M/s Kalyan Toll Infrastructure Ltd, Indore V. ACIT Centtral -2 Indore, Indore

CO 50/Ind/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5016 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 13-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business income; Business expenditure; Document seized; Question of law; Fair market value; Documents seized; Revenue expenditure; TDS
• Section: 131; 68; 132; 69C; 143(3); 142(1); 153A; 250; 264; 64; 153C

Judgement Text

ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 1 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA No.13/Ind/2021 Assessment Year:2013-14 DCIT Central-2, Indore बनाम/ Vs. M/s Kalyan Toll Infrastructure Ltd., Indore (Appellant) (Respondent ) P.A. No.AACCK1840M CO No. 50/Ind/2021 (Arising out of ITA No.13/Ind/2021) Assessment Year:2013-14 M/s Kalyan Toll Infrastructure Ltd., Indore बनाम/ Vs. DCIT Central-2, Indore (Appellant) (Respondent ) P.A. No.AACCK1840M Revenue by Shri P.K. Mitra, CIT-DR Assessee by Shri Ajay Tulsiyan, CA Date of Hearing: 19.01.2021 Date of Pronouncement: 11.03.2022 आदेश /O R D E R PER MANISH BORAD, A.M: The above captioned appeal filed at the instance of the Revenue and cross objection by assessee for Assessment Year 2013-14 are directed against the order of Ld. Commissioner of Income Tax(Appeals) (in short ‘Ld.CIT]-III, ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 2 Indore dated 22.09.2020 which is arising out of the order u/s 153A r.w.s.143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 29.12.2017 framed by DCIT(Central)-2, Indore. The revenue has raised following grounds of appeal : (i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 36,15,98,952/- made by the Assessing Officer on account of unexplained cash credit u/s 68 of the Income Tax Act, without appreciating the facts and evidences mentioned in the assessment order. (ii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 40,85,959/- made by the Assessing Officer on account of unjustified payments made to dummy contractors, without appreciating the facts and evidences mentioned in the assessment order. The assessee has raised the following grounds of cross objections: (i) That the Learned CIT(A) erred in confirming the addition of Rs. 9,40,0000/- made by the Learned AO. That on the facts and in the circumstances of the case, the said addition is uncalled for and wrong prayed to be deleted. (ii) That the Learned CIT(A) erred in not allowing deduction of education cess of Rs. 12,39,485/- incurred during the year. That on the facts and in the circumstances of the case and in law the appellant is entitled to claim deduction of such cess of Rs. 12,93,485/- which is prayed to be now allowed. 2. Brief facts of the case as culled out from the records are that the assessee M/s Kalyan Toll Infrastructure Ltd. was incorporated on 03.07.2002 and is engaged in BOT contract and civil construction contract business during the year under consideration and is managed and controlled by Garg Family of Indore (Kalyan Group). The erstwhile flagship company of the group was Keti Construction (India) Ltd, which was jointly owned and managed by Garg Family and Jakhetia Family. Later on this company was demerged into two companies namely Keti–T Construction (India) Ltd. (coming to Garg family) and Keti KJ Construction (India) Ltd. (going to Jakhetia family). The demerged company i.e. Keti - T Construction (India) Ltd. was merged into the assessee company w.e.f 01.09.2011. The assessee filed the return of income for this year u/s 139 on 01.10.2013 declaring total income of Rs. 7,89,88,060/-. Search ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 3 and Seizure operations u/s 132 were carried out on the business as well as residential premises of Kalyan Group of Indore on 04.09.2015. The AO issued notices u/s 153A for A.Ys 2010-11 to 2015-16. In response to which the assessee filed returns u/s 153A for A.Ys 2010-11 to 2015-16 on 28.08.2016. The return u/s 153A for the year under consideration was filed declaring total income of Rs. 7,89,88,060/-. Later on during the assessment proceedings, various details were called for by the Assessing Officer which were duly replied by the assessee. However, the assessment order u/s 153A r.w.s. 143(3) was passed by the AO on 29.12.2017 assessing the income for this year at Rs. 44,56,12,967/- making various additions. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A) and the appeal was partly allowed deleting the major additions made by the Assessing Officer, therefore, the Revenue has filed the appeal whereas the assessee has also filed cross- objection challenging the confirmation of additions in the impugned order. In the appeal filed by the Revenue, a revised Form no. 36 was filed. 3. Ground no. 1 raised by the revenue challenges the findings of the Learned CIT(A) deleting the addition of Rs. 36,15,98,952/- made by the AO u/s 68 on account of fresh share capital issued by the assessee. Facts, in brief, relating to the issue are that the assessee issued share capital to the promoters, directors, their relatives and also to some outside third parties during the year under consideration. Such shares having face value of Rs. 10 per share were issued at a premium of Rs. 68 per share. The AO made addition u/s 68 in respect of the shares issued to the outsider third parties which are all Bombay based companies amounting to Rs. 36,15,98,952/- including the share premium. Being aggrieved the assessee challenged the said addition before the Ld. CIT(A), who deleted the same. Therefore, the revenue is in appeal before this Tribunal. 4. Before us, ld. CIT-DR vehemently argued the issue supporting the order of the Ld. AO and submitted that the addition was rightly made by the Ld. Assessing Officer. Per contra, Ld. Counsel for the assessee relied upon the ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 4 findings of Ld. CIT(A) and also referred to the paper books filed on 07.01.2022 containing 229 pages in main paper book and 1043 pages in volume I to volume III which also include submission made before the Ld. CIT(A) and various other documents to support the genuineness, creditworthiness and identity of the share holders and also support the other contentions of the assessee. 5. We have considered the submissions of both the sides and perused the records placed before us. We find that that during the year under consideration the company has allotted total 10256410 shares at a premium of Rs. 68 per share to the group companies, family members of the directors and also to outside parties. The share capital of the company increased by Rs. 10,25,64,100/- and the share premium increased by Rs. 69,74,35,880/-. Out of these amounts the AO made addition u/s 68 of Rs. 36,15,98,952/- i.e. in respect of 4635884 shares which all were issued to certain Mumbai based companies. We also find that the issue price of Rs. 78 per share was decided on the basis of the certificate issued by a Chartered Accountant valuing the shares at FMV in accordance with the prescribed Rules i.e. Rule 11UA as is evident from the page 986 to 990 of the paper book. Further, we find that the entire share capital and premium added by the Ld. AO u/s 68 was received and credited in the books of accounts of the assessee in earlier years and no incriminating document was found or seized related to the issue of share capital during the search on the assessee as also evident from the assessment order, where there is no reference of any incriminating seized material while making this addition. Independent enquires were also conducted through the DDIT Mumbai during the post search proceedings and summon u/s 131 were issued to various share holders, in response to which some of the share holders duly complied and also filed their submissions confirming the transaction with the assessee as is evident from page 16, page 29 to page 33 of the assessment order. We also find that some of the summons were returned unserved and in the cases where the summons returned unserved and were ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 5 again issued on the new address, the same were served and were duly complied with by the share applicants as mentioned on page 16 second para of the assessment order. 6. We also find that the AO was already in possession of the financials of all the share applicants of multiple years and also discussed the same in the assessment order. From the details so abstracted by the AO in the assessment order, we find that all the share applicants had sufficient net worth in the form of their share capital and free reserves to make investment in the shares of the assessee company. The creditworthiness of the share applicants was doubted primarily for the reason that the share applicants have shown very nominal returned income in their returns as per the table given on page 14 and 15 of the assessment order. In some cases, inspector report was referred by the Assessing Officer. However, the same were neither provided to the assessee nor ever confronted and no opportunity of cross examining the persons whose statements were recorded by the inspector was provided to the assessee. In respect of various other adverse observations made by the AO in the assessment order, referring to the enquiries conducted during the post search proceedings, learned counsel for the assessee explained that the same were never brought to the knowledge of the assessee and were never confronted by the Investigation Wing during the post search enquiries and no doubt was raised and no question was asked by the search team on this issue during the entire search proceedings in the statements recorded u/s 132(4) and also the post search proceedings. We find force in the contention of the learned counsel for the assessee because we find that the assessee had filed elaborate documents such as name and addresses of the share applicants, their master data from ROC, their confirmation letters, copies of their ITRs, Balance Sheets and MOA and AOA and also copies of the bank statements of the share holders and also the corresponding bank statement of the assessee before the AO and are also enclosed in the paper book. ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 6 7. We find that with regard to the observation of the AO that there was no justification of the premium charged by the assessee, learned counsel for the assessee explained that the assessee had submitted that the shares were issued on the basis of the valuation done by Chartered Accountant of the FMV in accordance with Rule 11UA. Further, the assessee company is the flagship company of the Kalyan Group having turnover of more than 250 crores and net profit above 20 crores and has shown substantial growth in its revenue and profitability in subsequent years. Its net worth as on 31.03.2013 is 290 crores and the book value itself works out to more than 65 per share without factoring in the intrinsic value of its assets and properties, its intangible assets in the form of future entitlements of toll collection of various toll projects for as long as 20 to 30 years, also the intrinsic value of its investments made in various SPVs and subsidiaries companies, its prospective future growth and earnings. Further, learned counsel for the assessee explained that the assessee had issued much larger share capital at the same premium to its promoters, associate companies, directors and family members during the year under consideration. We find that the Ld. CIT(A) examined the issue at length and deleted the addition made u/s 68 observing as under:- 1. Ground No. 1 to 3:- These grounds of appeal are raised against the addition of Rs. 36,15,98,952/- made u/s 68. Since common issue is involved in all these grounds and the facts are also common and intermingled, all the three grounds are taken together for adjudication. The various contentions raised by the appellant through these grounds are that firstly no incriminating documents in relation to the addition of share capital made by the AO u/s 68 were found during the search and therefore, the addition is wrong. Secondly it is also contended that the impugned amounts added as share capital during the year under consideration, were received in earlier years as share application money and therefore, the addition made in this year is wrong and it also contended that the addition made on account of share capital is wrong even on merits of the case. 2.1 It is seen that the AO has discussed this issue in para no. 5 on page 3 to page 64 of the assessment order, wherein it is stated by the AO that on perusal of the balance sheet of AY 2013-14 it was found that the appellant has received huge amount of share capital with share premium totaling to Rs. 36,15,98,952/- @ 10 per share with premium of Rs. 68 per share. The AO further noted that all these share holders totaling to 31 in number were based at Mumbai and during the assessment proceedings vide notice issued u/s 142(1) dated 20.11.2017 the assessee was asked to prove the identity and creditworthiness of the investors and genuineness of the transactions. The submission filed by the assessee in response to the notice is ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 7 abstracted by the AO in Para 5.2 in the assessment order. The AO further noted that the submission filed by the assessee was not convincing since the share applicants companies have shown very meager income, which detail has been tabulated in Para 5.4 of the assessment order. The AO further noted in Para 5.5 of the assessment order that to examine the identity and creditworthiness of the share applicants commission was issued to the DDIT Mumbai u/s 131(1)(d) and the report of the DDIT Mumbai dated 30.11.2016 was communicated to the AO on 21.12.2016 and it was reported that the share applicants companies are not having creditworthiness. In para 5.6 onwards the AO has discussed all the 31 share applicants and has observed that in few cases the initial summons issued by DDIT Mumbai were returned unserved but when the same were issued again to the new addresses as per the ITD website, the share applicants submitted details and on perusal of the same it was observed that these share applicants have invested in the equity shares of Keti-T Construction (India) Ltd., which later on was merged with the appellant company. It is also seen that the AO abstracted the financial details of all the companies in the assessment order and concluded in Para 5.7 that there was hardly any profit in these companies and the entire fund received in the shape of share capital and share premium received which is extended in the form of loans and advances and share capital and that the financial parameters indicate all these companies are bogus paper companies and also concluded that the amount received by the appellant from companies whose identity and creditworthiness is doubtful and therefore the transactions is not a genuine transactions. Thereafter the AO has discussed certain case laws and held that the ingredients of section 68 are not satisfied by the appellant and finally concluded in Para 6.10 of the assessment order that the shares are allotted during AY 2013-14 and therefore, the amount of Rs. 36,15,98,952/- is treated as unexplained cash credit u/s 68 and added to the income of the appellant for AY 2013-14. 2.2 The appellant has challenged the above addition on various proposition, the first and foremost being that no incriminating documents were seized during the search u/s 132 in respect of the issue of share capital, on which the above addition has been made by the AO. It is contended that no incriminating document was found during the search and therefore, no addition ought to have been made in this year on account of share capital. It is also contended that no additional income was surrendered by the appellant company during the search. Referring to the assessment order it is contended that there is no reference of any seized material much less any incriminating material while making the addition by the AO. Certain enquiries were got conducted during the search and post search proceedings but these were also not based on any incriminating material seized during the search. It is contended by the appellant that the search was carried out in this case on 04.09.2015 and during the search the Investigation Wing did not find any document / evidence / material to show that the appellant was having any unaccounted money / income which was brought in books of accounts in the form of share capital. Referring to the show cause notice issued by the AO in this regard, it is contended by the appellant that the said show cause does not refer to any incriminating material seized during the search and the only thrust was on certain enquiries conducted in respect of some of the share applicants and the statements recorded of some office boy and receptionist etc which are also not against the appellant. It is also submitted by the appellant that the addition based upon the statement of a third person and not based on any incriminating material found during the search was held to be wrong by the Honourable Gujrat High Court in the case of Pr. CIT V/s Soumya Constructions (2016) 387 ITR 529. Referring the opening remarks of the AO in the assessment order, while discussing the issue of share capital in Para 5 of the assessment order, it is contended that the genesis of this issue was the balance sheet of the appellant from where the AO observed that the appellant has issued share capital during the year and it is contended that the issue did not cropped up from any incriminating material ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 8 seized in the search. It is contended that no seized material whatsoever has been referred by the AO in the assessment order while making this addition. It is also submitted that search u/s 132 was carried out on 04.09.2015 and this assessment year falls in the category of completed assessment / non-abated assessment. Thereafter taking support from the various decisions of the Honourable High Court of Delhi, Mumbai, Calcutta, Gujarat and also various decisions of Honourable Jurisdictional ITAT and also other ITATs, which are already abstracted in the written submission above, the appellant submitted that it is a settled legal position that in a completed assessment year / non-abated year no addition can be made in the search assessment u/s 153A in the absence of any incriminating material. 2.3 The next proposition of the appellant while challenging the addition is that the impugned amounts added by the AO u/s 68 in this year on account of share capital issued, were actually received and credited in the books of accounts in earlier years and none of the impugned share application amount from 31 share applicants was received and credited in the books during the year under consideration. Referring to the provisions of section 68 it is contended by the appellant that any amount can be tested on the touch stone of the provisions of section 68 only when such amount is actually credited in the books of accounts of the said year. It is further contended that the entire share application money was received prior to 01.04.2012 and was credited in the books of accounts of the respective earlier years. The appellant has contended that the addition has been made by the AO u/s 68 only on the basis of share allotted during the year under consideration whereas no such amount was actually received and credited in the books in this year. The amounts already received and credited in the books in earlier years were transferred through a journal entry from the share application account to the share capital and share premium account and it cannot be said that the impugned amount were credited in the books during the year under consideration. The appellant has also contended that complete details of amounts received by the appellant as share application were filed before the AO during the assessment proceedings along with the date wise and year wise confirmation from the share applicants, the relevant bank statements of the share applicants and also the bank statements of the appellant company, which all documents sufficiently substantiated the fact that the entire share application money, against which shares were allotted during the year, were received in earlier years. It is also the contention of the appellant that the AO was also well aware of this fact still made the addition and referring to the concluding para 6.10 of the assessment order, the appellant stated that the addition has been made in this year solely for the reason that the shares were allotted during this year. The appellant has also placed reliance on the decisions of Honourable Delhi High Court, Honourable Rajasthan High Court and certain other decision of the Honourable ITAT for the proposition that addition u/s 68 can be considered only in the year in which the amount is actually received and credited in the books and not in any other year. 2.4 The appellant has also challenged the addition on merits and contended that the identity of all the share applicants, being all corporate entities is very well established on record. It is contended that the identity of all the share applicants is established from the assessment order also where the AO has abstracted the financial of all the 31 share applicants from the MCA site as stated in Para 5.6 of the assessment order. It is also contended that in certain cases summons issued u/s 131 were returned unserved, which were later issued on the new addresses found from the ITD website itself, as mentioned by the AO in the assessment order. In most of the cases summons were served and the share applicants also responded and filed the requisite information and also confirmed that they have invested in equity shares of the appellant company. With regard to the genuineness of the transactions, it is contention of the appellant that the shares having face value of Rs. 10 each were ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 9 allotted at a price of Rs. 78 per share and share premium of Rs. 68 per share was charged. The price of allotment was determined on the basis of valuation exercise carried out by the appellant as prescribed by the relevant rules of the Income Tax Act and also the Companies Act, which has also not been disputed by the AO. The appellant has submitted that considering its business model, revenues and profits generated in the past and also in the future showing considerable growth in its operations and profitability also the share premium charged by it was fully justified. It is also contended that huge share capital was allotted to various group entities also during this year from whom same share premium was charged. It is contended that all the transactions are through proper banking channel and as evident from the bank statements of all the share applicants, no cash deposits were found to have been made by these share applicants before making payments to the appellant on account of share application money. Further all the share applicants have confirmed their transactions with the appellant, therefore, the genuineness of the transactions stand established. With regard to the creditworthiness of the share applicants, the appellant submitted that the AO has abstracted the financial credentials of all the 31 share applicants in the assessment order for AY 2009-10 till 2014-15, from which it is established that all these companies were having sufficient own net worth to make the investment in the appellant company. It is also stated by the appellant that the only major serious observation of the AO is with regard to the nominal income shown by these share applicants in their financials, which alone cannot be a deciding factor. It is contended by the appellant that the share applicants are mostly finance and investment companies and generate revenues only at the time of disposal of their investments. The appellant has also contended that it has discharged its onus which lay upon it u/s 68 properly and if at all the AO was not convinced with regard to the creditworthiness of the share applicants, the same could have been questioned, enquired and got verified from the share applicants through their respective jurisdictional AO’s. Various other contentions have been raised by the appellant and the enquiries conducted and the statements recorded have also been assailed by the appellant through its written submission as already abstracted above. The appellant has also placed reliance on various case laws and has also discussed and distinguished the decision of Honourable Supreme Court rendered in the case of NRA Iron & Steel Pvt. Ltd. 2.5 After taking into consideration carefully the observations made in the assessment order and also the written submission of the appellant I now proceed to adjudicate the issue under consideration i.e. the addition made by the AO u/s 68 of Rs. 36,15,98,952/-. I find that the first contention of the appellant that the addition has not been made with reference to any incriminating seized material appears to be correct. On perusal of the show cause notice dated 20.11.2017 issued to the appellant it is seen that the issue of share capital was not raised on the basis of any incriminating seized material. There is no reference of any seized material much less any incriminating material in the entire show cause notice issued to the appellant. Same is the position with regard to the assessment order passed by the AO wherein the discussion in respect of share capital is in Para 5 and various sub paras starting on page 3 to page 64 and there is no reference whatsoever of any material seized during the search on the appellant. The search in this case was conducted on 04.09.2015 and therefore, the year under consideration false in the category of completed / non-abated assessment wherein additions can only be made with reference to incriminating material seized during the search. 2.6 I find that the first and foremost contention of the appellant that no incriminating documents were seized in relation to the addition made by the AO and this assessment year being a completed / non-bated assessment year, therefore, addition can be made only on the basis of seized material and in the absence of which the ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 10 income of such completed assessment cannot be disturbed has sufficient merits to be accepted. This legal proposition has been explained and accepted by various Honourable High Courts, some of which are cited below. i) Hon’ble Delhi High Court in the case of Commissioner of Income Tax vs. Kabul Chawla (2016) 380 ITR 573 (Del) ii) Hon’ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (2015) 120 DTR 89 (Bom) iii) Mumbai ITAT Special Bench in the case of All Cargo Global Logistics Ltd (2012) 18 ITR 0106 iv) Hon’ble Delhi High Court in the case of Principal Commissioner Of Income- Tax V. Kurele Paper Mills P. LTD. (2016) 380 ITR 571 (Del) v) Hon’ble Calcutta High Court in the case of Pr. CIT-2 v. Salasar Stock Broking Ltd. (ITAT No. 264 of 2016) dated 24.08.2016. The Hon’ble Supreme Court has also dismissed the special leave petition filed by the Department against this judgment. vi) Hon’ble Gujarat High Court in the case of Principal CIT Vs. Soumya Constructions (2016) 387 ITR 529, vii) Hon’ble Delhi High Court in the case of PCIT Vs. Lata Jain (2016) 384 ITR 543 (Del) viii) Hon’ble Calcutta High Court in the case of CIT, Kolkata v. Veerprabhu Marketing Ltd. (ITA no. 661/2008) ix) Hon’ble Delhi High Court in the case of Pr CIT vs. Meeta Gutgutia, ITA No. 306/2017. The SLP preferred by the department against aforesaid decision of Delhi High Court in case of Principal Commissioner of Income- tax, Central -2, New Delhi vs. Meeta Gutgutia has been dismissed on 02.07.2018 [2018] 96 taxmann.com 468 (SC), (2018) 257 Taxman 0441. It would be worthwhile to mention that this settled position of law has also been accepted and reiterated by the Honourable Jurisdictional ITAT Indore Bench in many of the cases, which has also binding precedence on this office. Some of these cases are as follows: x) Hon’ble ITAT Indore Bench in the case of Omprakash Gupta, Bhopal Vs. ACIT IT(SS)A Nos.277 to 281/Ind/2017 dated 28.02.2019. The Hon’ble Bench following the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra), Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (supra) and also Hon’ble Delhi High Court in the case of PCIT Vs. Meeta Gutgutia (supra) and also Honourable Gujarat High Court in the case of PCIT V/s Soumya Construction (Supra) held that no addition can be made in respect of concluded assessments u/s 153A of the Act unless there is any incriminating material found during the course of search. xi) Decision of Hon’ble ITAT Indore Bench in the case of Sainath Colonisers Vs. ACIT (Central)-II Bhopal in IT(SS)A Nos.289 to 291/Ind/2017 dated 28.2.2019 wherein also similar issue has been considered and it has been held that if there is no incriminating material found during the course of search, no addition can be made u/s 153A of the Act. xii) One of the latest order passed by the Honourable Jurisdictional Bench of ITAT Indore is in the case of DCIT-2(1),Indore V/s Shri Satish Nema in ITA no. IT(SS) No 149, 150 & 152/Ind/2016 Assessment Year 2005-06, 2006- 07,& 2009-10 dated 07.02.2020 wherein it has been held that: ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 11 “19. We therefore respectfully following the decision referred above and also considering the latest judgment of Hon'ble High Court of Delhi in the case of Principal CIT & Ors V/s Meeta Gutgutia (supra) come to the conclusion that since the assessment orders in question were concluded and non abated assessments no addition can be made in the assessment proceedings u/s 153A of the Act unless there is any incriminating material found during the course of search. We find no inconsistency in the finding of Ld. CIT(A) quashing the assessment proceedings u/s 153A of the Act since the additions were not made on the basis of any incriminating material found during the course of search. Thus revenue's appeal for Assessment Years 2005-06, 2006-07 and 2009-10 stands dismissed.” xiii) In the matter of Shri Krishna Ghosh v. Asst. CIT (ITA no. 1410/Kol/2014) (Honourable ITAT “D” Bench, Kolkata) – held that ‘it is observed from the assessment order that the AO had not referred to any incriminating material found during the search based on which addition has been made. Therefore we hold that the AO had no jurisdiction to make addition u/s 153A and accordingly, are liable to be deleted.’ xiv) Hon’ble Panji ITAT in the case of Smt. Sunita Bai Versus Dy. Commissioner of Income Tax, Central Circle-I, Belgaum (2015) 68 SOT 0098 held that “The total income shall be determined in respect of assessment year for which original assessments have already been completed on the date of search by restricting additions only to those which' flow from incriminating material found during the course of search. If no incriminating material is found in respect of such completed assessment, then the total income in the' proceedings u/s 153A shall be computed by considering the originally determined income.” xv) Hon’ble Delhi ITAT in the case of ACIT vs M/s Delhi Hospital Supply Pvt Ltd (ITA 3996/DeI/2011) dated 01.01.2015 held "7. Keeping in view of the aforesaid findings given by the Ld. CIT(A), we are of the considered view that Ld. CIT(A) has rightly held that in the absence of any material found during the search, as a result, no disallowance/ additions can be made in the assessment u/s. 153A of the I.T. Act. Even otherwise, we find force in the Ld. Counsel's submissions that the issue in dispute is also covered by the decision of the Hon 'ble Jurisdictional High Court in the case of CIT(Central)- III vs. Kabul Chawla in ITA No. 707, 709, 713/Del/2014 wherein the Hon 'ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions were not sustainable in the eyes of law. In our considered opinion, the Ld. CIT(A) has rightly adjudicated the issue in dispute and accordingly rightly deleted the additions in dispute. Keeping in view of the above discussion, we uphold the Ld. CIT(A)'s order which is a well reasoned order and therefore, the same does not need any interference on our part and also by respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of CIT(Central)-III. Kabul Chawla (Supra), we are of the view that Ld. CIT(A) has rightly deleted the additions in dispute. Accordingly, the ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 12 issues in dispute are decided against the Revenue and in favour of the Assessee. " 2.7 Thus from all the above decisions it emerges that it is the established position of law that in cases of search, while making assessments u/s 153A of the Act, completed assessments can be interfered by the A.O. only on the basis of some incriminating material unearthed during the course of search or requisition of documents in the course of search and not otherwise. In my considered view the addition made by the AO is not based on any incriminating document seized in the search on the appellant and in view of the above discussion and in view of the legal settled proposition as explained by various authorities and as discussed above that in the absence of any incriminating document no addition can be made in the year under consideration the addition so made by the AO is wrong. 2.8 The appellant has also contended that the addition made by the AO u/s 68 is also wrong for the reason that the amount under consideration were not received and were not credited in the books of accounts of the appellant in this year. It is seen that in response to the show cause notice issued by the AO, the appellant has filed complete details of share application money received by it, which also included the confirmations from all the share applicants, their bank statements and also the bank statement of the appellant. On perusal of the confirmations given by the share applicants it is seen that the respective share applicants have confirmed the payments made by them to the appellant company wherein date wise details of payments so made are also mentioned. The bank statements of all the share applicants were also filed from where the dates of payments made by them as mentioned in the confirmations is also verifiable. Further the appellant has also filed its own bank statements which also substantiate the date on which such sums are credited in the accounts of the appellant. Therefore, it is evident that the impugned share application money was not received by the appellant during the year under consideration. From this, it follows that the impugned amounts were credited in the books of accounts of the appellant in earlier years and not in the year under consideration. In my opinion section 68 of the Income Tax Act can be triggered only in respect of the amounts credited in the books of accounts maintained by an assessee for the year under consideration and not in respect of opening balances appearing in the books of accounts of any year. While holding so I find support from the decision of the Honourable High Court of Rajasthan in the case of CIT V/s Parmeshwar Bohra (2007) 301 ITR 404 wherein it is held that a carry forward amount of the previous year does not become a cash credit generated during the relevant year and therefore, cannot be taxed u/s 68 in a year in which the amount is not actually received by the assessee. Similarly the Honourable Delhi High Court in the case of CIT V/s Usha Stud Agricultural Farms Ltd. (2008) 301 ITR 384 affirmed the order of the Honourable Tribunal which has endorsed the decision of the CIT(A) that since there was no fresh credit entry in the previous year under consideration and the impugned credit entries were already made and accounted for in earlier years, the same cannot be considered u/s 68 in the year under consideration and the AO was not justified in making the impugned addition u/s 68. I also find that the Honourable Kolkatta ITAT in the case of DCIT V/s Global Mercantile Pvt. Ltd. (2016) 157 ITD 924 on similar facts upheld the order passed by the CIT(A). The facts of this case before the Honourable ITAT were that the assesse received share application money in earlier years which were kept in share application account and the shares were allotted to these share applicants out of transferring monies from share application account to share capital account, which were added as unexplained cash credit u/s 68 in the year in which shares were allotted. The addition was deleted by the CIT(A) holding that only shares were allotted during the assessment year under appeal and no monies were received during this year and hence there was no scope for invoking provisions of section 68. ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 13 2.9 It is a settled law that the income can be taxed only in the year in which it is earned. If it is the case of the AO that certain amounts are unexplained income of the appellant, obviously such income would relate to the year in which it was found credited in the books of the assessee and in any case cannot be taxed in any subsequent year in which it was neither earned nor received. Thus in my view the taxability of any amount u/s 68 can be adjudged only in the year in which the sum is actually received by the appellant. 2.10 Therefore, in view of the above discussions it is held that the addition made by the AO u/s 68 in the year under consideration is wrong since the same is not based on any incriminating material found during the search and also for the reason that the impugned amounts were in fact not received and therefore, not credited in the books of the appellant in this year and is accordingly deleted. Since the addition made u/s 68 has been held to be wrong and is deleted, the other contentions of the appellant on the merits of the addition become academic and are not required to be adjudicated. As a result the addition made u/s 68 of Rs. 36,15,98,952/- is deleted. 8. From perusal of the above findings of the Ld. CIT(A), we find that there is no dispute that the share application money was received by the assessee in earlier years and only the shares were issued during the year under consideration. The addition was made in this year since the shares were allotted during this year, which fact is also accepted by the AO in Para 6.10 of the assessment order. Since the impugned amounts were credited in the books of the assessee in earlier years and not during the year under consideration, in our considered view, the Ld. CIT(A) rightly deleted the addition made u/s 68 in this year. Our view finds support from the decision of the coordinate Bench of Honourable Kolkata ITAT in the case of DCIT vs. Global Mercantiles (P.) Ltd. [2016] 157 ITD 924, wherein the assessee received share application monies from 20 individuals in earlier year that were kept in share application money account and the assessee allotted shares to 20 individuals out of transferring monies from share application money account to share capital account and the AO asked the assessee to produce shareholders before him. The AO found that assessee merely furnished copies of pay orders used for payments to assessee company and also furnished income tax particulars and balance sheets of all shareholders. The AO concluded that shareholders did not have creditworthiness to invest in assessee company and brought entire sum to tax as unexplained cash credit u/s 68. The Ld. CIT(A) concluded that Assessee ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 14 duly discharged its onus of providing complete details of shareholders and no addition could be made u/s 68 as no share application monies were received. The Honourable coordinate Bench held, that share application monies from 20 individuals had been received by Assessee during financial year 2004-05 relevant to Asst Year 2005-06 and only shares were allotted to them during asst year under appeal and admittedly no monies were received during AY under appeal and hence there was no scope for invoking provisions of S. 68. Therefore, the order passed by CIT(A) did not require any interference and the appeal of Revenue dismissed. 9. We find that the Hon’ble Delhi High Court in the case of CIT v. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384 held that the Learned CIT(A) has deleted the addition of Rs. 15 lacs mainly on the ground that this credit balance of Rs. 15 lacs is being reflected in the accounts of the assessee over the past four to five years or so and hence this was not a fresh credit entry of the previous year under consideration and these credit entries were already made and accounted for in the asst. yrs. 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessee and thus these credit entries did not relate to the year under consideration for being considered under s. 68. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessee does not pertain to the year under consideration, under these circumstances, the AO was not justified in making the impugned addition under s. 68 and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A). The above being the position, no fault can be found with the view taken by the Tribunal. Thus, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to fall within the limited purview of s. 260A, which is confined to entertaining only such appeals against the order which involve a substantial question of law. ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 15 10. Similarly the Honourable Rajasthan High Court decision in CIT vs Parameshwar Bohra (2007) 301 ITR 404 held that there is a clear finding and about which there is no dispute that the amount added in the income of the assessee as unexplained investment or cash credit in the asst. yr. 1993-94 was the same amount which was credited in the books of account of the assessee for previous year ending on 31st March, 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on 31st March, 1992 and on 1st April, 1992 it was an opening balance. It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94. This alone is sufficient to sustain the order of the Tribunal in deleting the amount from the assessment for asst. yr. 1993-94. 11. In light of the facts reiterated above and after going through the findings of the Honourable High Courts and Coordinate Bench cited supra, we are of the considered view that the addition made u/s 68 was unjustified since the amounts under consideration were not actually received and credited into the books of accounts in the year under consideration, but were received in earlier years. Major amounts were received in the immediately preceding year and some amounts were received even in preceding two and three years. The assessee has filed the bank statements of all the share holders and also the corresponding bank statement of the assessee, from where it is evident that the impugned amounts were received by the assessee in earlier years. Section 68 provides for a deeming fiction of treating the amount found credited in the books of accounts of the assessee maintained for any previous year, being charged to income tax as the income of the assessee of that previous year. Under section 68 the credits in the books of the assessee, which are ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 16 unexplained are deemed to be income of the assessee. Therefore, it has necessarily to follow that such income can be deemed as income only of the year in which such amount is actually received by the assessee. If any credit is deemed as income, it can be said to have been earned by the assessee and taxed only in the year in which it is received and credited in the books of the assessee and not in any earlier or subsequent year. Merely crediting an amount as share capital/share premium by way of journal entry by debiting the share application account cannot be inferred of having received a fresh credit in the books of accounts and cannot be taxed merely on this basis. The assessee would be deemed to have earned such income only in the year in which such income is actually received and credited in the books of the assessee. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A) deleting addition of Rs.36,15,98,952/-. 12. Further, we also find that the Ld. CIT(A) deleted the addition also for the reason that no incriminating material or document relating to the issue of share capital was found during the search on the assessee. We find that no reference or support of any incriminating material was taken by the AO while making this addition. Evidently, search in this case was conducted on 04.09.2015 and the impugned assessment year was not an abated assessment year. We find that for deleting the addition, the Ld. CIT(A) drew support from the following decisions. i) Hon’ble Delhi High Court in the case of Commissioner of Income Tax vs. Kabul Chawla (2016) 380 ITR 573 (Del) ii) Hon’ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (2015) 120 DTR 89 (Bom) iii) Mumbai ITAT Special Bench in the case of All Cargo Global Logistics Ltd (2012) 18 ITR 0106 iv) Hon’ble Delhi High Court in the case of Principal Commissioner Of Income-Tax V. Kurele Paper Mills P. LTD. (2016) 380 ITR 571 (Del) ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 17 v) Hon’ble Calcutta High Court in the case of Pr. CIT-2 v. Salasar Stock Broking Ltd. (ITAT No. 264 of 2016) dated 24.08.2016. The Hon’ble Supreme Court has also dismissed the special leave petition filed by the Department against this judgment. vi) Hon’ble Gujarat High Court in the case of Principal CIT Vs. Soumya Constructions (2016) 387 ITR 529, vii) Hon’ble Delhi High Court in the case of PCIT Vs. Lata Jain (2016) 384 ITR 543 (Del) viii) Hon’ble Calcutta High Court in the case of CIT, Kolkata v. Veerprabhu Marketing Ltd. (ITA no. 661/2008) ix) Hon’ble Delhi High Court in the case of Pr CIT vs. Meeta Gutgutia, ITA No. 306/2017. The SLP preferred by the department against aforesaid decision of Delhi High Court in case of Principal Commissioner of Income-tax, Central -2, New Delhi vs. Meeta Gutgutia has been dismissed on 02.07.2018 [2018] 96 taxmann.com 468 (SC), (2018) 257 Taxman 0441. 13. We also find that in the case of Omprakash Gupta, Bhopal Vs. ACIT IT(SS)A Nos.277 to 281/Ind/2017 dated 28.02.2019, this bench following the decision of Hon'ble Delhi High Court in the case of Kabul Chawla (supra), Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (supra) and also Hon’ble Delhi High Court in the case of PCIT Vs. Meeta Gutgutia (supra) held that no addition can be made in respect of concluded assessments u/s 153A of the Act unless there is any incriminating material found during the course of search. 14. In light of the facts reiterated above and after going through the findings and decision of Honourable Delhi High Court in the case of CIT V/s Kabul Chawla (2016) 380 ITR 573 Delhi and also in the case of Pr. CIT V/s Meeta Gutgutia (2017) 395 ITR 526 followed dismissal of SLP by the Honourable Supreme Court in Pr. CIT V/s Meeta Gutgutia on 02.07.2018 (2018) 96 taxmann.com 468 (SC), we are of considered view that the Ld. CIT(A) has rightly deleted the addition made by the AO since no incriminating material ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 18 was found during the course of search in respect of this issue. Accordingly ground no. 1 of the departmental appeal stands dismissed. 15. Ground no.2 raised by the revenue challenges the findings of the Ld. CIT(A) deleting the addition of Rs. 40,85,959/- made by the AO on account of payments made to contractors. Facts, in brief, relating to this issue are that during the search certain documents relating to two persons Mr. Juber Sabbir Patel and Mr. Varun Narendra Thakral were found and seized from the office premises of the company. These documents were in the nature of their salary slip, bank statements, passport size photograph, bank account opening forms etc. Both these persons are employees of the assessee company. It was also found that the assessee company has paid various amounts to these persons on account of job work charges for petty contracts in various years. The amounts so paid were withdrawn in cash within couple of days of those credit entries. The AO stated that the assessee has used its employees as petty contractors and made payment against the contract work through cheques and properly recorded in the books of accounts. The ld. Assessing Officer also noted that the assessee has inflated the project cost through this modus operandi and the assessee was asked to explain the said issue during the assessment proceedings. The assessee filed its submission before the Assessing Officer as also abstracted by the AO in the assessment order and having not convinced with the same, an addition of Rs. 40,85,959/- was made by the AO on this account. Being aggrieved, the assessee approached the ld. CIT(A) and the ld. CIT(A) after the considering the submissions of the assessee deleted the addition. 16. Before us, ld. CIT-DR defended the order of the Assessing Officer whereas the learned counsel for the assessee relied upon the order of the ld. CIT(A). ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 19 17. We have considered the submissions of both the sides and perused the material available on record. We find that the ld. Assessing Officer noted that the assessee has used its employees as petty contractors and made payment against the contract work through cheques and properly recorded in the books of accounts. The ld. Assessing Officer also noted that the assessee has inflated the project cost through this modus operandi. We find that the ld. CIT(A) after the considering the submissions of the assessee deleted the addition observing as follows: - “Ground No. 5:- This ground is raised against the addition of Rs. 40,85,959/- made by the AO by treating the payment made to the contractor as non business expenditure. The issue is discussed in Para 8 of the assessment order where the AO has observed that during the search certain documents related to two persons i.e. Juber Sabbir Patel and Varun Narendra Thakral were seized from the office premises of the Kalyan group which are in the nature of salary slips, bank statement, passport size photo graph, duly signed bank opening forms, identity cards etc of these persons. The AO further observed that both these persons are actually employees of the appellant company and on subsequent verification of their bank accounts it was observed that both these persons are receiving payment from the appellant against petty contract work. It is also the observation of the AO that these amounts are being withdrawn in cash within couple of days by these persons. Therefore, the AO reached to the conclusion that the appellant has used its employees as petty contractors and made payments against the contract work through cheques and properly recorded the same in the books of accounts, which amounts are subsequently withdrawn by the petty contractors who were also the employees of the appellant company. The impact of these transactions as per the AO is that the project cost of the running projects is inflated by the appellant. The AO required the appellant to explain the transactions made with both the persons and the reply filed by the appellant is abstracted by the AO in the assessment order. The AO then noted that the appellant explained that both these persons are its employees as well as its contractors also and the payments reflecting in their bank statements were made to these contractors against work done by them on the project sites. The appellant has filed the ledger account of both the petty contractors and details of TDS deducted thereon and submitted that the cash withdrawals made by the contractors can only be explained by them and the withdrawals might have been done for onward payments to sub-contractors and labourers by these contractors. The AO further observed that the appellant has not filed the income tax returns of both the petty contractors as required by the AO and that the payments made to the said employees / dummy concerns is nothing but a managed entry through which the project cost was inflated. The AO concluded that the payments made to such persons is a non business expenditure and disallowed the same and made the addition to the income of the appellant. 4.1 The appellant at the outset submitted that no incriminating documents were seized in respect of the addition made by the AO on account of payment made to two contractors and the documents seized such as their salary slips, bank statements, photograph, identity cards etc cannot be categorized as incriminating documents more so since all these documents were found from the personal desk of these two persons, who are also the employees of the appellant. It is contended that the documents found are all proper, legal and personal documents of these persons which can be found at ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 20 the work place of any individual and cannot be termed as incriminating in nature. It is also contended that the AO has also not considered these documents as incriminating, as evident from the assessment order and also evident from the fact that no proceedings u/s 153C were initiated against these two contractors. It is also stated by the appellant that search in this case was conducted on 04.09.2015 and therefore, this case would fall in the category of abated assessment. However, it is still contended by the appellant that since no incriminating material was seized, though this is a abated year, still the impugned addition made is wrong and uncalled for. 4.2 It is also contended that in order to promote entrepreneurship skills and also in order to reward its employees, the appellant encouraged these two employees to undertake contractorship on some of its ongoing projects where with the help of sub-contractors and supervisors these persons provided labourers on various sites, on account of which payments were made to these contractors on the basis of bills submitted by them for their services. All such payments were made through proper banking channels after deducting proper TDS as per law. These payments were capitalized by the appellant to the ongoing project cost in the books of accounts and were not claimed as revenue expenditure. It is vehemently argued that nothing was found in the search to raise any eyebrows in respect of the transactions with these two contractors and there was no reason of suspicion much less any cogent material to consider the impugned payments as not related to the business of the appellant as held by the AO. It is also contended that the bank statements of these contractors were also found from their table and the cash withdrawals made from their account on regular basis were made for making payments to sub-contractors and the labourers, which would have been done by any such contractor and should not have viewed with suspicion without there being any corroborative evidence. It is also contended by the appellant that no evidence what so ever was found during the search that these persons have paid any cash back to the appellant. It is also the contention of the appellant that no enquiries or verification was attempted from these persons and adverse inference was drawn merely stating that the income tax returns of these persons were not filed, which too could have been easily obtained by the AO since the PAN no. of these contractors were available with the AO. Finally it is contended by the appellant that the payments made to these labour contractors are genuine and legitimate against the actual work done by them and there is no cogent material on record to cast any shadow of doubt which could support the allegation of the AO that the payments were made to them merely for inflating the project cost. The addition made by the AO has also been challenged on the ground that the payments so made were not claimed as revenue expenditure in the profit and loss account but were capitalized to the BOT projects under construction. The appellant has also assailed this addition contending that on one hand the AO has alleged that the appellant has inflated the project cost through dummy contractors and has received back the cash against the cheques issued to these contractors and on the other hand an another addition of Rs. 9,40,000/- has been made by the AO in AY 2013-14 in the same common assessment order stating that certain payments were made by the appellant to its some other contractors in cash which are not accounted in the books, which stand of the AO is self contradictory as on one hand the AO is alleging that payments made to the real contractors is not recorded in the books and on the other hand also alleging that payments to bogus contractors is being recorded in the books. Finally the appellant concluded that the addition is not based on any cogent material and is merely made on assumptions conjectures and surmises. 4.3 After taking into consideration carefully the observation of the AO in the assessment order and also the detailed and elaborate written submission of the appellant I now proceed to adjudicate the issue under consideration. The undisputed facts are that Mr. Juber Sabbir Patel and Mr. Varun Narendra Thakral are the employees of the ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 21 appellant and during the search certain documents such as their bank statements, salary slips, their photograph, identity cards etc were found and seized from the working place of these persons. From their bank statements it was gathered that these persons were receiving payments from the appellant company and it was explained that both these persons are also working as contractors for the appellant and supplying labourers at various BOT sites for ongoing projects of the appellant. The copies of ledger account of these persons in the books of appellant as well as details of TDS deducted by the appellant were also filed during the course of assessment proceedings. The AO basically observing that there are frequent and regular cash withdrawals from the bank accounts of these contractors doubted the transactions and came to the conclusion that since these persons are also the employees of the appellant, they are acting as dummy contractors for the appellant and the AO treated the payment as non-business expenditure in nature and made the addition. 4.4 I find that the contention of the appellant that no incriminating documents were seized in relation to the addition made by the AO and this assessment year being a completed / non-bated assessment year, therefore, addition can be made only on the basis of seized material and in the absence of which the income of such completed assessment cannot be disturbed has sufficient merits to be accepted. Coming to the nature of documents seized it is seen that the AO has also mentioned in Para 8.2 of the assessment order that the documents seized were salary slips of the employees, their bank statements, their photograph, duly signed bank opening form, identity cards etc on the basis of which the AO found that both these persons are the employees of the appellant company. In my opinion these documents are not in the nature of incriminating documents as the same are all very normal, legal and individual documents of the employees which could be very logically found at the working place of any individual. In the assessment order the AO has also not treated these document as incriminating in nature neither any other documents has been referred by the AO while making this addition. Therefore, I am convinced that the addition made by the AO is not based on any incriminating document and in view of the settled legal proposition as explained by various authorities and as discussed above, in the absence of any incriminating document no addition can be made in the year under consideration. I find that the contention of the appellant that the impugned payments were not claimed as expenditure at all and were capitalized to the project cost and therefore, the disallowance of the same is patently wrong for this reason also has also sufficient force. It is also seen that the AO has also accepted the fact in Para 8.3 and also in Para 8.6 of the assessment order that the impugned payments were incurred by the appellant towards its running projects, implying thereby that the same were capitalized in the books of accounts and were not claimed as revenue expenses. In such a situation the disallowance of these expenses as non-business expenditure and addition thereof to the total income of the appellant is not justified for this reason also. Further there is nothing on record to suggest that the contractors were dummy contractors and the payment made to them by the appellant through cheques was returned by them to the appellant in cash. Neither any evidence to this effect was found during the search nor there is anything else on record to suggest so. It is only the assumption of the AO that the cash withdrawals made by these persons from their bank accounts was routed back to the appellant in cash whereas the explanation tendered by the appellant that such cash withdrawals were made for making the payments to sub-contractors and also to the labourers has also neither been denied nor rebutted by the AO. Therefore, in view of the above discussion I do not find any justification in the addition made by the AO and the same is hereby deleted. Accordingly this ground of appeal is allowed.” ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 22 18. On consideration of above, we find that both the persons were the employees of the assessee and therefore, finding of certain documents such as, their bank statements, salary slips, identity card etc from the working place of these persons could not be viewed adversely. Both these persons were also working as sub-contractors for the assessee and were supplying labourers at various BOT sites. Further, with regard to the regular withdrawal of cash from the bank accounts of these sub-contractors, the Ld. CIT(A) examined the same and reached to the conclusion that such withdrawals were necessitated for making payments to the labourers. Ld. CIT(A) also observed that no incriminating documents were seized in relation to the addition made by the AO and the documents seized were in the nature of regular documents of these persons who were also employees of the assessee and were working in the same office and therefore, these documents are not in the nature of incriminating documents and the same could be very logically found at the working place of any individual. We also find that in the assessment order, the ld. Assessing Officer has also not treated these documents as incriminating in nature and no enquiry were made in this respect from both these persons and therefore, the addition was made only on presumptions and assumptions. Even before us, the Revenue could not controvert the finding of the ld. CIT(A) by bringing any contrary material on record. In view of these facts, we do not find any infirmity in the finding of the Ld. CIT(A) deleting the impugned addition. Accordingly ground no. 2 raised by the department is dismissed. CO filed by the assessee 19. Ground no. 1 of the cross objections of the assessee challenges the findings of the Ld. CIT(A) upholding the addition of Rs. 9,40,000/- made by the AO u/s 69C on account of unexplained expenditure incurred out of the books. This ground was not pressed during the course of hearing. Therefore, the same is dismissed as not pressed. ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 23 20. Through ground no.2 of the cross objection, the assessee has challenged the findings of the Ld. CIT(A) of not allowing the deduction of claim of education cess of Rs. 12,93,485/- which was made for the first time before the Ld. CIT(A). The Ld. CIT(A) observed that the fresh claim raised during the appellate proceedings is not allowable in view of the decision of the Honourable Supreme Court in the case of Goetz India Ltd. (2006) 284 ITR 323 (SC). Being aggrieved, the assessee is before this Tribunal. 21. Before us, the learned counsel for the assessee submitted that the cess is an allowable expenditure and is not hit by the disallowance contemplated u/s 40(a)(ii) and placed reliance on the decision of Honourable Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. in DB ITA No. 52/2018 dated 31.07.2018 (TS – 6741-SC-2018 (Raj)) and other relevant case- laws wherein such claim has been allowed to the assessee. Per contra, the Ld. CIT-DR defended the order of the Ld. CIT(A). 22. We have heard the rival contentions and perused the material available on record. We find that the claim of deduction of education cess was made by the assessee before the Ld. CIT(A) which was not allowed stating that the said claim was not made by revising the return and therefore, could not be allowed in view of the decision of the Honourable Supreme Court in the case of Goetz India Ltd. (supra). However, we find that that similar claim of deduction of education cess has been held to be allowable to the assessee by Indore Tribunal in various cases drawing support from the decisions of the Honourable Rajasthan High Court in the case of Chambal Fertilizers and Chemicals Ltd. and also the decision of Honourable Bombay High Court in the case of Sesa Goa Ltd. V/s JCIT (2020) 117 taxmann.com wherein the Honourable High Courts have held that education cess can be claimed as allowable deduction out of business income. Honorable coordinate Bench of ITA No.13 of 2021 and CO 50 of 2021 Kalyan Toll Infrastructure Ltd. 24 Mumbai ITAT in the case of Overseas Polymers Pvt. Ltd. V/s ACIT in ITA No. 6754/Mum/2018 dated 17.12.2020 held that the cess is an allowable deduction. Further, Indore Tribunal also in the case of M/s Agrawal Coal Corporation Pvt. Ltd. V/s ACIT 1(1), Indore in ITA No. 776/Ind/2019 dated 24.08.2020 has held that the claim of education cess is allowable to the assessee. In view of these facts in the light of the judicial pronouncements (supra), we hold that the assessee is entitled to deduction of cess of Rs. 12,39,485/-. Accordingly ground no. 2 of the cross objection stands allowed. 23. In result, departmental appeal i.e. ITA No.13/Ind/2021 is dismissed whereas the Cross-objection No.50/Ind/2021 filed by the assessee is partly allowed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 11.032022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 11.03.2022 !vyas! Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Sr. Private Secretary, I.T.A.T., Indore