShriTarunGoyal was confronted wherein he has alleged to have provided accommodation entry to the assessee group, ShriAnuAggarwal categorically denied to have received any accommodation entries from anybody. 24. In view of the above, we hold that the issue of share capital was out of the purview of assessment u/s 153A as the assessment for assessment year 2005-06 was not pending on the date of search and no incriminating material relating to share capital was found during the course of search. Accordingly, the addition of Rs. 3,60,00,000/- made by the Assessing Officer and sustained by learned CIT(A) for unexplained share capital is deleted." 7.2.11 The aforesaid decision of Hon'ble ITAT, Delhi Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out for the purpose of grant of deduction under section 80IA of I.T. Act 1961. The aforesaid decision of ITAT, Nagpur Bench, Nagpur has achieved finality in as much as the question of law raised in this respect was not admitted by the Hon'ble Bombay High Court in the appeal filed by the revenue. The aforesaid view has thus achieved finality and thus respectfully following the same, I am of the opinion that nothing adverse can be drawn from the interest received and credited in the profit and loss account of appellant company for the purpose of quantum of allowable deduction under section 80IA(4) of I.T. Act 1961. 7.2.15 It is seen that the sale proceed of empty bags is credited to the profit and loss account. The aforesaid sale of empty bags is in respect to purchase of cement and other consumable materials and cost of which debited to the profit and loss account. The sale value of Bardana would go to reduce the cost of expenditure on account of consumable debited in the profit and loss account. The sale of Bardana is not an independent source of income. The sale of Bardana is inextricably linked to the development of projects being that of development of infrastructure pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. reported in 454 ITR 212(SC). Further, we find that the ld CIT(A) had relied on the decision of Lucknow Tribunal in the case of Vijay Infrastructure in ITA No. 254/Lkw/2015 dated 30.10.2015 to give relief to the assessee on merits. We find that this decision of Lucknow Bench of Tribunal has been approved by the Hon'ble Allahabad High Court in the Income Tax Appeal No. 29/2016 dated 12.07.2017, wherein, specifically, the widening of roads from 2 lanes to 4 lanes have been approved to be development of roads activity by placing reliance on the CBDT Circular No. 4/2010. We find that the Special Leave Petition preferred by the revenue against this decision of the Hon'ble Allahabad High Court has been dismissed by the Hon'ble Supreme Court in Special Leave Petition (Civil) Dairy No. 10863/2018 dated 13.04.2018. In any event, we find that the claim of deduction u/s 80IA of the Act is to be examined in the initial year of its claim and the same is allowed in the initial year. The same cannot be disturbed by the revenue in the subsequent years, unless there exists any contrary materials on record or fresh development in facts. In the instant case, admittedly no such contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious infrastructure and road development projects as main contractor and sub-contractor at various sites in Madhya Pradesh & Chhattisgarh. TBCL mainly gets contracts from government agencies such as Madhya Pradesh Road Development Corporation (MPRDC), Madhya Pradesh Rural Development Authority (MPRRD), Chhattisgarh Public Works Department (CGPWD) and Sanjay Gandhi Thermal Power (SGTP) etc. These contracts are awarded after tender notification. In order to win the bid for tender and later on to ensure smooth functioning of work, inspection, approval and release of payments in time, the directors of company and project in charge keep in touch with the government officers/officials and liaison for the company." 3.1. The ld AO concluded that the contents reflected in the seized documents represent illegal payments made to various Government officials for liasoning purpose by Shri Govind Prasad Pandey on behalf of the assessee company. A statement to the effect was also recorded from Shri Govind Prasad Pandey u/s 132(4) of the Act by the search team. This statement was subsequently retracted by Shri Govind Prasad Pandey on 15.01.2015 before the Investigation Wing itself. Based on Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation would hold good for other assessment years qua this issue:- "7.2.3. DECISION:- I have carefully considered the submission put forth & the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material brought on record. The A.O. has made the addition for Rs. 16.75 lakhs on account of illegal gratification on the basis of documents seized from Shri Govind Pandey an employee of appellant company. The A.O. has discussed about the addition at para 6.1 of assessment order and has given the details as regard to seized documents in assessment order. The A.O. on the basis statement of Shri Govind Pandey has concluded that the addition of Rs. 16.75 lacs is required to be made at the hands of appellant on account of payment of illegal gratification. 7.2.4 It is seen from record that the residential premises of one of the employees, Shri Govind Pandey was searched simultaneously and addition made is on the basis of statement of Shri Govind Pandey u/s 132(4) of I.T. Act 1961 which has been retracted. The seized documents are not found from the premises of assessee. The seized documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf." 21. Several decades back the Madras High Court in the case of Shriramalinga Choodambikai Mills Ltd. vs. CIT: (1955) 28 ITR 952 held that in the absence of any evidence to show either that the sales were sham transactions or that the market price were in fact paid by the purchasers, the mere fact that goods were sold at a concessional rate would not entitle the Income tax Department to assess the difference between the market price and the price paid by the purchaser as profit of the assessee. In CIT vs. A. Raman & Co.: (1968) 67 ITR 11 the Supreme Court held that the law does not oblige a trader to make the maximum profit that he can out of his trading transactions. Income which actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible 17. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 26. The Hon'ble Supreme Court further observed:- 17. From a plain reading of the Section it is manifest that to make an entry relevant there under it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as/ relevant evidence, still, the statement made therein shall not alone be sufficient evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Office did not make any inquiry from buyers of flat in respect of actual prices paid by them. He also did not make any other inquiry in order to corroborate his conclusion. There is no incriminating evidence to show that the assessee has sold the flats at a higher rate. 32. Considering the facts of the case in hand in totality and in the light of the judicial decisions referred to hereinabove, we do not find any merit in the impugned additions. We, therefore, set aside the findings of the ld. CIT(A)and direct the A.O. to delete the addition of Rs. 32.56 crores. The ratio laid down by the aforesaid decision squarely applies to the facts in case of appellant and considering the same noting found in the documents not belonging to appellant and also not found from appellant are not sufficient evidence to hold that appellant has made any payment on account of illegal gratification. In view of above, the conclusion of the A.O. as regard to illegal payment is unjustified and unsustainable. 7.2.5 It is seen that the appellant company has maintained regular books of account in respect to activities of business. The A.O. has found no fault with the books of account maintained by appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2.7 It is noted that Shri Govind Pandey although in the initial statement had given adverse evidence however the same was retracted. Shri Govind Pandey in his subsequent statement had explained the nature of notings as made in the documents found from his premises. The Hon'ble ITAT, Raipur Bench, Raipur in case of Shri B.L. Agrawal in ITA No.110 to 114/BLPR/2012 had considered the contradictory statement of third party for making addition. The relevant findings as recorded in the order of Hon'ble ITAT at para 19 & 20 are reproduced hereunder: 10. In our considered opinion the statement of Shri Sunil Kumar Agrawal which has been duly retracted can by no stretch of imagination be a basis to hold that the assessee was owner of the share capital of these four companies. This presumption is not tenable under any Law be it the Income Tax Law or Company Law. 20. In this regard we also note that Hon'ble Apex Court in the case of Surajmal vs. State (Supra) has expounded that it is well settled that where witnesses make two inconsistent statements in their evidence either at one stage or at two stages, the testimony of such witnesses becomes unreliable and unworthy of crede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Similarly, in respect of bank transactions, last three digits were omitted. Tax has to be collected on real income but not on hypothetical income. Unless those entries are independently corroborated with contemporaneous record, no adverse view can be taken by the Assessing Authority. No such direct independent evidences have been brought to demolish the contention of the assessee. As contended by the assessee, no assets have been unearthed during search, which is ultimate weapon of the Dept., for making such addition on the basis of some mathematical calculation. 26. It is clear from the above provisions of section 153A that the income of the assessee in case of a person where search is initiated u/s. 132, the books of account or other documents or any assets are requisitioned u/s. 132A, the Assessing Officer after issue of a notice to furnish income of the assessee in respect of each assessment year falling within 6 assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition made, the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such 6 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. Applying this test, it could not be said that the decision recorded by the CIT(A) one which could not have been arrived at by a reasonable person properly informed in law considering the state of evidence on record. Hence, in our considered opinion, the CIT(A) has reached a correct conclusion in deleting the addition made by the AO on the basis of loose sheets. The ratio laid down by Hon'ble ITAT Hyderabad Bench squarely applies to the facts in the case of appellant and considering the aforesaid judicial precedent addition made by the A.O. is unjustified and unsustainable. For the detailed reasons recorded hereinabove, I am of the considered opinion that the impugned addition made by the AO is unjustified and unsustainable and hence, the addition made at Rs. 16.75 lakhs is directed to be deleted. Thus, these Grounds of appeal of appellant are allowed." 3.4. We find that Shri Padam Singhania at the time of search itself had categorically stated that no illegal payments were made by the assessee company to any Government off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company. In view of the aforesaid observations, we have no hesitation to delete the substantive addition in the hands of the assessee company. Accordingly, the addition made on alleged illegal payments for various assessment years are hereby deleted. Accordingly Ground No. 2 raised by the revenue for AYs. 2011-12 to 2015-16 is dismissed. 4. Addition u/s 68 in respect of share capital contribution of Rs. 1,37,56,000/- Ground No.3 for AY 2011-12 We have heard the rival submissions and perused the materials available on record. The ld.AO observed that the assessee had allotted shares at a premium of Rs. 40 per share to different Kolkata based companies on 02.04.2009. The ld AO observed that 192400 shares of Rs. 10 each were held by family members in the assessee company. 3,62,000 equity shares were allotted to different Kolkata based companies at a premium of Rs. 40 per share. During the year under consideration, the shares were transferred by Kolkata based companies to the individual family members at par, pursuant to which entire 5,45,400 equity shares came to be held at a price of Rs. 10 each by the family members in the assessee company. The ldAO observed in para 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire set of transactions. We find that these contentions were rightly appreciated by the ld CIT(A) while granting relief to the assessee by observing as under:- "7.5.3. DECISION:- I have carefully considered the submission put forth & the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material evidences brought on record In the case of appellant share capital has been issued to corporate shareholders in the relevant Asstt. Year 2010-11 at Rs. 181 lakhs. The details as to share capital issued to various corporate shareholders have been observed in assessment order at page 60. The details as reproduced in assessment order indicate the name of corporate shareholders and complete address of the company and number of shares issued to shareholders and amount received towards contribution of share capital including premium. The A.O. has obtained details of two such corporate shareholders from the website of Ministry of Corporate Affairs (MCA) and balance sheet of such corporate shareholders has been obtained and pasted at page 62 of assessment order. M/s. UmangVanijya Pvt. Ltd had su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t." 16. The aforesaid judgment has been followed by all the Courts and the judgments relied on by the appellants relates to the period prior to the judgment in Lovely Exports. As the Apex Court has specifically held that if the identity of the person providing share application money is established then the burden was not on the assessee to prove the creditworthiness of the said person. However, the department can proceed against the said Company in accordance with law. The position of the present case is identical. It is not the case of any of the parties that M/s Alliance Industries Limited, Sharjah is a bogus company or a non-existent company and the amount which was subscribed by the said Company by way of share subscription was in fact the money of the respondent assessee. In the present case, the assessee had established the identity of investor who had provided the share subscription and it was established that the transaction was genuine though as per contention of the respondent the creditworthiness of the creditor was also established. In the present case, in the light of the judgment of Lovely Exports (P) Ltd., we have to see only in respect of the establishment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. reported at 159 ITR 78 (SC). In the facts of present case, the assessee has placed on record the details down loaded from website of registrar of the companies and PAN details to substantiate the contributions of share capital. No fault is found in the same. In the case of appellant there is no legal evidence brought on record to doubt the genuineness of contribution of share capital. Ratio laid down by the Hon'ble Bombay High Court squarely applies to the facts in case of assessee The addition made by the A.O. is thus unjustified and unreasonable. 7.5.6 The A.O. has referred to report of Investigation Wing of Kolkata to Investigation Wing of Jabalpur which has been pasted at page 65 &66 of assessment order. In aforesaid report no specific observation is given as regard to transaction of contribution of share capital received by appellant from the aforesaid corporate shareholders. The A.O. himself has brought on record the Balance Sheets of some corporate shareholders wherein substantial share capital and reserves and surplus of corporate shareholders are found by downloading the information from site of Ministry of Corporate Affairs (MCA) PAN of such companies is also ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of both the sides and have perused the material placed before us. In the case of Kabul Chawla (supra), Hon'ble Jurisdictional High Court has considered all earlier decisions of Hon'ble Delhi High Court and has also considered the decisions of other High Courts and Tribunals and summarized the legal position in paragraph 37 and at the conclusion of the case in paragraph 38, which are reproduced below:- "Summary of the legal position. 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:- i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial, the completed assessment can be reiterated and the abated assessment or reassessment can be made In clause (vu), it is stated "Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search". 10. In the case of RRJ Securities Ltd. (supra), in paragraph 21, it has been held "In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. However, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possibility of any income that may be remained undisclosed in the relevant assessment years. This Court in Commissioner of Income Tax (Central)-III v. Kabul Chawla: ITA 707/2014, decided on 28th August, 2015 has held that completed assessments could only be interfered with by the AO on the basis of any incriminating material unearthed during the course of the search or requisition of the documents. In absence of any incriminating material, the AO does not have any jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts recorded during search and seizure operations". Their Lordships further observed "However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation". In paragraph 24, their Lordships have mentioned about the prevailing practice of extracting statement by exerting undue influence or coercion by the search party. Though the above decision in the case of Harjeev Aggarwal is with reference to the meaning of undisclosed income u/s 158BB of the Income-tax Act, however, in our opinion, the above observation of Hon'ble Jurisdictional High Court would be squarely applicable while considering the evidentiary value of the statement while making the assessment u/s 153A." "23. We have discussed in detail the legal position as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court in various cases. We have also discussed the facts of the assessee's case. Now, applying the law as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dated 01/08/2017 in ITA No.13/2017. The aforesaid decision rendered is in respect to contribution of share capital received by said company. Perusal of assessment order shows that addition made is not on the basis of any incriminating material or evidence found in the course of search. Regular assessment framed has already achieved finality. The facts and circumstances in case of appellant are similar to that of decision of Hon'ble Delhi High Court. The ratio laid down by the aforesaid decision squarely applies to the facts in case of appellant. The addition made by the A.O. on account of share capital is thus unjustified and unsustainable. 7.5.8 It is seen that sum of Rs. 252.93 lakhs is share application money received upto Asstt. Year 2009-10 which was shown as share application money in balance sheet for the year ended 31/03/2009. The aforesaid sum includes Rs. 181 lakhs for which shares have been issued to corporate shareholders in Asstt. Year 2010-11. In the regular assessment framed u/s 143(3) and assessment framed u/s 153A r.w.s. 143(3) of I.T. Act 1961 for Asstt. Year 2009-10 contribution of share application money has not been disputed by the A.O. In fact share ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. 5. Addition on account of unrecorded cash transactions Ground No. 4 for AY 2011-12- Rs. 137 lakhs Ground No. 4 for AY 2012-13 Rs. 70 lakhs We have heard the rival submissions and perused the material available on record. During the course of search, seized document Annexure A-1/LPS-6/ page 36 was recovered from the head office of the assessee company, wherein, it was written "cash from GR" against Rs. 70 lakhs. Shri Padam Singhania was asked about the same. He responded that 'GR' stands for Shri Guddu Rastogi who is the dealer of Prism and Ambuja cement at Shahdol. He further stated that this amount was paid in cash to Shri Guddu Rastogi against purchase of cement during the FY 2011-12 and later on, when the company had sufficient funds, the same was paid through e-transfer and cash amount of the same was received back from him. Shri Padam Singhania came forward to surrender this Rs. 70 lakhs as undisclosed income from AY 2012-13. Similar noting was mentioned in the seized paper A-1/LPS-6/Page35 wherein, cash payment totaling to Rs. 1,37,00,000/- was referred against cement purchase to Shri Guddu Rastogi. Shri Padam Singhania came forward and offered a sum of Rs. 97,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Further, the said loose papers refer to amounts allegedly received by the assessee from Shri Guddu Rastogi and not payments made thereon. The ld AO could have understood the truth had he proceeded to examine Shri Guddu Rastogi in this regard to ascertain whether any payment per se was made by him to the assessee company or to any representative on behalf of the assessee company or whether there were any receipts from the assessee company. It was also pointed out that Shri Padam Singhania though surrendered this income originally had later on retracted his statement which was ignored by the ld AO while making addition in the hands of the assessee. The ld CIT(A) appreciated the contentions of the assessee and deleted the addition for both the years by observing as under:- "7.4.3. DECISION:- I have carefully considered the submission put forth& the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material evidences brought on record. In case of appellant, the A.O. has made the impugned addition of Rs. 137 lakhs in Asstt.Year 2011-12 and Rs. 70 lacs in Asstt. Year 2012-13 for det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been made by the appellant. Evidentiary value in respect to notings on loose papers have come up for consideration before Hon'ble ITAT, Ahemdabad Bench, Ahmedabad in case of M/s Nishant Construction Pvt. Ltd in ITA No. 1502/Ahmd/2015 vide order dated 14/02/2017. The relevant findings of Hon'ble ITAT are reproduced at above para 7.2.4. The ratio laid down by the aforesaid decision squarely applies to the facts in case of appellant and considering the same notings found on loose paper are not sufficient evidence to hold that appellant has made any payment. In view of above conclusion of A.O. as to payment made to Guddu Rastogi is unjustified and unsustainable. 7.4.6 The only adverse thing which is considered by the A.O. for making the impugned addition is the statement of Shri Padam Singhania obtained during the course of search at his premises which has been retracted and would no longer remain credible evidence on record. The aforesaid issue is amply supported by instruction issued by CBDT on 10/03/2003 and further clarification issued there upon on 18/12/2014. The CBDT has explained in the aforesaid instruction that the A.O. shall not obtain confessional statement du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self- incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs. Hon'ble High Court of Andhra Pradesh in the case of Gajjam Chinna Yellapa reported at 370 ITR 0671 has held as under: 9. The Act empowers the Assessing Officers or other authorities to record the statements of the assesses, whenever a survey or search is conducted under the relevant provisions of law. The statements so recorded are referable to Section 132 of the Act. Sub-section 4 thereof enables the authorities not only to rely upon the statement in the concerned proceedings but also in other proceedings that are pending, by the time the statement was recorded. 10. If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4.7 The various contention raised by appellant in the submission as referred to hereinabove are fair and reasonable. Considering the totality of fact and circumstances in case of appellant, I am of the considered opinion that the addition made by the A.O. at Rs. 137 lakhs in Asstt. Year 2011-12 and Rs. 70 lakhs in Asstt. Year 2012-13 is unjustified and unsustainable. Hence, the addition made by the A.O. is directed to be deleted in both the assessment years. These grounds of appeal of appellant are allowed." 5.2. We have gone through the said seized documents A-1/ LPS-6/ pages 35-36. We find that the seized documents only refer to cash received from Shri Guddu Rastogi allegedly. It does not refer to any cash payment made to Shri Guddu Rastogi. Hence, addition made on account of unrecorded cash payment by the ld AO for both the years by placing reliance on the seized documents is devoid of merit. In any event, the ld AO had not resorted to make any cross verification from Shri Guddu Rastogi to ascertain the fact as to whether there was any cash transaction regarding purchase of cement between the assessee company and him. The revenue before us had not brought any evidence on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract payment made by assessee company to him or to doubt the capacity of Shri Sushil Singhal to execute the sub-contract work for the assessee company. It was submitted that assessee company had duly deducted tax at source on the subcontract payment made to Shri Sushil Singhal. The ld AO dismissed the same by stating that merely a particular transaction had undergone tax deduction procedure, the same would not establish its genuineness. The ld AO proceeded to disallow the entire sub-contract payment made to Shri Sushil Singhal of Rs. 1,23,62,077/- for AY 2012-13 ;Rs. 1,68,58,576/- for AY 2013-14 and Rs. 1,57,89,630/- for AY 2014-15. 6.1. The assessee submitted that search assessment of Shri Sushil Singhalwas also framed by the very same ld. AO on 23.12.2016, wherein, the sub-contract payment made by assessee company to ShriSushilSinghal had been duly assessed as 'business income' in the hands of Shri Sushil Singhal by the very same ld AO. Further, it was reiterated before the ld. CIT(A) that there is absolutely no incriminating material found during the course of search of either Shri Sushil Singhal or the assessee company to doubt the genuineness of the sub-contract payment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial statements as submitted by Shri Sushil Singhal has been accepted without inviting any adverse observation in the assessment framed in his hand at the same time by the same A.O. The financial statements of Shri Sushil Singhal indicates that he is having substantial plant and machinery worth Rs. 104.83 lakhs being opening WDV in assessment year 2014-15 and there has been further addition to Land machinery of Rs. 33.64 lakhs. The various plant and machinery like dumper, tripper excavator, tippers, JCB etc. fully substantiate the contention of the appellant company that Shri Sushil Singhal had satisfactory ability to execute the sub contract work for the appellant company. The financial statements of Shri Sushil Singhal also indicted that substantial loans have been obtained from the financial institutions in order to acquire the fixed assets being plant and machinery for execution of civil work. The evidence on record thus fully substantiates that Shri Sushil Singhal has executed the work of sub contract of appellant company, Moreover the aforesaid facts have been accepted by A.O. in the assessment of Shri Sushil Singhal without inviting any adverse observation and thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." 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 153Ais relatable to abated proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minating material unearthed during the course of the search or requisition of the documents. In absence of any incriminating material, the AO does not have any jurisdiction to interfere in concluded assessments." 11. In the case of Harjeev Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference :- "19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also discussed the facts of the assessee's case. Now, applying the law as laid down by Hon'ble Jurisdictional High Court and Hon'ble Apex Court to the facts of the assessee's case, the following position emerges (i) No addition u/s 153A in respect of a completed assessment can be made unless some incriminating material was unearthed during the course of search Admittedly, in the case of the assessee, no incriminating material with regard to issue of share capital has been found and seized during the course of search (u) Any statement recorded during the course of search cannot on a standalone basis without reference to any other material discovered during search and seizure operation would empower the Assessing Officer to make the addition The words "evidence found as a result of search" would not take within its sweер statement recorded during search and seizure operations. Therefore, the Revenue's stand that the addition u/s 153A can be made in respect of share capital on account of statement of Shri Tarun Goyal and Shri Anu Aggarwal cannot be accepted. (un) Even otherwise, the statement of ShriTarunGoyal cannot be utilized against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shil Singhal also was covered in the search based on the consequential search warrant issued in his name on 16.10.2014 and search assessments were independently framed on him by the very same ld. AO just 4 days prior to the completion of search assessments in assessee's company case. In the search assessments completed in the hands of Shri Sushil Singhal, the sub-contract payments made by the assessee company to Shri Sushil Singhal were treated as 'business income' by the very same ld AO, meaning thereby, the ld AO had indeed accepted the fact that Shri Sushil Singhal had acted as a subcontractor to the assessee company. Having taken the said stand while framing the search assessment of Shri Sushil Singhal, the very same ld AO would not be justified in taking a divergent stand while framing the search assessment in the hands of the assessee company by stating that Shri Sushil Singhal is a man of no means and does not have capacity to execute sub-contract work for the assessee company. These facts were duly appreciated by the ld CIT(A) on merits while granting relief to the assessee company, on which, we do not find any infirmity. In any event, no addition could be made at all in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Sale Summary, it contains the name of the party, period in which the sale was made and quantity sold thereon. Accordingly, he proceeded to add the sum of Rs. 12,02,643/- as unaccounted sales in the hands of the assessee. The ld CIT(A) observed that the period mentioned in the seized documents from December 2010 to May 2012 and said document is dated 26.05.2012. The said seized documents does not represent any sale of gitti made during the year under consideration. Accordingly, the addition made by the ld AO ignoring this fact and merely based on statement of Shri Padam Singhania cannot be sustained in the eyes of law. The seized document A- 1/LPS-22/page 17 is reproduced at page 90 of the assessment order. On perusal of the said seized documents, we find that the same contains the name of the party, sale of gitti made during the particular period, number of trips undergone together with the quantity sold thereon. Nowhere the said seized document contains the value of rate per metric ton. Hence, the basis of Rs. 250 per metric ton adopted by the ld AO for arriving the sale figures of Rs. 12,02,643/- is apparently devoid of merit. Further, we find from the perusal of the said seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash balance available with the assessee company, which are duly reflected in the main cash book maintained by the assessee company. This is also reflected as a contra entry in the imprest cash book/ petty cash book maintained by Shri Pradeep Khare. The assessee in support of these contentions furnished the main cash book as well as the petty cash book together with the cash vouchers for expenses incurred by Sri Pradeep Khare on behalf of the assessee company before the ld AO. The ld AO disregarded the same and proceeded to add a sum of Rs. 8,62,692/- as unaccounted cash payments made by the assessee on substantive basis and same was also added in the hands of M/s. Shivangi Oil Pvt Ltd. on protective basis. 8.1. The assessee submitted before the ld CIT(A) that the ld AO had not even bothered to make enquiry/ cross verification with Shri Pradeep Khare to ascertain the facts. It was submitted that the assessee had maintained regular books of account with respect to expenses incurred and claimed in profit and loss account. From the cash vouchers of Shri Pradeep Khare, it could be seen that the expenditure was incurred by Shri Pradip Khare out of imprest amount given to him and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AO in the search assessment proceedings. Hence, it cannot be said that those payments are not recorded in the books of accounts of the assessee company warranting any addition. In these facts and circumstances of the case, the statement given by Shri Padam Singhania has got absolutely no relevance. In any event, the said statement stood subsequently retracted by him. Hence, the entire addition is made by the ld AO without appreciating the modus operandi adopted and the evidences on record. Accordingly, ground No. 1 raised by the revenue in AY 2014-15 is dismissed. 9. Addition of Rs. 28,76,300 on the basis of rough extracts of invoices Ground No. 4 for AY 2014-15. We have heard the rival submissions and perused the material available on record. During the course of search, seized document A-1/LPS-1/pages 3 to 33 were seized from the office premises of the assessee company located at Burhar, containing certain bills of "Om Marketing" and "Ishwari Industries". The Search party compared the said invoices with the ledger account of Om Marketing and Ishwari Industries in the books of the assessee company and found that those invoices reflected in the seized documents were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny The aforesaid invoices found in the course of search was not found recorded in the regular books of account of appellant. The appellant has also not claimed to have received the aforesaid goods for executing work. The independent evidence collected bythe A.O. on record indicates that the seized documents are not the evidence of any payment made by the appellant which is not recorded in books of account. It is noted that no claim is made by appellant in respect ito aforesaid seized documents and it is also not an evidence of payment made by the appellant is undisputed fact on record. In view of above facts there is no justification for making any addition at the hands of appellant in as much as there is neither any claim which requires disallowance nor there is any unexplained expenditure which requires addition at the hands of appellant. The seized documents are in fact no evidence of transaction made by the appellant which requires adverse consideration at the hands of appellant. Thus explanation of appellant that the aforesaid documents are fabricated documents which have no relevance either with income or expenditure of appellant deserves acceptance. 7.5.4 The addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be delete. These grounds of appeal of appellant are allowed." 9.1. We find that the ld CIT(A) had taken due cognizance of the independent verification carried out by the ld AO from the proprietor of 2 concerns i.e. Om marketing and Ishwari Industries, wherein the proprietor had categorically denied having made any cash sales in respect of those invoices to the assessee company and also denied having made any transaction qua those invoices reflected in the seized documents with the assessee company. This clearly goes to prove that the documents are merely rough notings and proforma invoices not acted upon by the parties. In fact, the corroborative material in the form of third-party independent examination goes in favour of the assessee. This fact has been duly appreciated by the ld CIT(A) while granting relief to the assessee company on which we do not find any infirmity. Accordingly Ground No. 4 in Assessment Year 2014-15 is dismissed. 10. Addition on account of unaccounted receipts of Rs. 1,73,63,660/- Ground No. 1 for AY 2015-16 We have heard the rival submissions and perused the materials available on record. In the group of cases at the instance of Authorized Officer, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 9 crore by the entire family members. This benefit of telescoping was not granted by the ld. AO and the addition ultimately was made in the hands of the assessee company herein based on the original statement of Shri Padam Singhania. 10.1. The assessee reiterated its submissions before the ld. CIT(A) and pleaded that the contents in the seized documents are just rough notings. No cash was received by the assessee from Shri Ashok Singh to the tune of Rs. 1,73,63,660/-. The assessee stated that an information was sought under Right to Information (RTI) Act from PMGSY and MPRRDA asking about the work allotted to Shri Ashok Singh. The authorities confirmed that they had not given any work to Shri Ashok Singh. Based on the strength of this RTI information, the assessee pleaded that the contents in the seized documents are just rough notings not having any supportive or any corroborative evidence and hence had to be construed as dumb documents. The assessee also clarified that the said notings were made to mislead the financers/ creditors that their debts would be paid as soon as the money is received from the mentioned sources, but in reality, no such source actually existed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an alternative measure, had come forward to surrender the sum as income of the assessee with the bonafide belief that the same would be available for telescoping benefit with the overall disclosure of Rs. 9 crores made by the family members for the group as a whole. The ld. AO having ignored the fact that there was no occasion for the assessee to receive any money from Shri Ashok Singh, proceeded to add the rough notings in the loose papers as unaccounted receipts in the hands of the assessee and had not even given the benefit of telescoping to the assessee. It is a fact that the contents in the said documents are absolutely not supported with any corroborative evidence whatsoever. We agree with the contention of the assessee that there was no occasion at all for the assessee to receive any money from Shri Ashok Singh. Hence the notings in the loose papers found in the search are to be construed only as dumb documents not supported with corroborative evidence and hence no addition per se could be made in the hands of the assessee based on such dumb documents, dehors the statement given by Shri Padam Singhania. No work was executed by the assessee to Shri Ashok Singh, so as to enab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is purchase of materials and labour payment and other overhead expenses incurred on day-to-day basis. The figure submitted in the stock statement to the bank is an estimated figure which should not be taken for the purpose of assessment of the company. The another loose sheet i.e. A- 1/LPS-6/Page-51 representing actual WIP as on 31.08.2014 matches with the books of account regularly maintained by the assessee and the same is more than the stock statement submitted to the bank and hence there cannot be any concealment of income thereon. The ld AO however, ignored the said submissions and proceeded to add the difference amount of Rs. 4,14,08,000/- based on the initial statement of Shri Padam Singhania for AY 2015-16. It is pertinent to note that Shri Padam Singhania had categorically stated in his statement u/s 132(4) that one of the bunch of loose papers represent work in progress as on 31.08.2014 for the purpose of submission of stock statement to the bank to avail the credit facility from the bank and another bunch which is reflected at page 51 of the loose sheets which is 'actual' for the month of August 2014. The very same reply was given by the assessee company during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X
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