WIND WORLD INDIA LTD., MUMBAI V. DCIT CENTRAL CIRCLE-3(1), MUMBAI

ITA 1465/MUM/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3857 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Income from undisclosed sources; Earning of tax free income; Corroborative evidences; Valuation report; Assessment record; Set aside
• Section: 132; 144; 43B; 139; 143(3); 153A; 14A; 36 (1) (iii); 37(1); 64; 43; 48; 13; 153; 119; 22; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA Nos. 1352 to 1355 & 1910/Mum/2019 (Assessment Years 2010-11 to 2013-14 & 2014-15) T h e DCIT Ce n tra l C i rcle -3 (1 ) Ro o m No . 1 9 2 4 , A ir In d ia B u ild in g, 1 9 t h Flo o r, Na r im a n , Mu m b a i-4 0 0 0 2 1 Vs. M/s Wind World India Ltd. A-9, Wind World Tower, Veera Desai Road, Veera Industrial Estate, Andheri (W) Mumbai-400 053 (Appellant) (Respondent) PAN No. AAACE 0319 D ITA Nos. 1465, 1466 to 1470/Mum/2019 (Assessment Years 2007-08, 2010-11 to 2014-15) M/s Wind World India Ltd. A-9, Wind World Tower, Veera Desai Road, Veera Industrial Estate, Andheri (W) Mumbai-400 053 Vs. T h e DCIT Ce n tra l C i rcle -3 (1 ) Ro o m No . 1 9 2 4 , A ir In d ia B u ild in g, 1 9 t h Flo o r, Na r im a n , Mu m b a i-4 0 0 0 2 1 (Appellant) (Respondent) Assessee by : None Revenue by : Ms. Dr. Pallavi Darade, CIT DR Date of hearing: 31.05.2022 Date of pronouncement : 24.06.2022 O R D E R PER PRASHANT MAHARISHI, AM: ITA No. 1465/Mum/2019 A.Y. 2007-08 01. This appeal is filed by assessee against the order passed by the Commissioner of Income-tax (Appeals)-15, Mumbai Page | 2 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 [learned CIT (A)] for A.Y. 2007-08 dated 26 th December, 2018 raising following grounds of appeal:- “1. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of passing the assessment order by invoking the provisions of section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings. 2. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of making the estimated addition of Rs. 22.34.11.367/- on account of alleged bogus purchases. 3. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of making the estimation of alleged bogus purchases of Rs. 22,34,11,367/- despite the fact that no incriminating material relating to these bogus purchases were found during the course of search and no assessment or reassessment was pending as on the date of search.” 02. The brief facts of the case shows that assessee is a company incorporated in joint collaboration with the German Principal Enercon GmbH holding 56% of shares and Mehra family holding 44% share. Earlier it was known as Enercon India limited Group and is engaged in the business of manufacturing of Wind Mill accessories, parts and also in maintenance of Wind Mill. For the year of consideration, assessee filed return of income on 28th Page | 3 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 September, 2008 declaring a loss of ₹2,61,57,710/-. The return of income was picked up for scrutiny. The assessment under Section 143(3) read with section 92CA (3) of the Act was completed on 22 December 2010 determining the total income at ₹120,72,740/-. The appeal was preferred before the learned CIT (A), wherein substantial relief was allowed and consequent to that total income of the assessee was assessed at ₹3,78,77,270/-. The learned Assessing Officer challenged the order of the learned CIT (A) before ITAT. However, during the pendency of the appeal search under Section 132 of the Act was carried out on 24 th March, 2013. During the course of search, statements were recorded and it was found that in purchase no standard operating procedure was followed. In one of the statement, when questioned, the assessee could not produce the bills and the supporting documents of several vendors. The several statements of employees were recorded. The statement of Managing Director was also recorded on 15 March 2013, therein; it was pointed out that purchase worth ₹266,57,822,87,822/- were made during the financial year 2006-07 to 2012-13 in the books purchase. The Managing Director (MD) agreed that purchase were not verified and further the MD tabulated the expenditure for several years. 03. Meanwhile, assessee filed an application for settlement of cases under Section 243C of the Act on 5 th December, 2014 for A.Y. 2007-08 to 2014-15. This petition was rejected under Section 245D (4) of the Act on 30 January 2016 and therefore, the assessment proceedings were Page | 4 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 revived. Notice under Section 153A of the Act was issued on 28th January, 2014 which was not replied to and therefore, the learned Assessing Officer proceeded to make the assessment. The learned Assessing Officer raised the queries with respect to the bogus purchases. The assessee submitted the detail report. However, the learned Assessing Officer dealt with the whole issue and identified 41 parties wherein the evidences furnished by the assessee are found to be inadequate. Thereafter, the learned Assessing Officer dealt with several seized documents found during the search with respect to each of the party. He further made analysis of the purchase bills in 346 box files and thereafter reached the conclusion that the purchases are not genuine. 04. He further corroborated the same with the invoices of the transports and also analysis the consumption of steel and cement and same were consumed much higher than the Bill of Materials (BOM). Thereafter, he corroborated the statement of Mr. Siddhartha Mehra and Mr. Yogesh Mehra and found that the assessee has paid speed money also. The learned Assessing Officer reached at a conclusion that the books of accounts are fabricated creating dummy quotes without actual purchases and delivery of goods. Therefore, he tabulated the year-wise books purchased from A.Ys. 2007-08 to 2013-14 totaling in all to ₹362,25,04,658/-. The Assessing Officer held that assessee has failed to show the genuineness of purchases and therefore, he disallowed ₹22,90,37,426/- and passed an assessment order under Section 153A of the Act. He further made an addition of unaccounted cash expenses of Page | 5 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 ₹31,32,458/-. Assessment order under Section 144 read with section 153A of the Act was passed on 28 th June, 2017, determining the total income of the assessee at ₹143,22,42,624/- against the total income assessed originally under Section 143(3) of the Act order dated 22 nd December, 2010 of ₹120,72,740/-. 05. The assessee preferred an appeal before the learned CIT (A) challenging the order passed by the learned Assessing Officer and the validity of the assessment order passed under Section 144 of the Act, which was dismissed. The assessee also challenged the error in taking the original assessed income, which was wrongly made by the learned Assessing Officer and rectified by the learned CIT (A). The assessee also challenged the addition on account of bogus purchases. The learned CIT (A) after considering the explanation of the assessee estimated the ratio of bogus purchases to the turnover at 1.04% and upheld the addition of ₹62.76 crores. He further upheld the addition of ₹24,30,000/- on account of speed money to various government agencies. He rectified the amount taken by the learned Assessing Officer of ₹31,32,458/- to ₹24,30,000/-. The assessee also challenged that both the amount of bogus purchases and expenditure on account of speed money both cannot be made and therefore, he deleted the addition of speed money over and above the bogus purchases. Accordingly, the appeal of the assessee was allowed partly. Page | 6 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 06. Aggrieved by the order of the learned CIT (A), assessee has preferred this appeal by raising above stated grounds of appeal. 07. Despite issued notices for hearing to the assessee on 8 th November, 2021, 6 th January, 2022, 5 th April, 2022 and 31 st May, 2022, none appeared on behalf of the assessee. 08. Therefore, the appeals of the assessee are decided on merits of the case as per information available on record. 09. The learned Departmental Representative vehemently supported the order of the learned Assessing Officer and the learned CIT (A). 010. We have carefully considered the rival contentions and perused the orders of the lower authorities. Facts stated above are also perused. 011. The first ground of appeal is against the action of the learned Assessing Officer in passing order under Section 144 of the Act. In paragraph no. 5 of the order of learned CIT (A), it was categorically held that all the submissions produced before the learned Assessing Officer was considered. Further, in response to notice under Section 153A of the Act, the assessee did not care to file even the return of income. Therefore, we find that no force in the ground no.1 of the appeal. Hence, dismiss. 012. Coming to the ground no. 2 of the appeal with respect to the addition sustained by the learned CIT (A) of ₹22,34,11,367/- as well as the issue of making addition Page | 7 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 without having any incriminating material has been dealt with by the learned CIT (A) in his order as under:- “In ground Nos. 3 to 7 of the appeal, the assessee has disputed (1) the addition made by the AO of Rs. 28,46,859/- related to hawala /bogus purchases identified by the Sales Tax Department, (ii) the addition made of Rs. 27,79,200/ related to purchases from certain bogus suppliers identified during the search action and (i) the addition of the estimated amount of Rs. 22,34,11,367/- out of the total purchases by applying the average ratio of the bogus purchases to the turnover for the years relevant to AYs 2010-11 to 2012-13. Since all the said 5 grounds relate to the issue of additions made by the AO on account of bogus purchases, they are being taken up together for the sake of convenience. 7.1 It is noted that in course of the assessment proceedings, the AO observed that for the relevant year, the assessee has claimed purchases from alleged hawala/ bogus suppliers identified by the Sales Tax Department viz. M/s Pooja Enterprises (Rs 9,72,399/-), M/s RJ Corporation (Rs 7,22,637/-) and M/s Siddhivinayak Trading Company (Rs 11,51,823/-) totally aggregating to Rs 28,46,859/-. The AO proceeded to disallow the entire amount of purchases of Rs. 28,46,859/- related to the hawala/ bogus suppliers. 7.2 Further, in course of the search action, an exhaustive exercise was carried out to identify those parties/suppliers wherein the SOP was not followed. After this exercise, a list of certain 41 parties were Page | 8 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 identified where the SOP was not being followed. In respect of the said 41 parties even the sites where the material procured from them was actually consumed, could not be identified. The total purchases/expenses booked by the assessee from these 41 parties in the years relevant to A.Ys. 2006- 07 to 2012-13 was of Rs. 266.54 crores. The amount related to the relevant year out of the total amount of Rs. 266.54 crores was of Rs. 27,79,200/- which was also disallowed by the AO. 7.3 Further, in course of the search action, the assessee was not able to produce the books of accounts prior to 18.10.2008. It was explained by the assessee that due to some dispute with their principals, M/s. Enercon Gmbh, the SAP server which was installed at Germany was disconnected on 18.10.2008 and therefore the accounts prior to this date are not in its possession. It was observed at the time of the search action that for the period prior to 18.10.2008, the assessee had booked purchases from 6 suppliers identified by the Sales Tax Department as hawala/suspicious dealers for an aggregate amount of Rs. 7,36,90,974/-. Also for the year relevant to A.Y. 2006-07, the assessee was not in possession of bills and other supporting for purchases to the tune of Rs. 5.92 crores. Therefore there was no doubt that the assessee had also indulged in bogus purchases for period prior to 18.10.2008. However, in absence of the books of accounts for the period prior to18.10.2008, the bogus purchases for the period which is relevant to A.Ys. 2007-08 to 2009-10 could not be exactly quantified and had to be estimated. It Page | 9 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 was observed at the time of the search action that the average ratio of bogus purchases to turnover for the years relevant to AYS 2010-11 to 2012-13 is of 1.04%. By applying this average ratio of 1.04% to the turnover, the bogus purchases for the years relevant A.Ys. 2007-08 to 2009-10 were estimated to be of Rs. 60.76 crores. Out of this amount of Rs. 60.76 crores an amount of Rs 22,34,11,387/- pertained to the relevant year. When confronted with the further evidences related to the said 3 years relevant to AYS. 2007-08 to 2009-10, Shri Yogesh Mehra, Managing Director, enhanced the admission on account of bogus purchases to Rs. 170 crores from Rs. 129.06 crores made initially. Thus it can be observed that for the 3 years relevant to A.Y.s 2007 08 to 2009-10 for which books of accounts were not available, Shri Yogesh Mehra offered a further amount of around Rs. 41 crores. The AO also proceeded to make a further disallowance out of purchases of Rs. 22,34,11,367/- being the amount of bogus purchases estimated @ 1.04% of the turnover for the relevant year. 7.4 It is noted that in course of the search action, it was observed that the Books of accounts of the assessee are maintained on SAP accounting system and the regular purchases/expenses are booked by the relevant Heads of the Departments as per the Standard Operating Procedure (SOP) followed by the assessee company. The detailed SOP and documentation followed by the assessee company for the purchases of material as well as for booking of expenses was explained by Mr. Biju Thomas, Page | 10 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 Accounts Manager, and Shri Sajji Vellanikkran, Accounts head in course of the statements of oath recorded at the time of the search action on 15.03.2013. It was explained that the assessee has 4 procurement cells which procures the various material required for manufacture/assembly of windmill machines and its installation at various sites. These 4 procurement cells are (i) procurement cell for the material required for manufacture/assembly of the windmill machines, (ii) procurement cell for the material required for construction of towers on which windmill machines are to be mounted, (iii) separate procurement cells for each of the states where the wind power project sites located are for the other miscellaneous materials/expenses and (iv) procurement cell at the head office at Mumbai for urgent purchases. The heads of the procurement cells have been assigned powers of placing orders for procurement of material from the identified vendors. The elaborate procedure followed by the said 4 Procurement cells has been explained as under by the employees of the Accounts Department of the assessee. 7.5 The procurement cell related to manufacture/assembly of the windmill machines places orders with the identified vendors for the material required. The delivery of the material by the vendors is accompanied by invoice, delivery challan, lorry receipt, quality control report etc. The material is then tested by the quality control department. On confirmation of the quality, the material is transferred to the regular godown and a GRN is prepared. After Page | 11 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 this process, the bills are sent to the accounts department for making necessary payments. Similar procedure is followed by the procurement cells related to construction of towers on which windmill machines are to be mounted and the separate procurement cells for each of the states where the wind-power project sites are located. The procurement cell at the Head office at Mumbai normally does not purchase any material which is required for manufacture/assembly of windmill machines or its installation. Only in exceptional condition when material is required on an urgent basis, the same is procured by the Head Office at Mumbai. 7.6 In course of the search action, an exhaustive exercise was carried out to identify those parties/suppliers wherein the SOP was not followed. After this exercise, a list of certain 41 parties were identified where the SOP was not being followed. In respect of the said 41 parties even the sites where the material procured from them was actually consumed, could not be identified. The total purchases/expenses booked by the assessee from these 41 parties in the years relevant to A.Ys. 2007- 08 to 2013-14 was of Rs. 266.54 crores and the amount related to one of the said 41 suppliers from the relevant year was of Rs 27,79,200/-. It was admitted by Shri Biju Thomas. Accounts Manager, in his statement on oath recorded at the time of the search action that as per the direct instructions of the used dummy codes for booking the bogus Page | 12 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 management he had purchases/expenses in the SAP in respect of the said 41 parties. 7.7 Further, at the time of the search action, parallel exercise and investigations were carried out to find out the actual consumption of the major raw materials of cement and steel as per the standard norms vis-a-vis the consumption shown in the regular books of accounts. This analysis revealed that for the years relevant to A.Ys. 2010-11 to 2012-13, the excess consumption of cement is in the range of 24.35% to 57.31% and the excess consumption of steel is in the range of 17.98% to 42.76%. Also, at the time of the search action, incriminating documents were found which showed that the assessee has incurred substantial expenditure by way of speed money. These facts about excess consumption and incurring of speed money expenses corroborated the findings in respect of the bogus purchases. Moreover, these facts also showed that the material in respect of the bogus purchases has not at all been consumed. 7.8 When confronted with the various discrepancies noted at the time of the search action as well as the statements on oath of the said 2 employees of the Accounts Department, Shri Yogesh Mehra, Director admitted that the purchases made from 32 out of the said 41 parties for the years relevant to AYS 2007-08 to 2013-14 for an aggregate amount of Rs. 129.06 crores, is boqus/unverifiable. 7.9 Further, as noted above in course of the search action, the assessee was able to produce the books of Page | 13 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 accounts prior to 18.10.2008 due to some dispute with their principals, M/s. Enercon Gmbh. It was observed at the time of the search action that for the period prior to 18.10.2008, the assessee had booked purchases from 6 suppliers identified by the Sales Tax Department as hawala/suspicious dealers for an aggregate amount of Rs. 7,36,90,974/-. Also for the year relevant to A.Y. 2006 07, the assessee was not in possession of bills and other supporting for purchases to the tune of Rs. 5.92 crores. Therefore there was no doubt that the assessee had also indulged in bogus purchases for period prior to 18.10.2008. However, in absence of the books of accounts for the period prior to 18.10.2008, the bogus purchases for the period which is relevant to A.Ys. 2007-08 to 2009-10 could not be exactly quantified and had to be estimated. It was observed at the time of the search action that the average ratio of bogus purchases to turnover for the years relevant to AYS 2010-11 to 2012-13 is of 1.04%. By applying this average ratio of 1.04%, the bogus purchases for the years relevant to A.YS. 2007-08 to 2009-10 were estimated to be of Rs. 60.76 crores. When confronted with the further evidences related to the said 3 years relevant to A.Ys. 2007-08 to 2009-10, Shri Yogesh Mehra, Managing Director, enhanced the admission on account of bogus purchases to Rs. 170 crores from Rs. 129.06 crores made initially. Thus it can be observed that Shri Yogesh Mehra offered an additional amount of around Rs. 41 crores for the said 3 years relevant to A.Ys. 2007-08 to 2009-10 for which the books of account were not available with the assessee. Page | 14 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 7.10 As noted earlier, in the pendency of the assessment proceedings initiated u/s 153A, the assessee had filed an application before the Hon'ble Settlement Commission for an additional income of Rs 82.79 crores for the years relevant to AYS 2007- 08 to 2014-15 which included an offer of additional income of Rs. 12.9 crores in respect of the bogus purchases of Rs. 129.06 crores admitted at the time of the search action for the said various years. However, after duly considering the various discrepancies noted at the time of the search action, the incriminating statements on oath recorded of the employees of the Accounts Department as well as the admission of bogus purchases by Shri Yogesh Mehra, Managing Director, this offer for additional income of Rs. 12.9 crores for the said various years on account of bogus purchases was held to be a non-true and full disclosure by the Hon'ble Settlement Commission and consequently rejected. 7.11 In course of the proceedings before the Hon'ble Settlement Commission, to support its claim of purchases in respect of the said 41 parties, the assessee had submitted purchase invoices, delivery challans, lorry receipts, confirmations etc. However, a number of discrepancies were noted by the Hon'ble Settlement Commission in these evidences submitted which included (i) improbably lesser time period claimed in transportation of material over large distances, (ii) lorry receipts for different financial years apparently being made by the same person on a single date, (iii) absence of delivery challans, insurance documents, weighment slips, quality Page | 15 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 certification etc., (iv) improbably lesser time period shown for loading huge quantities of cement bags, (v) the same persons handwriting being found on the lorry receipts of various transporters who are based at different locations, (vi) the same telephone nos. being found on the transport bills of different transporters, etc. These discrepancies clearly suggested that the purchases claimed by the assessee in respect of the said 41 suppliers were not genuine. 7.12 On rejection of the assessee's application before the Hon'ble Settlement Commission, the assessment proceedings initiated u/s. 153A were revived by the AO. In course of the assessment proceedings, the assessee furnished the same supporting evidences in respect of the said 41 parties which were placed before the Hon'ble Settlement Commission. However, on the basis of the said various discrepancies noted by the Hon'ble Settlement Commission in the proceedings before them, the AO held that the said evidences are unreliable and cannot be accepted. The AO relied upon the statement on oath of Shri Yogesh Mehra, Managing Director, recorded at the time of search action admitting that bogus purchases have been made for an aggregate amount of Rs. 170 crores for the year relevant to AYS 2007-08 to 2013- 14 which included an amount of Rs 41 crores related to AY 2007-08 to 2009-10 for which books of accounts were not avaialble. The AO further relied upon the statements of the employees of the Accounts department in respect of the dummy codes created for booking bogus purchases, the admission Page | 16 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 of Shri Siddharth Mehra, Director, in respect of unaccounted speed money expenses and the periodic destruction of the evidences in respect of payment of speed-money etc. The AO also relied upon the excess consumption shown by the assessee in its books vis- à-vis the consumption as per standard norms, the absence of necessary documentation especially related to transportation, presence of blank lorry receipts book & blank lorry invoices books of certain transporters, etc to conclude that the entire purchases made from the said 41 parties in A.Ys. 2007-08 to 2013-14 for an aggregate amount of Rs. 266.53 crores is bogus. The amount of bogus purchases in respect of one of the said 41 parties for the relevant was of Rs. 27,79,299/- which was added by the AO to the total income of the assessee for the relevant year. 7.13 As noted above, during the relevant year, the assessee had also made purchases of Rs. 28,46,859/- from hawala/bogus parties identified by the Sales Tax Department, the entire amount of which was disallowed by the AO. Moreover, again as noted above, since the books of account for the years relevant to AYS 2007-08 to 2009-10 were not available, the bogus purchases for the said 3 year period was estimated at Rs 60.76 crores by applying the average ratio of the bogus purchases to the turnover of 1.04% of the years relevant to AYS 2007- 08 to 2009-10. The amount estimated for the relevant year was of Rs 22,34,11,367/- which was also added by the AO to the total income of the assessee. Page | 17 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 7.14 In course of the appellate proceedings, the assessee submitted that in course of the search action Shri Yogesh Mehra, Managing Director, had identified 32 parties wherein the purchases were not verifiable. However, the AO has made the addition on account of bogus purchase in respect of all the said 41 parties. The assessee submitted that the said purchases are genuine and duly supported with bills / invoices and supporting evidences which were filed in course of the assessment proceedings. It was further submitted that the payments for purchases have been made through banking channels and there is no evidence of cash being returned back to the assessee, its employees or directors. It was further submitted that other than installation of the Wind Mill machines the assessee is also required to construct culverts, small bridges, roads, pathways, pitching, etc at its various sites and while determining the excess consumption of steel and cement during the search action, the consumption of steel & cement for the said construction of culverts, small bridges, roads, pathways, pitching, etc at its various sites, was not considered. It was further submitted that 80% of the cement & steel is utilised in installation of the Wind Mills and the balance 20% is utilised for the said other activities as explained. It was further submitted that in course of the search action, neither any substantial unaccounted cash nor substantial unaccounted jewellery / assets were found which suggested that its claim of purchases/expenses are genuine. It was further submitted that its German Principal closely monitors its activities and there has never been an allegation of siphoning of money Page | 18 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 against the assessee or its directors/employees. It was also submitted that the unaccounted expenses on account of speed money were found to be of only Rs 24,52,53,274/- for the years relevant to AYS 2007-08 to 2013-14 whereas the alleged bogus purchases and bogus expenditure determined by the AO for the said relevant years is of Rs 3,34,67,02,658/- which is around 14 times. Accordingly, the assessee contended that the action of the AO of making a aggregate disallowance of Rs 22,90,37,426/- on account of bogus purchases is not correct. 7.15 The contentions of the assessee have been duly considered. One of the contentions of the assessee is that in course of the search action, no incriminating evidences were found and the relevant year was a non-abated assessment, therefore as per the decision of the Hon'ble Jurisdictional High Court in the case of All Cargo Global Logistics (374 ITR 645), no additions could have been made. The Hon'ble Supreme Court in the case of P.R. Metrani v. CIT [2006] 287 ITR 209/157 Taxman 325 (SC) has explained the scope of section 132. It has been explained by the Hon'ble Supreme Court that the books of accounts, documents, money, bullion, jewellery or other valuable article or thing and any statements recorded of the persons searched may be used as evidence for any proceedings under the Act. Also, the statement on oath recorded in course of the search action u/s 132(4) has been held to be of evidentiary value by the Hon'ble Delhi High Court in the case of Dhingra Metal Works (328 ITR 384) and the Hon'ble Kerala Page | 19 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 High Court in the case of Paul Mathews (263 ITR 101) as against statement on oath recorded u/s 133A. It is not always that a person is incriminated for possession of evidence since a person can also be incriminated for not being in possession of the requisite basic documents. For example, a person can be incriminated for not being in possession of the requisite ticket while travelling in a train. In the instant case, it is observed that incriminating statements on oath were recorded of Shri Yogesh Mehra, Managing Director and key employees of the Assessee Group based on the incriminating facts of not following the SOP, absence of the basic documentation especially related to transport, etc in respect of the purchases from the alleged bogus suppliers which were otherwise being followed/maintained for other suppliers. These statements on oath recorded were not bland statements but on the factual position which emerged at the time of the search action. In view of decisions of the Hon'ble Supreme Court in the case of P.R. Metrani (supra) and the Hon'ble Allahabad High Court in the case of Gargi Devi Jwala Prasad, this was clearly sufficient incriminating material unearthed on account of the search action to warrant appropriate action u/s 153A r.w.s. 143(3). 7.16 Further, as noted above, in course of the search action, a number of discrepancies were noted which showed that the purchases/expenses claimed by the assessee in respect of the said 41 parties was bogus. The said discrepancies noted at the time of the search action are summarized as under: Page | 20 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 (i) The SOP was not being followed in respect of certain 41 parties. Shri Biji Thomas, Accounts Manager, in his statement on oath had accepted that as per direct instructions of the Management he had used dummy codes for booking bogus purchases/expenses in SAP in respect of the said 41 parties. (ii) In course of the search action, blank transport lorry receipt books and blank transport invoice books of a number of transporters were found which clearly showed that the assessee was fraudulently utilising these blank transport invoices and blank transport lorry receipts for its claim of bogus purchases. The misuse of blank transport invoices and blank lorry receipts was also accepted by Shri Shankar Shivaji Kanase, Asstt Manager in his statement on oath recorded on 15.03.2013. (iii) In respect of the purchases from the said 41 parties wherein SOP was not being followed, the assessee was not in possession of evidences in the form of lorry receipts, weighment slips, delivery/issue challans, test report, cheque payment details, inward and outward despatch stamps, insurance documents, etc. Moreover, other discrepancies like a) bills / invoices, lorry receipts, etc being in mint condition, b) improbably lesser time period claimed in transportation of material over large distances, (c) lorry receipts for different financial years apparently being made by the same person on Page | 21 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 a single date, (d) absence of delivery challans, insurance documents, weighment slips, quality certification etc., (e) improbably lesser time period shown for loading huge quantities of cement bags, (f) the same persons handwriting being found on the lorry receipts of various transporters who are based at different locations, (g) the same telephone nos. being found on the transport bills of different transporters, etc. were also noted at the time of the search action as well during the proceedings before the Hon'ble Settlement Commission. (iv) The actual consumption of major raw materials as per the Standard Norms vi-a-vis the consumption shown by the assessee in the regular books was found to be at major variance in the examination carried out during the search action. The excess consumption of cement for the years relevant to AYS 2010-11 to 2012 13 was found to be in the range of 24.35% to 57.31% and the excess consumption of steel was found to be in the range of 17.98% to 42.76%. (v) In course of the search action, it was observed that the assessee was incurring substantial expenditure by way of speed money and it was also admitted that the evidences of speed money are regularly being destroyed, which was also confirmed by Shri Siddharth Mehra, Director. Page | 22 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 7.17 Further, the Hon'ble Settlement Commission had also rejected the assessee's offer of additional income of Rs 12.9 crores in respect of the bogus purchases of Rs 129.06 crores for the years relevant to AYS 2007- 08 to 2013-14 on the ground of non full and true disclosure after considering the findings of the search action, the discrepancies noted in the supporting evidences submitted before them in respect of the purchases/expenses from the said 41 parties, the report submitted by the Department under Rule 6 and Rule 9, etc. The discrepancies noted by the Hon'ble Settlement Commission in the various supporting evidences submitted before them in respect of the purchases/expenses claimed from the said 41 parties included, (i) improbable lesser time period involved in transportation, (ii) lorry receipts for different financial years apparently being made by the same person on a single date, (iii) absence of delivery challans, insurance documents, weighment slips, quality certification etc., (iv) improbably less time shown for loading huge quantities of cement bags, (v) the same persons handwriting being found on the lorry receipts of various transporters who are based at different stations, (vi) the same telephone nos. being found on the transport bills of different transporters, etc. Similar discrepancies were also noted at the time of the search action. These discrepancies noted in course of the proceedings before the Hon'ble Settlement Commission and the search action also clearly suggested that the purchases claimed by the assessee in respect of the said 41 suppliers were not genuine. Page | 23 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 7.18 Further, though the assessee had admitted bogus purchases in respect of only 32 of the said parties, it is a fact that a number of discrepancies were also observed in the supporting evidences related to the balance 9 parties at the time of search action and also in the verifications carried out in course of the proceedings before the Hon'ble Settlement Commission. Moreover, it was also an admitted fact that in respect of the said 9 parties entries were made in the SAP accounting package using dummy codes as per the instructions of the management of the assessee company. Therefore, the contention of the assessee that the action of the AO of considering the purchases of all the 41 parties as bogus, is rejected. 7.19 The assessee contends that the payments have been made by cheque and therefore, the purchases claimed by it cannot be doubted. On this contention, it is noted that the Hon'ble Supreme Court in the case of Kanchawala Gems (2007) 288 ITR 10 (SC) has held that the mere fact that the payments have been made through cheques alone cannot prove the genuineness of the purchases claimed. 7.20 The assessee submitted that 80% of the cement & steel is utilised in installation of Wind Mills and the balance 20% is utilised for the other activities like construction of culverts, small bridges, roads, pathways, etc at its various sites. Accordingly, the assessee contended that the excess consumption worked out at the time of the search action is not correct. This contention of the assessee is rejected because at the time of the search action, the Page | 24 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 assessee could not identify the sites wherein the steel, cement, etc purchased from the said 41 parties had been consumed. Even in the assessment proceedings or the appellate proceedings, the assessee has been able to demonstrate that in which site(s) the said material procured from the said 41 parties has finally been consumed. 7.21 It was further contended by the assessee that at the time of search action neither any substantial unaccounted cash nor any substantial unaccounted jewellery / assets were found which clearly shows that the purchases claimed are genuine and have not been made to generate unaccounted funds. This contention of the assessee is also not acceptable since at the time of the search action, evidences suggesting substantial payment of speed money were found and it was also informed that these evidences are being destroyed on a regular basis. It is also not the case of the department that the said unaccounted funds have been used for the purpose of investments in undisclosed assets or hoarding of cash. 7.22 There is no dispute that in course of the search action, the assessee was not able to produce the books of accounts prior to 18.10.2008. It was observed at the time of the search action that for the period prior to 18.10.2008, the assessee had booked purchases from 6 suppliers identified by the Sales Tax Department as hawala/suspicious dealers for an aggregate amount of Rs. 7,36,90,974/-. Also for the year relevant to A.Y. 2006-07, the assessee was not in possession of bills and other supportings for purchases to the tune of Rs. 5.92 crores. Therefore Page | 25 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 there was no doubt that the assessee had also indulged in bogus purchases for period prior to 18.10.2008. However, in absence of the books of accounts for the period prior to 18.10.2008, the bogus purchases for the period which is relevant to A.Ys. 2007-08 to 2009-10 could not be exactly quantified and had to be estimated. It was observed at the time of the search action that the average ratio of bogus purchases to turnover for the years relevant to AYS 2010-11 to 2012-13 is of 1.04%. By applying this average ratio of 1.04%, the bogus purchases for the years relevant to A.Ys. 2007-08 to 2009-10 were estimated to be of Rs. 60.76 crores. When confronted with the further evidences related to the said 3 years relevant to A.Ys. 2007-08 to 2009-10, Shri Yogesh Mehra, Managing Director, enhanced the admission on account of bogus purchases to Rs. 170 crores from Rs. 129,06 crores made initially. Thus it can be observed that Shri Yogesh Mehra offered an additional amount of around Rs. 41 crores for the said 3 years relevant to A.Ys, 2007-08 to 2009-10 for which the books of account were not available with the assessee. Thus the action of the AO of making the said estimated addition of Rs 22.34.11.367/- cannot be faulted. However, after having estimated the quantum of bogus purchases by applying the said average ratio of 1.04%, it was not correct on the part of the AO of making the said separate addition of Rs 28,46,859/- on account of purchase from hawala/bogus suppliers identified by the Sales Tax Department and the said separate addition of Rs 27.79.299/-being the amount related to one of the said 41 bogus parties identified in course of the Page | 26 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 search action. Accordingly, grounds Nos. 3 to 7 of the appeal are partly allowed. 8. In ground No 8 of the appeal, the assessee has disputed the addition made by the AO of Rs 31,32,458/- on account of alleged unaccounted cash expenses in the form of "speed money" and in ground No 9 of the appeal, the assessee has disputed the action of the AO of not allowing telescoping of the said unaccounted cash expenses against the income determined by the AO on account of the addition of bogus purchases and bogus expenses. It is observed that the AO has quantified the unaccounted cash expenses for the relevant year at Rs 24,30,000/-, however, the addition made by him is of Rs 31,32,458/-. Therefore, the AO is directed to verify this fact and adopt the correct figure. Since both these grounds of appeal are inter related, they are taken up together for the sake of convenience. 8.1 It is noted that in course of the search action, various evidences were found in respect of payment of "speed money" to various government agencies for clearance / approvals, etc. for an aggregate amount of Rs 24,52,53,274/- for various years. The statement on oath of Shri Siddharth Mehra, General Manager was recorded at the time of the search action wherein he admitted to payment of "speed money" by the assessee company. Shri Yogesh Mehra, Managing Director was also confronted with the statement of Shri Siddharth Mehra, General Manager and he too accepted that the assessee company has made payment of "speed money" for smooth running of its business. The amount of "speed Page | 27 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 money" related to the relevant year was of Rs 24,30,000/- which was added to the total income of the assessee. In the appellate proceedings, the assessee has not disputed the total quantum and nature of the payments of Rs 24,52,53,274/- detected at the time of the search action on the basis of incriminating material found for the years relevant to AYS 2007-08 to 2013-14. Since the said expenses are admittedly of the nature of "speed money", Explanation 1 to sec 37(1) is clearly attracted and therefore the said amount Rs 24,30,000/- related to the relevant year cannot be allowed as a deduction. Accordingly, ground No 8 of the appeal is dismissed. 8.2 In ground no. 9, the assessee has contended that these unaccounted cash expenses should have been allowed to be set off against the addition made by the AO of Rs 22,90,37,427/- on account of bogus purchases. The contentions of the assessee in respect of telescoping have been duly considered. 8.3 I am of the view that the primary documents seized in the course of the search action and the statements on oath recorded at the time of the search action are most critical and carry immense evidentiary value, though the same may not be conclusive as held by the Hon'ble Supreme Court in the case of Pulangode Rubber Produce Co. Ltd. (91 ITR 18). The statements recorded at the time of the search action should be considered to be the most reliable for the reason that it was recorded on the spot and possibility of after-thought or to concoct an explanation and fabricate the evidence is minimum. In the instant case, Shri Yogesh Mehra, Managing Page | 28 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 Director, in course of his statement on oath recorded at the time of search action while replying to query no 135, had explained that the source of "speed money" is out of the unaccounted funds generated by claiming bogus purchases/ expenses from parties which were identified by him. The relevant portion of the statement on oath recorded of Shri Yogesh Mehra is reproduced as under: "Q. No 135 Please explain what is the source from with this speed money is paid? Ans. Sir, I have identified certain purchases which are not verifiable in reply to Q No 69. The money is generated from these purchases and diverted for utilising the same in payment of speed money in the interest of the company." 8.4 From the aforesaid, it can be observed that Shri Yogesh Mehra has duly explained the source of "speed money" to be out of the unaccounted funds generated by claiming bogus purchases. In view of such a factual position, making a separate addition on account of speed money along with the said addition on account of bogus purchases will result into a double addition. Since, the AO has already made disallowance of Rs 22,90,37,426/- on account of bogus purchases and out of which an amount of Rs 22,34,11,367/- has been upheld in this appellate order, this separate addition made by the AO on account of "speed money" cannot be sustained. However, in an eventuality, if finally the entire addition made on account of bogus purchases is deleted, this addition of Rs 24,30,000/- Rs Page | 29 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 31,32,458/- on account of "speed money" will stand. In no case, will the aggregate disallowance made on account of bogus purchases and on account of "speed money" will be less than Rs 24,30,000/-/ Rs 31,32,458/-. Accordingly, ground No 9 of the appeal is partly allowed.” 013. We find that during the course of search enough evidences were found which are tabulated by the learned Assessing Officer and based on that addition has been made. Therefore, it cannot be said that there is no incriminating material found during the course of search. In the result ground number 3 of the appeal of the assessee is dismissed. 014. Ground number two of the appeal is with respect to the addition of ₹ 223,411,367 on account of alleged bogus purchases upheld by the learned CIT – A. We find that the learned CIT – A has considered all the explanations furnished by the assessee. He has categorically stated that the assessee had booked purchases from six suppliers identified by the sales tax Department as hawala/bogus dealers. The assessee is also not in possession of the bills and other supporting evidences for purchases to the tune of ₹ 5.92 crores. Therefore, there was no doubt that the assessee has indulged in bogus purchases for all these years. The learned and CIT – A observed that the average ratio of bogus purchases to the turnover is merely 1.04% and therefore the bogus purchases were estimated for assessment year 2007 – 08 to 2009 – 10 at ₹ 60.76 crores. When assessee was confronted with evidences, the key persons, managing director enhanced the Page | 30 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 admission and offered an additional amount of unaccounted income. On that basis the learned CIT – A the addition of ₹ 223,411,367/–. In view of this, we do not find any infirmity in the orders of the lower authorities in confirming the addition of the above amount on account of alleged bogus purchase. Accordingly, ground number 2 of the appeal is dismissed. 015. In the result, appeal filed by the assessee in ITA number 1465/M/2019 for assessment year 2007 – 08 is dismissed. Assessment year 2010 – 11 Appeal number 1466/M/2019 (by assessee) Appeal number 1352/M/2019 (by AO) 016. For assessment year 2010 – 11, both the parties are in appeal before us against the order passed by the Commissioner of income tax appeals – 51, Mumbai dated 26/12/2018. 017. Grounds in ITA No. 1352/Mum/2019 for A.Y. 10-11 in Revenue’s appeal:- “1. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the addition of Rs. 2,01,96,432/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases ? Page | 31 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 2. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the addition off Rs. 2,01,96,432/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the cash generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in form of speed money? 3. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the disallowance of Rs. 10,50,94,178/- made u/s 14A on the ground that no exempt income has been earned during the assessment year under consideration?" 4. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the disallowance of Rs. 10,50,94,178/- on the basis of the decision of the Hon'ble Supreme Court in the case of Chettinad Logistics P Ltd (95 taxmann.com 221) as the aforesaid decision is a non-speaking order and no reason has been given for the decision and therefore, not a binding precedent under Article 141 of the Constitution?" 5. Whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹10,50,94,178/- ignoring the CBDT’s Circular No.5/2014 issue din exercise of powers conferred under Section 119 of the Income- tax act which provides disallowance even when no exempt income is earned? Page | 32 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 6. Whether on the facts and circumstances of the case and the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹2,03,17,621/- made by the Assessing Officer under Section 36(1)(iii) for interest free loans and advances to its subsidiaries on account of sufficient availability of interest free funds in view of the decision of the Hon'ble Supreme Court in the case of Avon Cycle Ltd. (Civil Appeal No. 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of funds was upheld?" 018. In ITA number 1466/M/2019, assessee has raised following grounds of appeal:- 1. on the facts and in the circumstances of the appellant’s case and in the law the learned and CIT (A) erred in confirming AO’s action of the assessment order by invoking the provisions of Section 144 despite the fact that all relevant details were filed by the appellant during the course of assessment proceedings 2. on the facts and circumstances of the appellant’s case and in law the learned and CIT (A) erred in confirming the AO’s action of making the estimated addition of ₹ 506,455,949/– on account of alleged bogus purchases 3. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making an addition of ₹ 36,845,487/– on account of alleged bogus purchases made from 6 parties is tabulated on page 153 of the assessment order on the ground that the names of these parties are Page | 33 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 appearing on the website of Maharashtra sales tax Department as the suspicious hawala dealers. 019. For this year assessee filed its original return of income on 30/9/2010 declaring a total income of ₹ 802,834,440/–. Subsequently search took place on 14/3/2013, which revealed that the assessee has made purchases from bogus parties of steel and cement, claimed bogus transportation expenditure, incurred unaccounted cash expenses on account of speed money and made payment for purchase of development rights to the related party, which is highly excessive. Consequently, notice u/s 153A was issued on 28/1/2014. Assessee approached the settlement commission, which was subsequently rejected on account of non-true and full disclosure. Therefore, the assessment u/s 153A was made. The learned assessing officer made following additions:- 1. The assessee has claimed purchases from the bogus suppliers identified by the sales tax Department aggregating to ₹ 36,845,487/–. This entire amount was disallowed. 2. AO further found that assessee has claimed purchases from 11 suppliers amounting to ₹ 506,455,949/– where the standard operating procedure normally followed by the assessee was not followed and it was observed that the requisite evidences related to transportation and to its conjunctions was not available. Therefore, the AO made an addition of the above amount as bogus purchases. Page | 34 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 3. During the course of assessment proceedings, it was found that assessee has incurred expenses in the nature of speed money, which was also quantified before the settlement commission. For the year the above expenditure was quantified at ₹ 20,260,332/– which was added by the learned that AO. 4. AO also disallowed ₹ 105,094,178/– u/s 14 A and also disallowed interest expenditure of ₹ 20,317,621/– u/s 36 (1) (iii) on account of diversion of interest-bearing funds for the purpose of advancing interest free loans to the subsidiary companies. 5. Assessee was also not allowed set-off of the brought forward losses of ₹ 65,42,13,876/– on the ground that the assessee did not file the return of income in time with respect to the relevant years to which these losses pertain. 020. Assessee approached the learned CIT – A wherein he confirmed the disallowance of estimated addition of ₹ 506,455,949/– on account of alleged bogus purchases and a further addition of ₹ 36,845,487/– a on account of alleged bogus purchases made from is 6 different parties who are bogus suppliers. However the learned CIT – A deleted the addition of ₹ 20,196,432/– made on account of unaccounted cash expenses in the form of speed money by allowing telescoping in respect of bogus purchases. He deleted the disallowance u/s 14 A on account of that that assessee did not earn any exempt income during the year. Further he deleted the disallowance of interest expenditure Page | 35 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 for the reason that assessee is having sufficient availability of interest free funds. Therefore, both the parties are aggrieved and are in appeal before us. 021. Coming to the ground number 1 – 3 of the appeal of the assessee, the learned departmental representative confirmed that they are identical to the appeal of the assessee for assessment year 2007 – 08. 022. On careful consideration of the facts and orders of the lower authorities, we find that the learned CIT – A has confirmed the addition of ₹ 506,455,959 on account of bogus purchases from 41 parties identified at the time of search action and assessee has not been a in a position to provide the requisite documents especially related to transportation and the consumption of the above material. The learned CIT – A has given the similar findings as has been given by him for assessment year 2007 – 08. We have already upheld the addition for that assessment year. Therefore, following our own order in assessee's case for assessment year 2007 – 08 we do not find any infirmity in the order of the learned CIT – A in confirmation of the addition of ₹ 506,455,949/– as assessee has failed to show that the material has been purchased with respect to the details of transportation as well as consumption of the material purchased. Accordingly, ground number 2 of the appeal is dismissed. 023. Ground number 3 is with respect to the addition of bogus purchases to the extent of ₹ 36,845,487/– from 6 different parties being suspicious suppliers, the facts relating to this are also identical to ground number 2 of the appeal of the Page | 36 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 assessee. Therefore, for similar reasons we also dismiss ground number [3] of the appeal of the assessee. 024. In the result, appeal filed by the assessee for assessment year 2010 – 11 in ITA number 1466/M/2019 is dismissed. 025. Now coming to the appeal of the learned that AO for the same assessment year, the ground number 1 relates to the disallowance on account of speed money of Rs 2,0 1,96,432/–. The fact shows that during the course of search action various evidences were found in respect of payment of speed money to various government agencies for clearances/approval amounting to ₹ 245,253,274/– for various years. The statement of general manager was recorded at the time of search action wherein he admitted to the payment of speed money. The managing director also accepted the same. The learned and CIT – A confirmed the addition however he telescope the same in view of the addition confirmed by him on account of bogus purchases for the reason that in answer to question number 135 the managing director of the company has stated that the source of the above speed money paid is on account of bogus purchases. Therefore we do not find any infirmity in the order of the learned CIT – A in allowing the telescoping of the above disallowance with respect to the addition confirmed by him on account of bogus purchases. Accordingly, ground numbers 1 – 2 of the appeal of the AO are dismissed. 026. The ground number three is with respect to the disallowance u/s 14 A of ₹ 105,094,178/–, deleted by the learned CIT – A on the argument that there is no exempt Page | 37 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 income and by the assessee during the year. This is challenged by the learned AO as per ground number 3 – 5 of the appeal. During the course of assessment proceedings the learned assessing officer asked assessee about disallowance u/s 14 A of the act as assessee has incurred substantial interest expenditure and has also made investment where from exempt dividend on income could have been earned. The learned assessing officer also found that assessee has not offered any disallowance. Therefore, the provisions of rule 8D invoked and total disallowance of ₹ 105,094,178/– was made. The learned CIT appeal on appeal before him found that there is no exempt income earned by the assessee and therefore he deleted the above disallowance following the various judicial precedents. However, we find that now with effect from 1 April 2022 the Finance act, 2022 has introduced an explanation, which makes it very clear that the provisions of Section 14A with respect to the disallowance will apply and shall be deemed to have always been applied in case where the assessee has not earned any exempt income. Therefore, in view of the amendment made we set-aside these grounds back to the file of the learned assessing officer to grant an opportunity of the hearing to the assessee and decide the issue afresh. Accordingly, these grounds are allowed with above directions. 027. Ground number 6 is with respect to the disallowance of interest expenditure of ₹ 20,317,621/– made by the learned assessing officer out of interest expenditure under the tax that assessee has advanced interest free loans and advances to its subsidiaries. The learned CIT – A has Page | 38 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 deleted the above disallowance holding that assessee has interest free funds available with it in the form of share capital and reserve of ₹ 539.75 crores whereas the advances given to subsidiaries and related concerns were of only ₹ 159.69 crores and therefore relying on the decision of the honourable Bombay High Court in case of reliance utilities and powers Ltd 313 ITR 340, he held that the presumption is available in favour of the assessee that no interest-bearing funds have been utilized for the above interest free loans and advances. The learned departmental representative could not show any infirmity in the order of the learned CIT – A. Therefore, we confirm the action of the learned CIT – A in deleting the above disallowance and accordingly ground number 6 of the appeal of the AO is dismissed. 028. In the result, appeal filed by the learned AO in ITA number 1352/M/2019 for assessment year 2010 – 11 is partly allowed. AY 2011-12 ITA number 1467/M/2019 (by assessee) ITA number 1353/M/2019 (by AO) 029. these are the cross appeals filed by both the parties for assessment year 2011 – 12 against the order passed by the Commissioner of income tax (appeals) – 51, Mumbai dated 26/12/2018. 030. In ITA number 1467/M/2019 filed by the assessee following grounds of appeal are raised:- Page | 39 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 1. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of passing assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details for filed by the appellant during the course of assessment proceedings 2. on the facts and the circumstances of the appellant’s case and in law the learned CIT (A) order in confirming the AO’s action of disallowing deduction u/s 80 IA amounting to ₹ 80,876,601/– 3. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) order in confirming the AO’s action in making the addition of ₹ 557,079,690/– on account of alleged bogus purchases 4. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 291,00,00,000/– on account of purchase of development rights of fully developed wind power site acquired from Messer’s Vish wind infrastructure LLP by invoking the provisions of Section 40 A (2) (b)/37 (1) 5. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing Page | 40 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 a sum of ₹ 60 crores by invoking the provisions of Section 37 (1) 031. in ITA number 1353/M/2019 the learned assessing officer has raised the following grounds of appeal:- 1. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of ₹ 33,912,150/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases 2. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of ₹ 33,912,150/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the case generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in form of speed money. 3. Whether on the facts and the circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 121,013,188/– made u/s 14 A on the ground that no exempt income has been earned during the assessment year Under consideration Page | 41 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 4. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 121,013,188/– on the basis of decision of the honourable Supreme Court in case of Chettinand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore, not a binding precedent Under article 141 of the Constitution 5. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 121,013,188/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned 6. whether on the facts and circumstances of the case, the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 34,358,442/– made by the AO u/s 36(1)(iii) four interest free loans and advances to its subsidiary is on account of sufficient availability of interest free funds in view of the decision of the honourable Supreme Court in the case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of funds was upheld. 032. Briefly stated, the fact shows that assessee filed its return of income on 29/11/2011 declaring a total income of ₹ 1,994,294,530/–. The facts stated in earlier year that assessee approached settlement commission wherein the Page | 42 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 application of the assessee was not admitted and therefore action u/s 153A of the act came into play and assessee was issued a notice on 28/1/2014. 033. During the course of assessment proceedings, the AO observed that assessee has claimed purchases from 21 suppliers where no standard operating procedure normally followed by the assessee in respect of its genuine purchases has not been followed and assessee failed to show the transportation detail for the material purchased as well as its consumption at the various sites. Accordingly, the assessing officer made an addition of ₹ 557,079,690/– treating the said purchases is bogus. The assessee was also found to be having incurred speed money expenditure and accordingly such unaccounted cash expenses of ₹ 33,912,150/– was added. During the year, assessee has claimed expenditure of ₹ 291 crores in purchase of site development rights in the nature of approvals and allotments of windmill project from Vish wind infrastructure LLP. During the course of search, it revealed that the above party did not have any technical knowhow, the technical manpower, or the sophisticated infrastructure in respect of acquisition of the site development rights. On the other hand, all these expertise were available with the assessee. It was also admitted by the managing director that knowhow, manpower, and infrastructure has been provided by the assessee to the above party for the acquisition of site development rights. Assessee has not received any amount for the said services rendered. Even the proceedings before the settlement commission also Page | 43 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 showed that site development rights payments made by the assessee to above company is of ₹ 783 crores at the rate of ₹ 14.5 lakhs per megawatt for the years relevant to assessment year 2011 – 12 to 2013 – 14 and that company has booked expenses of only ₹ 35,872,554/–. Therefore several doubts were raised with respect to the genuineness of the above transaction of purchase of development rights by the assessee from that company and hence the learned assessing officer disallowed the entire expenditure claimed by the assessee of ₹ 291 crores related to purchase of site development right from that company invoking the provisions of Section 40 A (2) (b) and Section 37 (1) of the act. The learned assessing officer further disallowed ₹ 60 crores u/s 37 (1) which the assessee voluntarily disallowed in the proceedings before the settlement commission. The AO further made a disallowance of ₹ 121,013,188/– u/s 14 A and disallowance of interest of Rs 243,86,238/– u/s 36(1)(iii) on account of diversion of interest-bearing funds for the purpose of giving interest for loans and advances to the subsidiaries. Accordingly assessment u/s 153A of the act was passed on total income of ₹ 6,238,701,170/–. 034. Assessee approached the learned CIT – A in appeal. The learned CIT – A confirmed all other additions except the disallowance on account of speed money of ₹ 33,912,150/– granting telescoping to the assessee he deleted the same, he also deleted the disallowance u/s 14 A of the act of ₹ 121,013,188/– as assessee did not on any exempt income. He also deleted the disallowance on account of interest of ₹ 34,358,442/– as assessee was Page | 44 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 having higher interest free funds then the amount invested in the sister concerns without charging interest. Therefore, both the parties are aggrieved and have preferred this appeal. 035. Coming to the appeal of the learned AO, ground number 1 – 2 of the appeal has already been decided by us in the appeal of the AO for assessment year 2010 – 11 wherein we upheld the action of the learned CIT – A in deleting the separate addition on account of speed money paid because of the reason that assessee has stated that amount earned out of bogus purchases have been used for spending on speed money. Therefore for the similar reasons, in absence of any change in the facts and circumstances of the case, we confirm the action of the learned CIT – A and ground number 1 and 2 of the appeal is dismissed. 036. Ground number 3 – 6 is identical to ground number 3 – 6 of the appeal of the AO for assessment year 2011 – 12 wherein we have set-aside the whole issue back to the file of the learned assessing officer in view of the amendment in the income tax act by Finance act 2022, for the similar reasons we also set-aside these three grounds back to the file of the AO to decide in accordance with the law. Accordingly, these grounds are allowed. 037. Ground number seven of the appeal is with respect to the deletion of the interest disallowance amounting to ₹ 34,358,442/–. This is identical to the ground number 7 of the appeal of the learned assessing officer for assessment year 2011 – 12 wherein we have upheld the action of the Page | 45 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 learned CIT – A in deleting the above disallowance in view of the specific finding that assessee has sufficient interest free funds available more than the amount invested in subsidiary companies without charging interest. Therefore, in absence of any change in the facts and circumstances of the case, we confirm the action of the learned CIT – A in deleting the same. Accordingly, ground number 7 of the appeal is dismissed. 038. Accordingly, appeal of the learned assessing officer is partly allowed. 039. Now we come to the ground of appeal of appeal filed by the assessee. Ground number 1 is with respect to the assessment-framed u/s 144 of the act. This is identical to ground number 1 of the appeal of the assessee for assessment year 2011 – 12 wherein we have confirmed the action of the learned assessing officer. Accordingly, we do not find any merit in the ground number 1 of the appeal and hence dismissed. 040. Ground number 3 is with respect to the addition on account of bogus purchases of ₹ 557,079,690 on account of alleged bogus purchases. This ground is identical to ground number 2 – 3 in the appeal of the assessee for assessment year 2011 – 12. There are no changes in the facts and circumstances of the case. For that year we have already confirmed the action of the learned CIT – A. Accordingly we also confirm the action of the learned CIT – A in confirming the disallowance/addition of ₹ 557,079,690/– on account of alleged bogus purchases accordingly ground number 3 of the appeal is dismissed. Page | 46 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 041. Ground number 2 of the appeal is against the disallowance of deduction u/s 80 IA of ₹ 80,876,601/–. The facts relating to the above disallowance shows that that assessee claimed that it has claimed deduction u/s 80 IA in the return of income filed u/s 139 (1) which was filed within the due date and the necessary certificate in form number 10 CCB was submitted in the course of proceedings before the settlement commission. The learned AO did not allow the claim of the assessee for the reason that no audit report in form number 10CCB was filed. Before the learned CIT – A assessee also failed to show that any such form has been filed before the assessing officer. The assessee also did not produce any evidence before the learned CIT – A also. The learned CIT – A also asked the assessee to produce certain details, which were not produced. Accordingly, the deduction was disallowed. No such details were also produced before us. In view of this we do not find any infirmity in the order of the learned CIT – A in confirming the disallowance u/s 80 IA of the act of ₹ 80,876,601/–. Accordingly, ground number 2 of the appeal is dismissed. 042. Ground number 4 is with respect to the disallowance of a sum of Rs 291,00,00,000/-on account of purchases of development rights of fully developed when the power site acquired from Vish wind infrastructure LLP[ LLP] . We find that this issue has been considered by the learned CIT – A as per paragraph number 9 of the appeal order. The facts relating to the above addition shows that during the course of search it was found that LLP had hardly carried out any business activities, which showed sale of Page | 47 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 development right of ₹ 291 crores to the assessee company. Further, in subsequent years also this LLP has shown sale of development right of ₹ 390 crores and ₹ 102 crores respectively. During the course of search proceedings the entire process of acquisition of development right was examined and it was found that the same constitute the complex activities which require highly technical knowhow, technical manpower and sophisticated infrastructure with latest technology. The LLP did not have any such expertise or infrastructure. It was further found that the site development approvals et cetera taken by the LLP were solely using the name of the assessee. It was also found that there is hardly any expenditure booked by the assessee and the such expenditure was financed by obtaining loan from the assessee. Further, the expenditure incurred by the LLP on acquisition of such rights, its books of account did not show any such entries. These facts were also accepted by the managing director in his statement recorded at the time of search. Further the valuation report furnished by the assessee by one consulting company, enquiry proved that that company did not have any prior experience or did not carry out any site visit et cetera or independent verification prior to submitting such report. Such report was also found to be backdated. Before the settlement commission, also the expenditure claimed by the assessee was found to be bogus. Therefore the settlement commission also held that the expenditure incurred by the assessee of ₹ 783 crores for the relevant years by payment of sum to the above LLP are not allowable to the Page | 48 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 assessee as deduction. On this basis, the learned assessing officer disallowed the expenditure of ₹ 291 crores for this year. The learned CIT – A on perusal of the finding of the learned assessing officer, settlement commission as well as in absence of any further information except the further valuation report, confirmed the action of the learned assessing officer. We find that when the payment was not found to be genuine, the party to which payments have been made did not have any capability of performing such work, the report of expert was found to be backdated and without any further evidence, the expert also did not visit the site or carry out any personal inspection, there is no doubt in our mind that the expenditure incurred by the assessee is bogus. Accordingly we confirm the action of the learned CIT – A in disallowing the above expenditure. Accordingly, ground number 4 of the appeal is dismissed. 043. Ground number five is with respect to the confirmation of disallowance of ₹ 60 crores u/s 37 (1) of the act. This offer was made by the assessee before the settlement commission. This addition was on account of the provisions of Section 43B of the act since the above sum is not paid before the end of relevant year. During the course of assessment proceedings, also assessee did not object to the same. Before the learned CIT – A also no evidences were produced. There are no evidences that the above sum has been paid even before the due date of filing of the return of income. Therefore, we do not have any other alternative but to confirm the action of the learned CIT – A in confirming the above disallowance of ₹ Page | 49 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 60 crores. Accordingly, ground number 5 of the appeal is dismissed. 044. Accordingly, appeal filed by the assessee in ITA number 1467/M/2019 four assessment year 2011 – 12 is dismissed. AY 2012-13 ITA number 1468/M/2019 (by assessee) ITA number 1354/M/2019 (by AO) 045. These are the cross appeals filed by the both the parties against the order of the learned CIT – A – 51, Mumbai dated 26/12/2018. 046. ITA number 1468/M/2019 is filed by the assessee raising following grounds of appeal:- 1. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of passing the assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings. 2. On the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making the addition of ₹ 803,285,982/– on account of alleged bogus purchases 3. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 390 crores on Page | 50 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 account of purchase of development rights of fully developed wind power sites acquired from Messer’s Vish wind infrastructure LLP by invoking the provisions of Section 40 A (2) (b)/37 (1). 047. In ITA number 1354/M/2019, the learned AO has raised the following grounds of appeal:- 1. whether on the facts in the circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs 1, 30,76,850/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases 2. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs 1 30,76,850/– made on account of unaccounted cash expenditure in the form of speed money by allowing telescoping as the country addition is been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the cash generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in the form of speed money 3. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 69,451,510/– made u/s 43B Page | 51 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 without giving any finding on the nature of payments made and ignoring the fact that such claim was not made in the return filed by the assessee 4. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– made u/s 14 A on the ground that no exempt income was earned during the assessment year Under consideration 5. whether on the facts in the circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– on the basis of the decision of the honourable Supreme Court in the case of Chettinand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore not a binding precedent Under article 141 of the Constitution 6. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned 7. whether on the facts and circumstances of the case the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 34,358,442/– made by the AO u/s 36 (1) (iii) for interest free loans and Page | 52 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 advances to its subsidiary is on account of sufficient availability of interest free funds in view of the decision of the honourable Supreme Court in the case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of fund was upheld. 048. The learned departmental representative submitted that above all grounds in the appeal of the assessee as well as of the learned AO are covered by appeal of the assessee and AO for assessment year 2011 – 12. 049. We first deal with the appeal of the assessee. We find that the ground number one of the appeal is identical to ground number one of the appeal of assessment year 2011 – 12. We have already dismissed that ground of appeal for assessment year 2011 – 12 hence, on the similar reasons, we also dismiss ground number one. 050. Ground number 2 of the appeal is with respect to the confirmation of the addition of bogus purchase of ₹ 803,285,982/–. This ground is similar to ground number three of the appeal of the assessee for assessment year 2011 – 12. While deciding that appeal, we have already confirmed the action of the learned CIT – A. Therefore, for the similar reasons we also confirmed the action of the learned CIT appeal in confirming the disallowance of the above sum on account of alleged bogus purchases accordingly ground number 2 of the appeal is dismissed. 051. Ground number three of the appeal is with respect to the confirmation of disallowance of ₹ 390 crores on account of Page | 53 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 purchase of development rights. This ground is identical to ground number 4 of the assessee for assessment year 2011 – 12. While deciding that appeal we have confirmed the action of the learned assessing officer. Accordingly, for similar reasons, in absence of any change in facts and circumstances, we confirm the action of the learned CIT – A – 11 a sum of ₹ 390 crores. Accordingly, ground number 3 of the appeal of the assessee is dismissed. 052. In the result ITA number 1468/M/2019 filed by the assessee for assessment year 2012 – 13 is dismissed. 053. Now we come to the appeal filed by the learned assessing officer we find that ground number 1 – 2 of the appeal is with respect to the telescoping of disallowance on account of speed money paid with unaccounted income of bogus purchases. This ground is identical to ground number 1 – 2 of the appeal of the AO for assessment year 2011 – 12. We have confirmed the action of the learned CIT – A for that year. Accordingly for the similar reasons we also dismiss ground number one and two and confirmed the action of the learned CIT – A in allowing telescoping of the above disallowance 054. ground number 4 – 6 of the appeal is with respect to the disallowance u/s 14 A which is similar to the ground number 4 – 5 of the appeal of the AO for assessment year 2011 – 12 which has been set-aside back to the file of the learned assessing officer in view of the amendment u/s 14 A of the act by the finance act 2022. For the similar reasons we also set-aside these grounds of appeal to the Page | 54 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 file of the learned AO to decide afresh with similar direction. Accordingly, these grounds are allowed. 055. Ground number 7 is with respect to the deletion of the disallowance of interest expenditure in view of the fact that assessee has sufficient availability of interest free funds. This ground is similar to ground number six of the appeal of the AO for assessment year 2011 – 12. We have confirmed the order of the learned CIT – A in deleting the above disallowance. For the similar reasons we also confirmed the order of the learned CIT – A for this year. Accordingly, ground number 7 is dismissed. 056. Ground number three of the appeal is with respect to the disallowance deleted by the learned CIT – A of ₹ 6,9451,510 u/s 43B of the act. We find that this issue has been set-aside by the learned CIT – A to the file of the learned AO with a direction to examine the nature of the expenditure whether it falls within the ambit of the provisions of Section 43B of the act or not and whether the actual payment of the above sum has been made during the relevant year before allowing the claim of the assessee. We find that the learned CIT – A has given a direction to the AO and there should not be any grievance to the assessing officer against the direction. The learned and CIT – A has not allowed the deduction. In view of this, we do not find any merit in the ground number 3 of the appeal, hence dismissed. 057. In the result ITA number 1354/M/2019 filed by the learned assessing officer for assessment year 2012 – 13 is partly allowed. Page | 55 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 AY 2013-14 ITA number 1355/M/2019 (by AO) ITA number 1469/M/2019 (by assessee) 058. ITA number 1355/M/2019 is filed by the learned assessing officer for assessment year 2013-14 against the order passed by the learned CIT – A dated 26/12/2018. 059. As per ground number 1 – 2 of the appeal, AO is aggrieved with the direction of the learned CIT – A granting telescoping of the disallowance confirmed of ₹ 153,943,689/– made on account of speed money. We find that identical ground has been raised by the learned assessing officer in earlier years also. There is no change in the facts and circumstances of the case. As for the assessment year 2011 – 12 and 2012 – 13, identical ground has been dismissed, therefore for the similar reasons we dismiss ground number 1 and 2 of the appeal of the AO. 060. Ground number 3 is with respect to the deletion of disallowance of Rs 4.50 crores u/s 43B of the act. This ground is identical to ground number three of the appeal of the AO for assessment year 2012 – 13 wherein the issue has been set-aside to the file of the learned assessing officer for the purpose of verification. Therefore, according to us the assessing officer cannot be said to be aggrieved by that order. In view of this, we dismiss ground number 3 of the appeal. Page | 56 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 061. Ground number 4 – 6 of the appeal is against the disallowance deleted by the learned CIT – A of ₹ 324,878,039 u/s 14 A of the income tax act as the assessee does not have any exempt income. Identical ground has been raised in case of the assessee for assessment year 2012 – 13 which has been set-aside back to the file of the learned assessing officer. As there is no change in the facts and circumstances of the case, we set- aside these grounds also back to the file of the learned assessing officer to decide in accordance with the similar direction. Accordingly, ground number 4 – 6 of the appeal is allowed. 062. Ground number 7 of the appeal is with respect to the deletion of the disallowance of interest expenditure of ₹ 79,399,439/–. The facts and circumstances of the disallowances identical to the ground number 7 of the appeal of the AO for assessment year 2012 – 13. The learned and CIT – capital has deleted the disallowance holding that assessee has sufficient interest free funds available then the amount of advances given interest free to its subsidiary companies. We do not find any infirmity in the order of the learned CIT – A. In view of this following our own decision for ground number seven in appeal of the AO for assessment year 2012 – 13 we dismiss this ground. 063. Accordingly ITA number 1355/M/2019 filed by the learned assessing officer is partly allowed. 064. Coming to appeal of the assessee wherein the first ground is against the action of the learned assessing officer Page | 57 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 confirmed by the learned CIT – A in passing the assessment order u/s 144 of the income tax act. This ground is identical to the grounds of appeal raised by the assessee for assessment year 2011 – 12. We have dismissed this ground of appeal in that appeal. Therefore, for the similar reasons we also dismiss this ground. Accordingly, ground number one is dismissed. 065. Ground number 2 is with respect to the disallowance of deduction u/s 80 IA of ₹ 160,761,237/–. This ground is identical to ground number two of the appeal of the assessee for assessment year 2011 – 12. This ground of appeal has been decided by us confirming the action of the learned CIT – A in disallowing the above deduction as assessee has failed to show that any report in form number 10 CCB is filed. In view of this, for similar reasons we also dismiss ground number 2 of the appeal. 066. Ground number three is with respect to the confirmation of disallowance of ₹ 473,502,577/– on account of alleged bogus purchases. This ground is identical to ground number 3 of the appeal of the assessee for assessment year 2011 – 12. We have confirmed the action of the learned CIT – A in confirming the above disallowance for that year. Therefore, for the similar reasons we confirm the order of the learned CIT – A accordingly ground number 3 is dismissed. 067. Ground number 4 is against the confirmation of the disallowance of ₹ 27.58 crores on account of alleged bogus transportation charges. This ground relates to the bogus purchases. The learned CIT – A has confirmed the same Page | 58 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 for the similar reasons as given for bogus purchases. As we have also confirmed the order of the learned CIT – A – allowing the bogus purchases, natural corollary forces us to confirm the above disallowance. Accordingly, ground number 4 of the appeal is dismissed. 068. Ground number 5 of the appeal is with respect to the disallowance of a sum of ₹ 102 crores on account of purchase of development rights. This ground is identical to the appeal of the assessee for assessment year 2012 – 13 and 2011 – 12. In those appeals we have confirmed the action of the learned CIT – A. Therefore for the similar reasons we also confirmed the action of the learned CIT – A in confirming the above disallowance. Accordingly, ground number 5 of the appeal is dismissed. Ay 2014-15 ITA number 1470/M/2019 (by assessee) ITA number 1910/M/2019 (by AO) 069. Both these above cross appeals have been filed by the parties against the order of the Commissioner of income tax appeals – 51, Mumbai dated 31/1/2019. 070. We first take up the appeal of the learned assessing officer in ITA number 1910/M/2019. The AO has raised following grounds of appeal:- 1. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in allowing Page | 59 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 the relief of ₹ 31,119,000/– against the disallowance of deduction on account of liquidated damages of ₹ 84,194,465/– made by the AO on the basis of debit note issued by one Messer’s E N wind power when such evidence was not produced before the AO during the assessment and remand proceedings and therefore, the relief allowed is in violation of rule 46A of the IT rules, 1962 2. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– made u/s 14 A ground that no exempt income has been earned during the assessment year Under consideration 3. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– on the basis of the decision of the honourable Supreme Court in case of Chittanand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore not a binding precedent Under article 141 of the Constitution 4. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned Page | 60 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 5. whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting ₹ 153,943,689/– on account of unaccounted cash expenses in the form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases and bogus transport expenses without appreciating that assessee has contested the addition made on account of bogus purchases and bogus transport expenses 6. whether on the facts and circumstances of the case the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 53,671,455/– made by the AO u/s 36 (1) (iii) four interest free loans and advances to its subsidiary is on account of sufficient availability of interest free funds in view of the decision of the honourable Supreme Court in case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of funds was upheld 7. whether on the facts and circumstances of the case the learned CIT (A) was correct in law in allowing the relief of ₹ 178,300,823/– and Rs 471,91,192/– in respect of 10% disallowances Under the heads employees benefit and legal and professional charges and security charges when the assessee failed to produce any villains in support of the claim 8. whether on the facts in the circumstances of the case the learned CIT (A) was correct in law in restricting the disallowance of ₹ 132,141,405/– being 1.04% of Page | 61 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 total purchases against the disallowance of ₹ 132,141,405/– against the disallowance of ₹ 1,270,590,431 being 10% of the total purchases made by the AO when the assessee failed to produce even the Ledger copy of purchase parties in support of the claim 071. in ITA number 1470/M/2019 the assessee has raised the following grounds of appeal:- 1. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of passing the assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings 2. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making an addition/disallowance of ₹ 182,785,086/– by invoking the provisions of Section 43B 3. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing set-off of brought forward loss of ₹ 336,508,609/– 4. on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing deduction u/s 80 IA amounting to ₹ 146,249,255/– Page | 62 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 5. on the facts and in the circumstances of the appellant’s case and in the law the learned CIT (A) erred in confirming the AO’s action of disallowing bad debts written off amounting to ₹ 2,007,599/– 6. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing liquidated damages amounting to ₹ 53,075,465/– 7. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 97,934,695/– claimed u/s 37 (1) on estimated basis 8. on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO action of making addition of ₹ 132,141,405/– on account of alleged bogus purchases on estimated basis. 072. We first deal with the appeal of the learned assessing officer. Ground number 2 – 4 of the appeal is with respect to the disallowance deleted by the learned CIT – A u/s 14 A of the act amounting to ₹ 541,007,860/– as the assessee has not earned any exempt income during the year. The identical issue has been dealt with by us in the appeal of the assessee for earlier years where the assessing officer has challenged the action of the learned CIT – A. We have set-aside those grounds back to the file of the learned assessing officer to decide the same in accordance with the law in view of the amendment made Page | 63 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 by the finance act 2022. Therefore, for similar reasons we also set aside this ground of appeal back to the file of the AO. Accordingly, ground number 2 – 4 of the appeal is allowed. 073. Ground number 5 of the appeal is with respect to the granting of telescoping adjustment on expenditure related to unaccounted cash expenses in the form of speed money against the addition of bogus purchases. This ground is also similar to the ground of appeal decided in the case of the appeal filed by the assessing officer for earlier years. We find that the learned CIT – A while upholding the disallowance of bogus purchases has granted the telescoping as in the statement made by the assessee it has been confirmed that these expenses are incurred out of the money generated out of the bogus purchases. In view of this we do not find any infirmity in the order of the learned CIT – A in granting telescoping of the above two different additions. Accordingly, ground number 5 of the appeal is dismissed. 074. ground number 6 is with respect to the disallowance of interest expenditure of ₹ 53,671,455/– which has been deleted by the learned CIT – A holding that assessee is having more interest free loans and advances compared to amount advanced to the subsidiary companies without charging interest. Identical issue arose in the case of the assessee from assessment year 2011 – 12 to assessment year 2013 – 14 wherein we have upheld the order of the learned CIT – A deleted the about disallowance. Therefore, for the similar reasons, we confirm the order of the Page | 64 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 learned CIT – A. Accordingly ground number 6 of the appeal is dismissed. 075. Ground number 1 of the appeal of the AO is against the deletion of disallowance to the extent of ₹ 31,119,000/– on account of liquidated damages of ₹ 84,194,465/–. The facts relating to the above disallowance made by the assessing officer is reproduced in paragraph number 16 of the assessment order. The assessee has claimed liquidated damages amounting to ₹ 84,194,465 in the profit and loss account. The assessee was asked to furnish the details the before the assessing officer assessee could not furnish any detail and therefore the learned assessing officer disallowed the above sum. The matter reached before the learned CIT – A who dealt with this issue in paragraph number 10 of his order. Before the assessing officer, it was submitted that assessee has entered into a memorandum of understanding on 26/2/2013 with one party for supply and commissioning of 20 MW wind power project in Rajasthan for a total contract amount of ₹ 1,037,300,000. As per the agreement, the project was to be commissioned on or before 31/3/2013, however it could not be commissioned within the stipulated time. For this project, that party has availed loan is and paid interest for an aggregate amount of ₹ 53,075,465, which was paid by the assessee. As per the MOU that party raised debit note of ₹ 31,119,000/– being 3% of the contract value towards liquidated damages for the delay in commissioning of the project. Therefore, assessee claimed deduction of the above sum amounting in all to ₹ 84,194,465 on account of liquidated damages. Assessee Page | 65 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 contended that it is not in the nature of the provision. The learned CIT appeal after obtaining the remand report of the learned AO held that as per clause 3 of the agreement dated 26/2/2013 the assessee was liable to pay the above amount of ₹ 31,119,000 as liquidated damages being the 3% of the contract value. The debit note was also raised on the assessee by that party on this basis the learned CIT – A allowed the claim of the above sum. However, he confirmed the disallowance of interest paid by the assessee pertaining to loan taken by that party. Thus out of the total claim of ₹ 84,194,465/–, learned CIT – A allowed the claim of ₹ 31,119,000/– and confirmed the disallowance to the extent of ₹ 53,075,465/– both the parties are in appeal on this issue. 076. On careful consideration of the findings of the lower authorities, it is apparent that assessee has incurred a liability of ₹ 31,119,000/– which is supported by the memorandum of understanding for delay in commissioning of the project. In view of this we do not find any infirmity in the order of the learned CIT – A in allowing the above deduction to the assessee. The assessee has challenged the confirmation of disallowance of ₹ 53,075,465/– as per ground number six of the appeal of the assessee. In view of this, we uphold the order of the learned CIT – A in allowing the claim of ₹ 31,119,000 which is supported by the debit note and the clauses of the agreement of memorandum of understanding and confirmation of disallowance of ₹ 5,30,75,465 which is not supported by any agreement. Accordingly ground number one of the Page | 66 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 appeal of the assessing officer as well as ground number six of the appeal of the assessee are dismissed. 077. Ground number 7 and 8 of the appeal of the AO as well as ground number 7 and 8 of the appeal of the assessee are with respect to the disallowance of certain expenditure confirmed by the learned CIT – A. The facts relating to the above ground is that assessee has claimed certain expenditure Under the head employee’s benefit, repairs and maintenance, other manufacturing expenses, commission and discount on sales and legal and professional fees as well as security service charges. Before the assessing officer, no further submissions were made and therefore the learned AO made an ad hoc disallowance of 10% of the above aggregate expenditure. Such disallowance was amounting to ₹ 333,689,904/–. The assessee contested before the learned CIT – A the submissions made by the assessee were not considered. The remand report was called for where the assessee only filed copies of the Ledger account of the said expenses and simple copies of the bills and invoices. In rejoinder assessee submitted that its registered office, factory is situated at a different place and records are lying under lockout and no employees are there to take care of. Therefore, it was stated that it is practically impossible to comply with the requirement of the AO. Assessee also stated that regular assessment u/s 143 (3) of assessment year 2008 – 09 has taken in place and no disallowance has been made and in that the head of these expenditure assessee also submitted a comparative chart of expenses to state that there is no abnormal increase in the Page | 67 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 expenditure claimed by the assessee for this year. Based on this the learned CIT – A noted that as assessee has failed to submit the complete details of such expenditure certain disallowance deserves to be confirmed. He examined each of those expenditure. With respect to the employee benefit expenditure he held that if the disallowances restricted to the 5% of the expenditure on which no tax has been deducted it would meet the criteria of reasonableness. With respect to legal and professional fees and security charges, he applied the same logic and restricted the disallowance to the extent of 5%. With respect to the repairs and expenditure, he confirmed the action of the AO in disallowing 10% of such expenditure. Similarly, he confirmed 10% of the disallowance out of commission and discount on sales. With respect to the manufacturing expenses, he compared the ratio of these expenditure and stated that it has come down and therefore he deleted the disallowance out of manufacturing expenses. Accordingly, he confirmed the disallowance to the extent of ₹ 97,934,695. On careful analysis of the order of the learned CIT – A we find that in each of the disallowance, he is faced with the situation where no complete details are available on record but comparative analysis of expenditure is available. He applied his mind and applied reasonable ratio to uphold the disallowance. No infirmity can be imputed in such an order. Accordingly, we confirm the order of the learned CIT – A – ground number 7 – 8 of the appeal of the assessee as well as of the AO are dismissed. Page | 68 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 078. Thus, appeal filed by the learned assessing officer in ITA number 1910/M/2019 for assessment year 2014 – 15 is partly allowed. 079. This leaves us with some of the grounds in the appeal of the assessee. 080. Ground number 1 is identical to the ground of appeal of assessee in earlier years wherein we have dismissed the same ground. For the similar reasons we uphold the action of the learned assessing officer in applying the provisions of Section 144 in making the assessment. Accordingly, ground number 1 is dismissed. 081. Ground number 2 is with respect to the confirmation of disallowance of ₹ 182,785,086/– u/s 43B of the act. The learned CIT – A has dealt with this issue in paragraph number 6 of the appeal. He has decided this issue after obtaining the remand report of the learned assessing Officer and rejoinder to the remand report of the assessee. The issue is 18.27 crores of service tax, which has been paid by the assessee on 18/9/2013 under the protest he held that, assessee, can claim the same as bad debt if the same is not received from the client but it is not allowable u/s 43B of the act. We do not find any infirmity in the order of the learned CIT – A in making the about disallowance invoking the provisions of Section 43B of the act as it did not satisfy the requisite criteria. In the result ground number 2 of the appeal is dismissed. 082. Ground number 3 is with respect to the not allowing set of brought forward losses of ₹ 336,508,609. This amount is Page | 69 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 and unabsorbed depreciation and not carry forward of losses. The learned CIT appeal did not allow the same because of the reason that there is no unabsorbed depreciation available to the assessee as per the assessment records of the earlier year. Therefore, there is no infirmity in the order of the learned CIT – A in confirming the above disallowance. Ground number 3 is dismissed. 083. Ground number 4 is with respect to the disallowance of deduction u/s 80 IA amounting to ₹ 146,249,255/-we find that identical issue arose in the case of the assessee in earlier assessment year where the assessee has not furnished form number 10CCB. On this identical ground, we have already confirmed disallowance of deduction u/s 80 IA in earlier years. There is no change in the facts and circumstances of the case and therefore we confirm the action of the learned CIT – A – ground number 4 of the appeal. 084. Ground number 5 of the appeal is against the disallowance of the bad debts amounting to ₹ 2,007,599/– this disallowance was confirmed by the learned CIT – A for the reason that before the assessing officer, in the remand proceedings, before the learned CIT – A assessee did not produce any of the details. In view of this, we do not have any reason to deviate from the orders of the lower authorities. Accordingly, ground number 5 of the appeal is dismissed. 085. In the result, appeal filed by the assessee in ITA number 1470/M/2019 for assessment year 2014 – 15 is dismissed. Page | 70 M/s Wind World India Ltd; A.Y. 07-08, 10-11 to 14-15 Order pronounced in the open court on 24.06.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 24.06.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai