B.T. Patil & Sons Belgaum Construction Pvt. Ltd., Karnataka V. DCIT, Central Circle, Kolhapur

ITA 231/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2567 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 21-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Assessee Lawyers: O S PRABHU
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Depreciation; Business expenditure; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Proportionate interest; Retrospective amendment; Question of law; Cost of acquisition; Corroborative evidences; Valuation report; Onus to prove; Retraction; Revised return; Documents seized
• Section: 69C; 43B; 143(3); 153A; 14A; 80IB; 139(5); 69; 54; 63; 132

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.451 TO 455/PN/2013 !$ $ / ASSESSMENT YEARS : 2005-06 & 2007-08 TO 2010-11 ACIT CENTRAL CIRCLE-1, KOLHAPUR . / APPELLANT V/S B.T. PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD., 4112, PATSON HOUSE, P.B. ROAD, BELGAUM - 590003 KARNATAKA. PAN NO.AAACB7343N . / RESPONDENT . / ITA NOS.228 TO 231/PN/2013 !$ $ / ASSESSMENT YEARS : 2007-08 TO 2010-11 B.T. PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD., 4112, PATSON HOUSE, P.B. ROAD, BELGAUM - 590003 KARNATAKA. PAN NO.AAACB7343N . / APPELLANT V/S DY.CIT CENTRAL CIRCLE, KOLHAPUR . / RESPONDENT / ASSESSEE BY : SHRI SATISH MODY & SHRI O.S. PRABHU / DEPARTMENT BY : SHRI S.K. RASTOGI, CIT 2 / ORDER PER R.K. PANDA, AM : ITA NO.451/PN/2013 FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 29-11-2012 OF THE CIT(A), KOLHAPUR RELATIN G TO ASSESSMENT YEAR 2005-06. ITA NOS.452/PN/2013 TO 455/ PN/2013 FILED BY THE REVENUE AND ITA NOS.228/PN/2013 TO 231/PN/ 2013 FILED BY THE ASSESSEE ARE CROSS APPEALS AND ARE DIRECTED AG AINST THE COMMON ORDER DATED 29-11-2012 OF THE CIT(A) KOLHAPUR RE LATING TO ASSESSMENT YEARS 2007-08 TO 2010-11 RESPECTIVELY. FO R THE SAKE OF CONVENIENCE ALL THESE APPEALS WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.451/PN/2013 (A.Y. 2005-06) (BY REVENUE) : 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READ S AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.69 B ON ACCOUNT OF DIFFERENCE IN VALUATION TO THE TUNE OF RS.4,15,196/- . 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF INFRASTRUCTURE CONSTRUCTION, CIV IL ENGINEERING AND CONTRACTORS ETC.. IT FILED ITS ORIGINAL RETU RN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 28-10-2005 DECLAR ING TOTAL INCOME AT RS.1,45,66,216/-. A SEARCH U/S.132 OF THE I.T. AC T WAS CARRIED OUT IN THIS CASE ON 23-10-2009. IN RESPONSE TO NOTICE U/S.153A THE ASSESSEE FILED ITS RETURN OF INCOME ON 05-08- 2010 DECLARING NIL INCOME. / DATE OF HEARING : . 23.12.2015 / DATE OF PRONOUNCEMENT:09.03.2016 3 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS ACQUIRED VARIOUS PROPERTIES. TO KNOW THE INVESTMENT IN THE SAID PROPERTIES THE AO MADE A REFERENC E U/S.142A TO THE DVO TO DETERMINE THE COST OF THE PROPERTIES IN THE HANDS OF THE ASSESSEE AS ON THE DATE OF ACQUISITION. THE FOLLOWING CHART INDICATES THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE ESTIMA TED BY THE DVO AND THE DIFFERENCE : ASST.YEAR DETAILS OF PROPERTY VALUE DECLARED BY APPELLANT (RS.) VALUE ESTIMATED BY DVO (RS.) DIFFERENCE ADDED TO TOTAL INCOME (RS.) (1) (2) (3) (4) (5) 2005 - 06 FLAT NO.7, STAR TOWER, AT CTS NO.8/1,8/2, 8/3 & 8/4, KHANAPUR RD, BELGAUM 8,61,304/ - 12,76,500/ - 4,15,196/ - 2007 - 08 FLAT NO.8 AT THE ABOVE ADDRESS 10,69,509/ - 11,23,000/ - 56,676/ - FLAT NO.10 AT THE ABOVE ADDRESS 4,87,415/ - 4,90,500/ - -- 2010 - 11 FLAT NO.401, 4 TH FLOOR, SIDDHIVINAYAK CLASSIC, CTS NO.2141, E-QARD, TARABAI PARK, KOLHAPUR 29,63,680/ - 39,77,000/ - 10,13,320/ - FLAT NO.301 AT THE ABOVE ADDRESS 29,62,480/ - 39,67,000/ - 10,04,520/ - 5. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS T O WHY THE DIFFERENCE OF RS.4,15,196/- RELATING TO A.Y. 2005-06 SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE IMPUG NED ASSESSMENT YEAR. IT WAS EXPLAINED BY THE ASSESSEE THA T THE VALUATION OFFICER HAS MADE VALUATION OF THE PROPERTY ON PRESUMPTION S AND NOT ON THE BASIS OF COMPARATIVE RATES PREVAILING IN THE MARKET . IT WAS ARGUED THAT THE IST SALE INSTANCE TAKEN BY THE DVO IS A SHOP ON THE GROUND FLOOR WHEREAS THE ASSESSES OFFICE PREMISES IS ON T HE FIRST FLOOR. FURTHER, IN THE SECOND INSTANCE THE RATE PAID BY THE AS SESSEE PER SQ.FT. IS MORE THAN THE RATE PER SQ.FT. OF THE SALE INSTANCE FOR WHICH THE DVO IGNORED THE SALE INSTANCE. IT WAS FURTHER SUBMITTED T HAT THE 4 ASSESSEE BEING A COMPANY PROVISIONS OF SECTION 56(1)(VII)(B) ARE NOT APPLICABLE. 6. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND BROUGHT TO TAX THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE DVO AND THE VALUE DECLARED BY THE AS SESSEE AND MADE ADDITION OF RS.4,15,196/- U/S.69B OF THE I.T. ACT, 1961 ON ACCOUNT OF THE PROPERTY PURCHASED BY THE ASSESSEE DU RING THE IMPUGNED ASSESSMENT YEAR. 7. BEFORE CIT(A) IT WAS SUBMITTED THAT NO INCRIMINATING EVIDE NCE WAS FOUND REGARDING UNDERVALUATION OF THE PROPERTIES. FU RTHER, THE AO HAS NOT POINTED OUT ANY DISCREPANCIES BETWEEN THE A MOUNT SPENT ON MAKING THE INVESTMENTS AND THE AMOUNTS REFLECTED IN T HE BOOKS AS PROVIDED U/S.69B. RELYING ON VARIOUS DECISIONS IT WAS SUBM ITTED THAT THE ADDITIONS MADE BY THE AO SHOULD BE DELETED. 8. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO U/S.69B. WHILE DOING SO HE HELD THAT THE AO IS ENTITLED TO AND HAD CORRECTLY REFERRED THE PROPERTY FOR VALUATION TO THE DVO U/S.142A. HE, HOWEVER, HELD THAT THE ADDITION HAS BEEN MADE BY THE AO WITHOUT REBUTTING THE EVIDENCES PUTFORTH BY THE ASSESSEE IN RESPECT OF ITS CON TENTIONS THAT THE DVO HAD ADOPTED ARBITRARY METHODS FOR VALUING THE P ROPERTIES IN QUESTION. THE RELEVANT OBSERVATION OF THE CIT(A) AT PARA 16 OF THE ORDER READS AS UNDER : 16. I HAVE HELD IN PARAGRAPH 12 THAT THE REPORT OF THE DVO UNDER SECTION 142A IS ONLY A PIECE OF EVIDENCE WHICH CAN BE REBUTT ED BY THE APPELLANT IN ORDER TO DETERMINE WHETHER OR NOT THE REPORT CAN BE RELIED UPON AS THE TRUE AND CORRECT ESTIMATE OF INVESTMENTS FOR THE PURP OSE OF SECTIONS 69 OR 69A OR 69B OF THE INCOME-TAX ACT. THE APPELLANT HAS POINTED OUT THAT THE DVO HAS NOT COMPARED THE RATES OF PROPERTY AVAILABLE IN THE SAME BUILDING AND HAS RELIED ON COMPARABLE RATES IN OTHER BUILDINGS IN THE SAME VICINITY TO ARRIVE AT THE VALUATIONS. THE APPELL ANT HAS POINTED OUT 5 THAT IN RESPECT OF FLAT NO.7 A COMPARISON WITH FLAT N O.201 IN THE SAME BUILDING WOULD SHOW THAT THE APPELLANT HAS MADE PAYM ENT OF A HIGHER AMOUNT THAN WHAT IS PAID BY OTHER PURCHASERS. SIMILAR LY, IN RESPECT OF FLAT NO. 8, THE APPELLANT HAS SHOWN THAT THE PURCHASE COST P ER SQ.FT. @ RS. 928/- PER SQ.FT. IS MORE OR LESS AT PAR WITH OTHER PROP ERTIES IN THE SAME BUILDING, WHICH ARE AT RS. 906/- PER SQ. FT. RS. 1,00 0/- PER SQ.FT OR RS. 928/- PER SQ.FT. IN RESPECT OF FLAT NO. 10, THE PURCH ASE COST IS RS. 1,001/ - PER SQ. FT. AS AGAINST THE PURCHASE COST OF RS. 615/- PER SQ. FT., RS. 709/- PER SQ.FT. AND RS. 902/- PER SQ.FT, IN THE SAME BUILDIN G. CITING THESE EXAMPLES, THE APPELLANT HAS MADE A CASE THAT THE VALUA TION MADE BY THE DVO IS ON PRESUMPTIONS AND NOT ON THE BASIS OF COMPARAT IVE RATES PREVAILING IN THE SAME BUILDING OR IN THE VICINITY. I FIND THAT THE ASSESSING OFFICER WAS ALSO APPRISED OF THESE FACTS. HOWEVER, THE CONTENTIONS WERE NOT ACCEPTED WITHOUT ASSIGNING ANY REASON. UNDER THESE CIRCUMSTANCES, I HOLD THAT THE ADDITIONS HAVE BEEN MADE WITHOUT REBUT TING THE EVIDENCES PUT FORTH BY THE ASSESSEE IN RESPECT OF ITS CONTENTION T HAT THE DVO HAS ADOPTED ARBITRARY METHODS FOR VALUING THE PROPERTIES IN QUESTION AND THE SAME CAN ONLY BE STATED TO BE ON THE BASIS OF PRESUMPTI ONS AND SURMISES. THE ASSESSEE HAS ALSO DEMONSTRATED THAT ON A COMPARATIVE B ASIS, IT HAS PAID MORE OR SIMILAR PRICE FOR THE FLATS PURCHASED BY IT. THE APPELLANT SUCCEEDS ON THIS GROUND. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 10. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE AO. 11. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE D VO INSTEAD OF CONSIDERING COMPARABLE CASES IN THE SAME BUILDING HAS CONS IDERED SALE INSTANCES IN SOME DIFFERENT BUILDINGS. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE A COMPARISON HAS TO BE MADE B ETWEEN AN APPLE AND APPLE AND IT CANNOT BE MADE BETWEEN AN APPLE AND AN ORANGE. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. PUNEET SABHARWAL REPORTED IN 328 ITR 48 5 HE SUBMITTED THAT ADDITION CANNOT BE MADE ONLY ON THE BA SIS OF REPORT OF THE DVO. THE PRIMARY BURDEN TO PROVE THE UNDERSTATE MENT OR CONCEALMENT OF INVESTMENT IS ON THE REVENUE. REFERRING TO THE ORDER OF THE CIT(A) HE SUBMITTED THAT THE CIT (A) HAS GIVEN A FA CTUAL FINDING THAT IN RESPECT OF FLAT NO.7 PURCHASED BY THE ASSESSE E DURING THE 6 IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS MADE PAYME NT OF A HIGHER AMOUNT THAN AS PAID BY ANOTHER PURCHASER AT FLA T NO.201 IN THE SAME BUILDING. HE ACCORDINGLY SUBMITTED THAT THE ORD ER OF THE CIT(A) BEING BASED ON FACTUAL FINDINGS BE UPHELD. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE DURING TH E IMPUGNED ASSESSMENT YEAR HAS PURCHASED FLAT NO.07 AT STAR TOWER , KHANAPUR ROAD, BELGAUM FOR A CONSIDERATION OF RS.8,61,304/-. WE FIND TH E AO ON THE BASIS OF THE VALUATION REPORT SUBMITTED BY THE DV O VALUING THE PROPERTY AT RS.12,76,500/- MADE ADDITION OF RS.4,15,196/- BE ING THE DIFFERENCE U/S.69B OF THE I.T. ACT. WE FIND THE LD.CIT(A) DELET ED THE ADDITION ON THE GROUND THAT THE PRICE PAID BY THE ASSES SEE IN RESPECT OF FLAT NO.07 IS HIGHER THAN WHAT IS PAID BY ANOTHER PURCHA SER IN FLAT NO.201 IN THE SAME BUILDING. ALTHOUGH THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO HE HAS NOT CONSIDERED THE SAME WITHOUT ASSIGNING ANY REASON. WE FIND IN THE INSTANT CASE THE ADDITION HAS B EEN MADE BY THE AO MAINLY BASED ON THE VALUATION REPORT OF THE D VO. THE HONBLE DELHI HIGH COURT IN THE CASE OF PUNNET SABHARWAL (SUPRA) HAS HELD THAT ADDITION TO INCOME BASED SOLELY ON REPORT OF DV O IS NOT VALID IN ABSENCE OF ANY EVIDENCE OF UNDERSTATEMENT OF CONSIDERA TION. THERE IS NO OTHER MATERIAL AVAILABLE WITH THE REVENUE TO SHOW T HAT ASSESSEE HAS PAID ANYTHING MORE THAN WHAT HAS BEEN STATED. SINC E THE LD.CIT(A) HAS GIVEN A FACTUAL FINDING THAT THE PRICE PAID BY T HE ASSESSEE FOR FLAT NO.7 IS MORE THAN THE PRICE PAID BY ANO THER PURCHASER BEING FLAT NO.201 IN THE SAME BUILDING AND SINCE THE ADDITION HAS BEEN MADE BY THE AO ONLY ON THE BASIS OF T HE VALUATION REPORT OF THE DVO, THEREFORE, IN ABSENCE OF ANY CONTRARY 7 MATERIAL/EVIDENCE BROUGHT BEFORE US BY THE REVENUE AUTH ORITIES THAT THE ASSESSEE HAS PAID ANYTHING BEYOND WHATEVER HAS BE EN DISCLOSED WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION. WE ACCORDINGLY UPHOLD THE SAME AND THE GROUND RAISED BY T HE REVENUE IS DISMISSED. ITA NO.228/PN/2013 (A.Y. 2007-08) (BY ASSESSEE) : 13. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1.0 ON THE FACTS AND IN LAW, LD. CIT(A), KOLHAPUR E ARED IN CONFIRMING THE SHIFTING OF UNDISCLOSED INCOME FOR THE ASST. YEARS FR OM 2007-08 TO 2010-11 BY BRINGING TO TAX RS.2,75,17,600/- FOR THE ASST. YEAR UNDER APPEAL, ON THE BASIS OF PAPERS SEIZED FROM TECHNICAL DI RECTOR OF JOINT VENTURE PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED , PUNE DURING THE ACTION U/S 132( 4) HELD ON. 24-09-2009 INSTEAD OF ALLOWING APPELLANT'S APPEAL BY ACCEPTING UNDISCLOSED INCOME OFFERED BY IT FOR THE ASST. YEAR 2009-10 & 2010-11 ON THE BASIS OF PAPERS SEIZED FROM IT 'S OWN PREMISES DURING THE COURSE OF SEARCH CONDUCTED ON 23-10-2009 1.1 LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE JOINT VENTURE/CONSORTIUM AGREEMENT BETWEEN APPELLANT & IT' S PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED WAS ON WORK SHARING BASIS & NOT ON JOINT EXECUTION BASIS AND AS SUCH THE CONTROL & MANAGE MENT OF THE PARTNERS OVER FINANCE & ADMINISTRATION IS INDEPENDENT. 1.2 LD. CIT(A) ALSO ERRED IN UPHOLDING THE AO'S BASELE SS ASSERTION IN PARA 10.4.2 ' PAGE NO'S 31, 28, 22, & 17 OF BUNDLES NO.1 SEIZED F ROM RESIDENCE OF SHRI. D.A. BHAT ARE INFACT DOCUMENTS OF M/S B.T.PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SENT TO SHRI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION AS P ER PERIODICAL RECONCILIATION IS VERY IMPORTANT IN THESE MATTERS RELA TED TO CASH PAYMENTS.' THE APPELLANT SUBMITS THAT NO OPPORTUNITY O F THE HEARING WAS GIVEN BY THE AO WITH REGARD TO THESE PRESUMPTIONS. 1.3 LD. CIT(A) WAS NOT JUSTIFIED IN CONCURRING WITH T HE FINDING OF THE AO REJECTING THE EVIDENCE IN THE FORM OF LOOSE PAPER S SEIZED AT THE OFFICE PREMISES OF THE APPELLANT HOLDING ON MERE IPSE DIXIT THAT SUCH EVIDENCE IS FABRICATED. 1.4 LD. CIT(A) ERRED IN CONFIRMING THE PRESUMPTION M ADE BY AO IN SHIFTING THE UNDISCLOSED IN COME TO EARLIER YEARS ON TH E BASIS OF EVIDENCE SEIZED FROM A THIRD PARTY. 14. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE CO MPANY IS IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF IRRIGATION PROJECTS. A SEARCH ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED ON 23-09-2009 IN THE CASE OF MAHALAKSHMI INFRA PROJECTS LTD. (MIPL IN SHO RT). DURING 8 THE COURSE OF SEARCH CONCRETE EVIDENCES OF SPEED MONEY PAYMENTS IN GHODZARI PROJECT AMOUNTING TO RS.4383.64 LAKHS WERE FOUND . GHODZARI PROJECT IS AN IRRIGATION CONTRACT OF GOVT. OF MAH ARASHTRA UNDERTAKEN BY THE ASSESSEE AND MIPL AS JOINT VENTURE PARTNERS. DURING SEARCH IN THE CASE OF MIPL ON 23-09-2009, EVIDENC ES WERE SEIZED PROVING THE FACT THAT 50% OF SAID UNEXPLAINED EXPE NSES AMOUNTING TO RS.2191.82 LAKHS RELATE TO THE ASSESSEE COM PANY. IN VIEW OF THE FOREGOING, CONSEQUENTIAL SEARCH U/S.132 OF THE I .T. ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE COM PANY ON 23- 10-2009 WHICH IS ONE MONTH AFTER THE MAIN SEARCH IN THE CASE OF MIPL. THE AO, THEREFORE, HELD THAT THE EVIDENCES FOUND WI TH MIPL, WHICH IS JOINT VENTURE PARTNER OF THE ASSESSEE, ARE VERY IMPORTANT IN THE CASE OF THE ASSESSEE ALSO. HE THEREFORE EXAMINED T HE EVIDENCES OF SPEED MONEY PAYMENTS RELATED TO GHODZARI PROJECT SEIZE D DURING SEARCH IN THE CASE OF MIPL. 15. THE AO NOTED THAT DURING THE COURSE OF SEARCH CERTAIN LOOSE PAPERS MARKED BUNDLE NO.1 CONTAINING 40 LOOSE SHEETS WER E FOUND FROM THE RESIDENCE OF SHRI DHIRENDRA ANANT BHAT, TECHNICAL DIRECTOR OF MIPL. THE ABOVE LOOSE SHEETS INDICATED EVIDENCES OF SP EED MONEY DEPICTING THE NAME OF THE PROJECT, AMOUNT, DATE OF PAYMEN T, NAME OF PAYER, NAME OF THE RECIPIENT, DESIGNATION OF THE PRIME RECIPIE NT, SHARE OF SUCH UNEXPLAINED EXPENDITURE BETWEEN MAHALAXMI INFRA PR OJECTS PVT. LTD. AND ITS J.V. PARTNER B.T. PATIL AND SONS, BELGAUM CONSTRUCTION COMPANY LTD. ETC. THE MAIN EVIDENCE OF SPEED MONEY PAYMENT RELATES TO GHODZHARI PROJECT, A PROJECT OF IRRIGA TION DEPARTMENT OF GOVERNMENT OF MAHARASHTRA UNDERTAKEN BY JOINT VENTURE COMPRISING OF MAHALAXMI INFRA PROJECTS PVT. LTD. A ND B.T. PATIL AND SONS, BELGAUM CONSTRUCTION COMPANY LTD. THE S AID SEIZED DOCUMENTS CONTAIN DETAILS OF TOTAL SPEED MONEY PAID IN RES PECT OF 9 GHODZHARI PROJECT UPTO 04-02-2009. THE TOTAL SPEED MON EY PAID IN RESPECT OF GHODZHARI PROJECT AS ON 04-02-2009 AMOUNTS TO RS.43,83,64,000/-. 50% OF THE ABOVE AMOUNTING RS.21,91,82,000 /- RELATES TO MIPL AND THE BALANCE 50% OF RS.21,91,82,000/- T O B.T. PATIL AND SONS, BELGAUM CONSTRUCTION COMPANY LTD. MIPL A ND ITS JV PARTNER B.T. PATIL AND SONS, BELGAUM CONSTRUCTION COMPAN Y LTD. ADMITTED THAT RS.43,83,64,000/- IS THE TOTAL UNEXPLAINED EX PENDITURE RELATED TO GHODZHARI PROJECT AND THEIR 50% SHARE IS RS.21,91,82,000/-. HOWEVER, THE ASSESSEE COMPANY AND ITS J.V. PARTNER HAVE DECLARED ADDITIONAL INCOME FOR A.YRS. 2009-10 AND 2010- 11 WHEN THE ACTUAL UNEXPLAINED EXPENSES RELATE TO A.YRS . 2007-08, 2008-09 AND 2009-10. 16. THE AO NOTED THAT IT IS THE CLAIM OF THE ASSESSEE COMPANY AND ITS J.V. PARTNER THAT THE UNEXPLAINED PAYMENTS MENTIONED IN THE DOCUMENTS SEIZED FROM SHRI D.A. BHAT, TECHNICAL DIRECTOR OF THE ASSESSEE COMPANY ARE ONLY PROJECTED PAYMENTS AND NO T PAYMENTS ACTUALLY BEEN MADE. THEREFORE, ACCORDING TO THE AO, TH E ONLY DISPUTE IN RESPECT OF UNEXPLAINED PAYMENTS RELATING TO GHODZHAR I PROJECT IS THE YEAR OF TAXATION AND NATURE OF PAYMENTS. THE AO AN ALYSED THE YEAR WISE BREAK UP OF SPEED MONEY PAID BY MIPL AND ITS J.V. PARTNER, B.T. PATIL AND SONS IN RESPECT OF GHODZHARI PROJECT AS PE R THE DOCUMENTS SEIZED FROM SHRI D.A. BHAT WHICH IS GIVEN AT PAGE S 4 TO 18 OF THE ASSESSMENT ORDER. HE ALSO REFERRED TO THE STATE MENT RECORDED U/S.132(4) OF THE I.T. ACT FROM SHRI D.A. BHAT ON 24-09-200 9 AND NOTED THE FOLLOWING CONCLUSIONS AS PER PARA 8.7 OF THE ASSE SSMENT ORDER (PAGE 18): (I) PAGE NOS. 31, 28, 22 & 17 OF BUNDLE NO.1 SEIZED FROM RESIDENCE OF SHRI D.A. BHAT ARE IN FACT DOCUMENTS OF M/S. B.T. PAT IL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SE NT TO SHRI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION IS V ERY IMPORTANT IN THESE MATTERS RELATED TO CASH PAYMENTS. IF NOT RECO NCILED 10 PERIODICALLY, IT MAY LEAD TO MISUNDERSTANDINGS BETWEEN JV PARTNERS AT A LATER DATE. (II) SHRI D.A. BHAT IS A TRUSTED AND LOYAL EMPLOYEE OF ASSESSE E COMPANY WORKING FOR NEARLY 2 DECADES. (III) HE IS INVOLVED IN THE PROJECT RIGHT FROM AWARDING OF THE CONTRACT TILL THE COMPLETION, INCLUDING RELEASE OF PAYMENTS ET C. (IV) THE SEIZED DOCUMENTS ARE IN THE HAND WRITING OF SHRI D.A. BHAT AND HE HAS CATEGORICALLY STATED U/S.132(4) THAT SPEED MONEY PAYMENTS HAVE BEEN MADE. (V) QUANTUM, DATE OF PAYMENT OF SPEED MONEY, DETAILS OF P AYER AND RECIPIENT ARE AVAILABLE IN THE SEIZED DOCUMENTS. (VI) SHRI D.A. BHAT WAS MAINTAINING THE ACCOUNTS RELATED T O SPEED MONEY OF GHODZARI PROJECT, SEIZURE OF EVIDENCE FROM HIS RESIDENCE PROVES THIS FACT BEYOND DOUBT. MOREOVER, SEIZURE OF D OCUMENTS OF B.T. PATIL & SONS IN RESPECT OF SPEED MONEY FROM THE R ESIDENCE OF SHRI D.A. BHAT FORTIFIES THIS FACT. HAD SHRI D.A. B HAT NOT BEEN MAINTAINING ACCOUNTS RELATED TO SPEED MONEY THERE WAS NO NEED TO SEND SPEED MONEY STATEMENTS BY B.T. PATIL & SONS TO SHRI D.A. BHAT FOR RECONCILIATION FROM TIME TO TIME. (VII) THERE ARE IRREFUTABLE EVIDENCES TO PROVE THAT THE SPE ED MONEY PAYMENTS HAVE ACTUALLY BEEN MADE AND THEY ARE NOT PR OJECTED EXPENSES. (VIII) INFACT, THERE ARE EVIDENCES TO PROVE THAT SPEED MONEY PAYMENTS HAVE BEEN MADE AT PRE-TENDER STAGE IN ORDER TO GET T HE CONTRACT ALLOTTED. (IX) THERE ARE EVIDENCE TO PROVE THAT SPEED MONEY EXPENSES ARE SHARED EQUALLY BY THE ASSESSEE COMPANY AND B.T. PATIL & SONS. 17. THE AO FURTHER NOTED THAT IN RESPECT OF THE SEARCH CONDUCTED AT THE ASSESSEES PREMISES, AN EXCEL FILE WAS FOUND, THE HARD COPY OF WHICH WAS PRINTED AND SEIZED AS BUNDLE NO.1 CONTAINING 17 PAGES. THE ENTRIES IN THESE PAGES REFLECTED UNEXPLAINED EXPENSES AS PAYABLE, WHICH WAS CONTRARY TO THE EVIDENCES SEIZED AT SHRI BHAT S PREMISES WHICH SHOWED THAT UNEXPLAINED EXPENSES WERE ACTUALLY INC URRED AND PAID. THE SAID FILE WAS CREATED ON 21-10-2009, I.E. TWO DAYS PRIOR TO THE DATE OF SEARCH. CASH OF RS. 2 CRORES WAS DEPOSITED IN MAHAVIR CO- OPERATIVE BANK ON 21-10-2009. THE STATEMENT RECORDED ON 23-10- 2009 U/S.132(4) OF SHRI B.B. PATIL, MANAGING DIRECTOR OF THE ASSESSEECOMPANY WAS A VERBATIM REPETITION OF THE STATE MENT OF SHRI 11 R.D. SHINDE, MANAGING DIRECTOR OF APPELLANTS JV PARTNER, MA HALAXMI INFRAPROJECTS LTD. (STATEMENTS REPRODUCED AT PARAGRAPH 9.5 OF THE ASSESSMENT ORDER) 18. THE ASSESSING OFFICER WAS OF THE BELIEF THAT ALL THE ABOV E ACTION WAS IN CONSEQUENCE TO PRIOR INFORMATION PASSED ON TO THE ASSESSEE BY ITS JV PARTNER, MAHALAXMI INFRAPROJECTS LTD. THEREFORE, SINCE THE EXCEL FILE WAS PREPARED ANTICIPATING SEARCH, THE ASSESSING OFFICER H ELD THE SAME TO BE SELF-SERVING AND A FABRICATED DOCUMENT AND W ITHOUT ANY EVIDENTIARY VALUE. 19. THE AO FURTHER NOTED THAT ON THE DATE OF SEARCH S TATEMENT U/S.132(4) WAS RECORDED FROM SHRI R.D. SHINDE, AT HIS RESIDEN CE AND EVIDENCES OF PAYMENT OF SPEED MONEY WERE CONFRONTED TO HIM. HE ADMITTED CATEGORICALLY THAT SPEED MONEY PAYMENTS WERE MADE. HE ALSO REFERRED TO THE STATEMENT U/S.132(4) RECORDED FROM S HRI AJIT R. GURJAR, PROJECT MANAGER AND MR. B.T. PATIL, ACCOUNTANT OF MIPL AT THE OFFICE PREMISES OF THE ASSESSEE. WHEN THE EVIDENCES RELATE D TO SPEED MONEY FOUND AT OFFICE PREMISES WERE PLACED BEFORE THEM BOT H OF THEM ADMITTED THAT SPEED MONEY PAYMENTS WERE MADE. 20. THE ASSESSING OFFICER FURTHER OBSERVED THAT THOUGH T HE UNEXPLAINED EXPENSES RELATED TO ASSESSMENT YEARS 2007- 08, 2008- 09 AND 2009-10 I.E. THE YEAR OF TAXATION, THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF' 22,61,37,650/- IN ASSESSMENT YEAR 2009 -10 (RS.9,31,00,000/-) AND 2010-11 (RS.13,30,32,650/-). THUS, SINCE THE ISSUE IN DISPUTE WAS THE YEAR OF TAXATION OF THE EXPE NDITURE INCURRED, THE ASSESSING OFFICER HAS INCLUDED IN HIS ORDER THE SCANNED COPIES OF VARIOUS SEIZED DOCUMENTS FOUND DURING SEARCH IN THE CASE OF MAHALAXMI INFRA PROJECTS LTD. (MIL) SHOWING THE DATES OF PAYMENTS ETC. THESE ARE AS UNDER: 12 SR.NO. SEIZED PAPERS DATE OF SPEED AMOUNT MONEY PAID A. 39 & 40 04/02/2009 RS. 43,83,64,000 B. 38 (VARIOUS DATES) RS. 2100.87 LAKHS PAID BY MIL C. 18 07/08/2008 RS. 1867.57 LAKHS - DO - D. 34 16/06/2007 RS.1337.63 LAKHS PAID BY MIL & THE ASSESSEE , B T PATIL & SONS E. 32 26/02/2008 RS. 2226.31 LAKHS PAID BY MIL 21. THE ASSESSING OFFICER HAS ALSO INCLUDED SCANNED PAGES NO. 17, 22, 28, AND 31 OF BUNDLE NO. 1, SEIZED AT SHRI BHAT'S RESIDE NCE WHICH INDICATES THAT THE DOCUMENTS PERTAINED TO THE ASSESSEE . HE NOTED THAT THESE WERE SENT BY THE ASSESSEE TO SHRI BHAT FOR RECONCILIATION. IN CONNECTION WITH SEIZED PAPER NO. 32 ABOVE, THE ASSESS ING OFFICER HAS SPECIFICALLY POINTED OUT THAT THE SUM OF RS. 2226.31 LAK HS WAS ALREADY PAID BY 26/02/2008 AND HENCE THE ASSESSEE'S C ONTENTION THAT THESE WERE PROJECTED EXPENSES, WAS TOTALLY WRONG . SIMILARLY, IT WAS MENTIONED THAT THE REVERSE SIDE OF PAGE NO. 16 ALSO INDICATED THAT PAYMENTS WERE ACTUALLY MADE AND WERE NOT PROJEC TED EXPENSES. BASED ON THE ABOVE EVIDENCES, THE ASSESSING OFFICER, WORKE D OUT THE YEAR-WISE ALLOCATION OF THE ASSESSEE'S SHARE OUT OF THE T OTAL SPEED MONEY PAYMENTS WHICH IS AS UNDER: A.Y.2007 - 08 A.Y.2008 - 09 A.Y.2009 - 10 TOTAL TOTAL SPEED MONEY PAID 550. 3 5 LAKHS 2981.35 LAKHS 851.94 LAKHS 4383.64 LAKHS ASSESEES SHARE,I.E.50% 275.175 LAKHS 1490.675 LAKHS 425.97 LAKHS 2191.82 LAKHS 22. AS AGAINST THE ABOVE WORKING, THE AO OBSERVED THAT THE ASSESSEE HAD DISCLOSED UNEXPLAINED EXPENSES RELATING TO G HODZARI PROJECT FOR A.YRS. 2009-10 AND 2010-11 AS UNDER : 13 A.Y. ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE TOWARDS UNEXPLAINED EXPENSES 2009 - 10 RS.9,31,00,000/ - 2010 - 11 RS.12,60,82,000/ - TOTAL RS.21,91,82,000/ - 23. IN VIEW OF THE ABOVE, THE AO HELD THAT UNEXPLAINED E XPENSES IN THE FORM OF SPEED MONEY PAYMENTS SHOULD BE TAXED IN THE YEAR OF PAYMENT. ACCORDING TO THE AO AS PER HIS ANALYSIS THE S PEED MONEY FOR A.Y. 2007-08 COMES TO RS.550.35 LAKHS OUT OF WHICH SHA RE OF THE ASSESSEE COMPANY IS RS.275.175 LAKHS. HE THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF RS.275.175 LA KHS SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SIMILAR LY, HE NOTED THAT FOR A.Y. 2008-09 THE ASSESSEES SHARE COMES TO RS .1490.675 LAKHS AND RS.425.97 LAKHS FOR A.Y. 2009-10. 24. IT WAS SUBMITTED BY THE ASSESSEE THAT SHRI D.A. BHA T, TECHNICAL DIRECTOR OF MIPL HAS RETRACTED HIS STATEMENT U/S.132(4) O F THE I.T. ACT BY FILING A LETTER DATED 11-10-2009. SHRI D.A. BHAT IS ONLY A TECHNICAL MAN AND IS NOT ACQUAINTED WITH FINANCIAL MATTERS. THE UNEX PLAINED EXPENSES SEIZED FROM RESIDENCE OF SHRI D.A. BHAT RELATED ON LY TO PROJECTED EXPENSES AND NOT ACTUALLY PAID. FURTHER, SHR I R.D. SHINDE IN HIS STATEMENT RECORDED ON 12-10-2009 IN REPLY TO QU ESTION NO.23 HAD STATED THAT AS ON THE DATE OF SEARCH THE JOINT V ENTURE HAS RECEIVED RS.98 CROREES ONLY IN RESPECT OF GHODZHARI PROJECT AND THEREFORE PAYMENT OF RS.43 CRORES IS HIGHLY UNREASONABLE. 25. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE MAHALAXMI-B.T. PAT IL, J.V. IS FORMED FOR THE PURPOSE OF GHODZHARI PROJECT AND KOYNA P ROJECTS. DURING THE COURSE OF SEARCH LOOSE PAPERS 1 TO 40 (BUNDLE NO.1) WAS FOUND AT THE RESIDENCE OF SHRI D.A. BHAT WHO IS TECHNICAL DIR ECTOR OF 14 MIPL. THE LOOSE PAPERS DEPICTED DATE WISE DETAILS OF VARIO US UNEXPLAINED BUSINESS EXPENDITURE OF GHODZHARI PROJECT OF R S.43.8364 CRORES. SINCE SHARE OF MIPL IN SUCH EXPENSES IS 50%, MA NAGING DIRECTOR OF MIPL SHRI R.D. SHINDE HAD ADMITTED THE ADDITIONA L INCOME OF RS.21.9182 CRORES. 26. ACCORDING TO THE AO SHRI D.A. BHAT, WHO IS A TRUSTED AND LOYAL EMPLOYEE OF MIPL WORKING FOR NEARLY 2 DECADES, IS INVOLVED IN THE PROJECT RIGHT FROM AWARDING OF THE CONTRACT TILL COMPLETION INCLUDING RELEASE OF PAYMENTS ETC. THE SEIZED DOCUMENTS ARE IN AN YWAY OF SHRI D.A. BHAT WHO HAS CATEGORICALLY STATED U/S.132(4) THAT SPE ED MONEY PAYMENTS HAVE BEEN MADE. THE STATEMENT U/S.132(4) HAS IMMENSE EVIDENTIARY VALUE. THE SEIZED DOCUMENTS CONTAIN QUANTUM, DATE OF PAYMENT OF SPEED MONEY, DETAILS OF PAYER AND RECIPIENT. S HRI D.A. BHAT WAS MAINTAINING THE ACCOUNTS RELATED TO SPEED MONE Y OF GHODZHARI PROJECT. SEIZURE OF EVIDENCE FROM HIS RESIDENCE PROVES THIS FACT BEYOND DOUBT. FURTHER, SEIZURE OF DOCUMENTS OF B.T. PATIL AND SONS IN RESPECT OF SPEED MONEY FROM THE RESIDENCE OF SHR I D.A. BHAT FORTIFIES THIS FACT. HAD SHRI D.A. BHAT NOT BEEN MAINTAINING AC COUNTS RELATED TO SPEED MONEY THERE WAS NO NEED TO SEND SPE ED MONEY STATEMENTS BY B.T. PATIL AND SONS TO SHRI D.A. BHAT FOR RE CONCILIATION FROM TIME TO TIME. ACCORDING TO THE AO, THERE ARE IRREFUT ABLE EVIDENCES TO PROVE THAT THE SPEED MONEY PAYMENTS HAV E ACTUALLY BEEN MADE ON THE RESPECTIVE DATES AND ARE NOT PROJECTED E XPENSES. FURTHER THERE ARE EVIDENCES TO PROVE THAT THE SPEED MONEY HA VE BEEN MADE AT PRE TENDER STAGE IN ORDER TO GET THE CONTRACT ALLOTTED . ALTHOUGH SHRI D.A. BHAT IS THE TECHNICAL DIRECTOR, HOWEVER, HE IS ALSO INVOLV ED IN FINANCIAL MATTERS OF THE MIPL. THE ASSESSEE HAS NOT SUBM ITTED ANY SUPPORTING EVIDENCE IN SUPPORT OF ITS CONTENTION THAT THE SAID EXPENSES HAVE BEEN PAID AFTER RECEIPT OF RA BILLS. ACCORD ING TO THE AO 15 THE PAPER/DOCUMENT SHOULD BE READ AS A WHOLE AND ALL THE CONTENTS OF THE PAPERS ARE PRESUMED TO BE TRUE AND CORRECT UNLES S CONTRARY IS PROVED. THE ASSESSEE IS ACCEPTING THE FIGURES OF PAGES 3 9 AND 40 BUT NOT ACCEPTING THE DATES OF PAGES 39 AND 40. THEREFORE, THE CONTENTION OF THE ASSESSEE IS CONTRADICTORY. 27. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT SH RI D.A. BHAT HAD RETRACTED FROM HIS STATEMENT U/S.132(4) WHICH ACCORDI NG TO HIM WAS GIVEN UNDER TREMENDOUS MENTAL TENSION AND PRESSURE THE AO NOTED THAT THE STATEMENT U/S.132(4) HAS IMMENSE EVIDENTIA RY VALUE. THE RETRACTION IN THE PRESENT CASE IS NEITHER IMMEDIATE NOR IS CORROBORATED WITH ANY EVIDENCE. ADMISSION IS A VERY IMPOR TANT PIECE OF EVIDENCE AND BRUSHING IT ASIDE WHIMSICALLY WOULD DISTORT T HE WHOLE PURPOSE OF THE PROVISIONS. ACCORDING TO THE AO IN ORDER TO ALLOW A WITHDRAWAL OR A RETRACTION OF THE SAME CONCLUSIVELY, THERE MUST BE MITIGATING CIRCUMSTANCES MAKING OUT A CASE FOR SUCH RETRA CTION, A FACT WHICH IS COMPLETELY ABSENT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. TO ALLOW RETRACTION WITHOUT ANY COGENT M ATERIAL WOULD AMOUNT TO MAKING A MOCKERY AND TRAVESTY OF THE SEARCH AND SEIZURE OPERATIONS. THE ASSESSEE HAVING ESTOPPED THE REVENUE BY THE ADMISSION CANNOT BE ALLOWED TO GO BACK ON ITS PROMISE H ELD OUT BY HIM. RELYING ON VARIOUS DECISIONS AND HOLDING THAT STATEME NT U/S.132(4) CARRIES STRONG EVIDENTIARY VALUE AND OBSERVING T HAT THE STATEMENT OF SHRI D.A. BHAT IS CORROBORATED BY INDEPENDE NT EVIDENCES THE AO MADE ADDITION OF RS.275.175/- LAKHS TO THE TOTAL INC OME OF THE ASSESSEE FOR THE A.Y. 2007-08. WHILE DOING SO, THE AO MAD E THE FOLLOWING OBSERVATION WHICH IS REPRODUCED HEREUNDER : 10.6.8 IT IS SIGNIFICANT TO NOTE THAT ALL THE EVIDEN CES RELATED TO SPEED MONEY PAYMENTS IN RESPECT OF GHODZARI PROJECT WE RE FOUND WITH ASSESSEES JV PARTNER. SINCE BUSINESS RELATION BETWEEN ASSESS EE AND M/S. MAHALAXMI INFRAPROJECTS LTD. IS AN UNDISPUTED FACT, T HE EVIDENCES FOUND WITH ASSESSEES JV PARTNER WOULD BE EQUALLY APPLICABLE T O THE ASSESSEE. 16 MOREOVER, PAGE NOS. 31, 28, 22 & 17 OF BUNDLE NO.1 SE IZED FROM RESIDENCE OF SHRI D.A. BHAT ARE IN FACT DOCUMENTS OF M/S. B.T. PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SENT TO SH RI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION AS PERIODICAL RECONCIL IATION IS VERY IMPORTANT IN THESE MATTERS RELATED TO CASH PAYMENTS. 10.6.9. AS DISCUSSED ABOVE, WHEN TWO EVIDENCES ARE THERE , ONE SPEAKING AND CONTEMPORANEOUS AND THE OTHER CLOUDED WITH DOUBT S, THE FORMER COMMANDS SUPERIOR EVIDENTIARY VALUE. THEREFORE, EVIDE NCES SEIZED ON 23/9/2009 FROM SHRI D.A.BHAT WILL HAVE SUPERIOR EVID ENTIARY VALUE THAN FABRICATED EVIDENCES SEIZED FROM ASSESSEE ON 23/10/2009. ASSESSEE COMPANY HAS ADMITTED 50% OF UNEXPLAINED EXPENSES RELAT ED TO GHODZARI PROJECT AS ADDITIONAL INCOME FOR AY 2009-10 & 2010-1 1. IT IS A SETTLED LAW THAT SEIZED MATERIAL HAS TO BE ACCEPTED IN FULL BECAU SE NO GENUINE SEIZED DOCUMENT CAN BE HALF TRUE. IN THE INSTANT CASE, GEN UINE SEIZED DOCUMENTS ARE THE ONES SEIZED FROM SHRI D.A.BHAT AND THEY PROVE THAT THE SPEED MONEY HAS BEEN ACTUALLY PAID ON THE DATES MENTIONED I N THE SEIZED DOCUMENTS. 10.6.10. IT IS ALSO PERTINENT TO NOTE THAT PAGE NO'S 9 TO 12 SEIZED FROM SHRI D.A.BHAT RELATE TO SPEED MONEY PAYMENTS OF RS.L,41,85, 000/- IN RESPECT OF KOYNA PROJECT. M/ S MAHALAXMI INFRAPROJECTS LTD BEING 51 % SHAREHOLDER IN THE SAID PROJECT HAS ADMITTED 51% OF RS.L,41,85,000 /- AS ITS ADDITIONAL INCOME FOR AY 2010-11. BASED ON THE SAME DOCUMENTS, ASSE SSEE COMPANY BEING 49% SHAREHOLDER IN KOYNA PROJECT HAS ADMITTED 4 9% OF RS.L,41,85,000/- AMOUNTING TO RS.69,50,650/- FOR AY 2 010-11. WHEN ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS.69,50,650/- ON THE ISSUE OF UNEXPLAINED EXPENSES RELATED TO KOYNA PROJECT BASED ON THE DOCUMENTS SEIZED FROM SHRI D.A.BHAT. HOW CAN ASSESSEE CONTEND THA T THE DOCUMENTS SEIZED FROM SHRI D.A.BHAT DEPICTING SPEED MONEY PAYME NTS RELATED TO GHODZARI PROJECT ARE INCORRECT AND UNRELIABLE? AS DI SCUSSED ABOVE, SEIZED DOCUMENTS CAN NEVER BE HALF TRUE. THEY ARE EITHER FU LLY TRUE OR FULLY UNTRUE. JUST BECAUSE EVIDENCES RELATE TO EARLIER YEARS WHICH MAY ATTRACT PENALTY AND PROSECUTION, SAME EVIDENCES WHICH ARE ACCE PTED AS TRUE BY THE ASSESSEE CANNOT BECOME UNRELIABLE. 10.6.11 IN THE LIGHT OF THE FOREGOING FACTS, THE CON TENTION OF THE ASSESSEE THAT THIRD PARTY EVIDENCES CANNOT BE USED AGAINST HIM IS HEREBY REJECTED. 11. ADDITION OF UNEXPLAINED EXPENSES : 11.1. AS DISCUSSED SUPRA, THERE ARE IRREFUTABLE EVIDENCE S TO PROVE THAT THE SPEED MONEY PAYMENTS HAVE ACTUALLY BEEN MADE AND THEY ARE NOT PROJECTED EXPENSES. THE STRENGTH OF EVIDENCES FOUND A T THE RESIDENCE OF SHRI D.A.BHAT HAS BEEN SUMMED UP AT PARA 8.7 ABOVE. THE WORKING OF THE YEAR-WISE SPEED MONEY PAYMENTS AS PER SEIZED MATERIAL IS GIVEN AT PARA 8.4 SUPRA. 11.2. THE YEAR-WISE ALLOCATION OF ASSESSEE'S SHARE OUT OF TOTAL SPEED MONEY IS TABULATED AS UNDER: AY 2007-08 AY 2008-09 AY 2009-10 TOTAL TOTAL SPEED 550.35 2981.35 851.94 4383.64 MONEY PAID LAKHS LAKHS LAKHS LAKHS ASSESSEE'S 275.175 1490.675 425.97 2191.82 SHARE IE 50% LAKHS LAKHS LAKHS LAKHS 17 11.3. IN VIEW OF THE FOREGOING, UNEXPLAINED EXPENSES IN THE FORM OF SPEED MONEY PAYMENTS SHOULD BE TAXED IN THE YEAR OF PAYMENT . AS PER THE SAID WORKING AGGREGATE AMOUNT OF SPEED MONEY FOR AY 2007- 08 IS RS. 550.35 LAKHS. ASSESSEE'S SHARE IS 50% WHICH WORKS OUT TO RS. 275.17 5 LAKHS. THEREFORE, RS. 275.175 LAKHS IS REQUIRED TO BE ADDED F OR A Y 2007-08. 11.4. HOWEVER, INSTEAD OF DISCLOSING THE UNEXPLAINED E XPENSES IN THE YEAR OF PAYMENT, THE ASSESSEE COMPANY DISCLOSED THE UNEXPLAINE D EXPENSES RELATED TO GHODZARI PROJECT FOR THE AYS 2009-10 AND 2010-11 AS UNDER: A.Y ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE TOWARDS UNEXPLAINED EXPENSES 2009-10 RS.9,31,00,000 2010-11 RS.12,60,82,000 TOTAL RS.21 ,91 ,82,000 11. 5 IT MAY BE NOTED THAT ASSESSEE'S SHARE OF UNEXPLAI NED EXPENSES FOR A.Y 2007-08 . IS RS. 275.175 LAKHS. AS AGAINST THIS, ASSESSEE HAS DISCLOSED RS. NIL AS ADDITIONAL INCOME. THIS IS BECAUSE OF THE FAC T THAT UNEXPLAINED EXPENSES RELATED TO A.Y'S 2007-08 AND 2008-09 WERE SHIF TED TO A.Y'S 2009-10 AND 2010-11. IT IS PERTINENT TO NOTE THAT TH E SEARCH WAS CONDUCTED ON 23/10/2009. AS ON THE DATE OF SEARCH, RE GULAR RETURN OF INCOME FOR AY 2009-10 WAS NOT FILED BY THE ASSESSEE THO UGH DUE DATE U/S 139(1) FOR FILING RETURN OF INCOME WAS OVER. AS REGAR DS AY 2010-11, DUE DATE U/S 139(1) FOR FILING RETURN OF INCOME WAS NOT O VER. THEREFORE, TO AVOID PENALTY FOR AY'S 2007-08 AND 2008-09, ASSESSEE WOU LD HAVE SHIFTED THE UNEXPLAINED EXPENSES TO FUTURE YEARS. 11.6. HOWEVER, IN VIEW OF CONCRETE EVIDENCES AS DISCUSSE D IN EARLIER PARAS OF THIS ORDER, UNEXPLAINED EXPENSES HAVE TO BE TAXED I N THE YEAR OF PAYMENT ONLY. 11.7. TO CONCLUDE, THERE ARE IRREFUTABLE EVIDENCES SE IZED FROM RESIDENCE OF SHRI D.A.BHAT TO PROVE THAT THE SPEED MONEY PAYME NTS HAVE ACTUALLY BEEN MADE ON THE RESPECTIVE DATES AND BY NO STRETCH OF IMAGINATION THEY ARE PROJECTED EXPENSES. THE EVIDENCES FOUND AT THE BUSI NESS PREMISES OF ASSESSEE COMPANY SHOWING THE UNEXPLAINED EXPENSES AS PAYA BLE ARE FABRICATED EVIDENCES AND THEY ARE SHAM DOCUMENTS. IT IS A SETTLED LAW THAT FABRICATED EVIDENCES AND SHAM DOCUMENTS DO NOT HAVE AN Y EVIDENTIARY VALUE. THE EVIDENTIARY VALUE OF DOCUMENTS WHICH ARE IN THE HANDWRITING OF SHRI D. A. BHAT, CORRECTNESS OF WHICH WAS ACKNOWLED GED BY HIM U/S.132 (4) CANNOT BE UNDERSCORED. 11.8 IN THE LIGHT OF THE FOREGOING DISCUSSION, UNEXPLA INED EXPENSES RELATED TO A.Y. 2007-08 AMOUNTING TO RS.275.175 LAKH S ARE HEREBY BROUGHT TO TAX. 18 28. BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSEE COMPAN Y AND MAHALAXMI INFRAPROJECTS HAD FORMED A JOINT VENTURE TO AC QUIRE WORK FROM THE GOVERNMENT OF MAHARASHTRA SINCE THEY DO NOT IN DIVIDUALLY QUALIFY. THE ASSESSEE HAS ITS OWN TECHNICAL AND ADMINISTRAT IVE MANAGEMENT SETUP. SHRI D A BHAT IS A TECHNICAL DIRECTOR OF MAHALAXMI INFRAPROJECTS LTD. AND THEREFORE THERE WAS NO QUESTION OF SHARING INFORMATION WITH HIM. HENCE, SHRI BHAT'S STATEMENT A ND THE DOCUMENTS SEIZED FROM HIS POSSESSION ARE NOT RELIABLE AND HAS NO EVIDENTIARY VALUE. THE ASSESSING OFFICER HAD FAILED TO PROVE T HE CORRECTNESS OF STATEMENT MADE BY THE THIRD PARTY I.E. SH RI D A BHAT. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD MERELY PRESUMED THAT PAGES NO. 17, 22, 28 AND 31 SEIZED FROM SHRI D A BHAT'S R ESIDENCE BELONGED TO THE ASSESSEE. NO EVIDENCE WAS BROUGHT ON R ECORD TO PROVE THIS FACT. FURTHER, THE ASSESSEE WAS NOT CONFRONTED WITH THESE SEIZED PAPERS AND WAS NOT ALLOWED AN OPPORTUNITY TO REBUT THE PRESUMPTIONS MADE BY THE ASSESSING OFFICER. 29. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT PRESU MPTION UNDER SECTION 132(4A)/292C OF THE ACT IS NOT AVAILABLE REG ARDING CORRECTNESS OF CONTENTS OF BOOKS OF ACCOUNT ETC. RECOV ERED FROM THE THIRD PARTY. 30. IT WAS SUBMITTED THAT NEITHER SHRI BHAT IN HIS STATEM ENT RECORD UNDER SECTION 132(4) HAD STATED THAT THE DOCUMENTS BELO NGED TO THE ASSESSEE NOR THE INVESTIGATION WING HAD PRESUMED SO, OT HERWISE, THE PROVISIONS OF SECTION 153C WOULD HAVE COME INTO FORCE. IT WAS ARGUED THAT THE ASSESSING OFFICER HAS ALSO NOT CONDUCTED ANY EN QUIRIES WITH THE RECIPIENTS OF THE UNEXPLAINED EXPENDITURE AS MENTIONED IN THE SEIZED PAPERS. THE ASSESSEE ARGUED THAT THE ASSESSING OFFICER'S OBSERVATION REGARDING VERBATIM REPLY GIVEN BY SHRI B B P ATIL WAS BASELESS. THE STATEMENT WAS NOT SUBMITTED BY SHRI PATIL B UT WAS 19 RECORDED BY THE SEARCH PARTY. EVEN OTHERWISE THE REP LIES OF SHRI R.D. SHINDE AND SHRI B.B. PATIL DO NOT APPEAR TO BE VERBATIM. IT WAS ARGUED THAT THE EXCEL FILE FOUND AT THE ASSESSEE'S PREMIS ES, WHICH WAS PREPARED TWO DAYS PRIOR TO SEARCH WAS ONLY A COINCIDEN CE, WHICH THE ASSESSING OFFICER HAD PRESUMED TO BE FABRICATED AND MADE IN ANTICIPATION OF SEARCH ACTION. HAD THE ASSESSEE ANTICIPATED SEARCH, THE EXCEL FILE AND OTHER RECORDS WOULD NOT HAVE BEEN KE PT IN THE PREMISES. MOREOVER, UNDER THE LAW OF HUMAN PROBABILITY IT WO ULD BE IMPOSSIBLE TO ANTICIPATE CONSEQUENTIAL SEARCH AFTER A GAP O F ONE MONTH. IT WAS ARGUED THAT THE DOCUMENTS SEIZED AT TH E ASSESSEE'S PREMISES WERE OF SUPERIOR EVIDENCE SINCE THE DOCUMENTS S EIZED FROM SHRI DA BHAT'S RESIDENCE DID NOT HAVE ANY EVIDENTIARY VA LUE AND FURTHER THESE WERE NEVER BROUGHT TO THE ASSESSEE'S N OTICE AND THE ASSESSEE WAS NOT ALLOWED TO REBUT THE ASSESSING OFFICER'S PRESUMPTIONS REGARDING THEM. IT WAS ACCORDINGLY SUBMIT TED THAT THE ADDITIONS MADE ON THE BASIS OF DOCUMENTS SEIZED FROM SHRI D A BHAT'S PREMISES WERE ERRONEOUS AND DESERVED TO BE DELETED. 31. ALTERNATIVELY IT WAS CONTENDED THAT THE ASSESSING O FFICER WAS NOT JUSTIFIED IN TAXING THE ADDITIONAL UNDISCLOSED INCOME OFFERED O N PROTECTIVE BASIS FOR ASSESSMENT YEARS 2009-10 AND 2010 -11 AFTER SHIFTING OF SUCH INCOME TO THE EARLIER ASSESSMENT YEARS. 32. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLANAT ION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO BY OBS ERVING AS UNDER : 28. I HAVE GIVEN CAREFUL CONSIDERATION TO THE CO NTENTIONS OF THE APPELLANT WITH REFERENCE TO THE FACTS OF THE CASE. T HE ISSUE REGARDING UNEXPLAINED EXPENSES IN GHODZHARI PROJECT WAS DEALT WI TH BY ME EXHAUSTIVELY IN THE CASE OF MAHALAXMI INFRAPROJECTS LT D. VIDE MY APPELLATE ORDER NO. NO.KOP/661 TO 667/11-12 DATED 3 0/10/2012 I HAD UPHELD THE DECISION OF THE ASSESSING OFFICER IN TAXI NG UNEXPLAINED EXPENSES IN ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 BASED ON THE LOOSE PAPERS FOUND IN THE RESIDENC E OF SHRI D A BHAT. I HAD ALSO DELETED THE PROTECTIVE ADDITIONS M ADE IN 20 ASSESSMENT YEARS 2009-10 AND 2010-11. THE RELEVANT PORTI ON OF THE ABOVE APPELLATE ORDER IS REPRODUCED HEREUNDER :- 56. I HAVE GIVEN CAREFUL CONSIDERATION TO THE CONTEN TIONS OF THE APPELLANT WITH REFERENCE TO THE FACTS OF THE CASE. TH IS IS A CASE WHERE SHRI D A BHAT, DIRECTOR IN APPELLANT COMPANY, HAS RE TRACTED FROM THE STATEMENT GIVEN EARLIER ON 24/09/2009 AND SHRI RAVIN DRA D SHINDE, MANAGING DIRECTOR/PROMOTER OF THE APPELLANT FIRM HA S BRUSHED ASIDE THE REVELATIONS MADE BY SHRI D A BHAT AS ALSO TH E DOCUMENTS PERTAINING TO GHODZHARI PROJECT, EXECUTED BY THE AP PELLANT FIRM IN JOINT VENTURE WITH B T PATIL & SONS (BELGAUM) CONSTRU CTION CO. LTD. RETRIEVED FROM SHRI D A BHAT'S RESIDENCE. AS PER THE J OINT VENTURE AGREEMENT DATED 03/08/2007, SHRI NAVIN B PATIL (SON OF SHRI B T PATIL) AND SHRI D A BHAT WERE NOMINATED TO BE THE A UTHORIZED REPRESENTATIVE OF JOINT VENTURE. SHRI D A BHAT REPRE SENTING MAHALAXMI CONSTRUCTION CORPORATION LTD. AND SHRI NAV IN BHAT WAS ON BOARD ON BEHALF OF B T PATIL AND SONS WERE WITNESSE S TO THE JOINT VENTURE AGREEMENT. THESE FACTS LEAD TO AN IRREFUTABLE CONCLUSION THAT SHRI D A BHAT WAS A CLOSE CONFIDANTE OF SHRI RAV INDRA D SHINDE AND NOT MERELY A PERSON LOOKING AFTER TECHNICAL ASPEC TS AS ALLEGED BY SHRI RAVINDRA D SHINDE. 57. IT IS HELD IN THE CASE OF PULLANGODE RUBBER PROD UCE CO. LTD. V. STATE OF KERALA [197]} 91 ITR 18 (SC)THAT- AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDEN CE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO TH E PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. EARLIER ALSO THE HON'BLE SUPREME COURT IN NARAYAN BH AGWANTRAO GOSAVI BALAJIWALE V. GOPAL VINAYAK GOSAVI AIR 1960 SC 100 HAD HELD THAT AN ADMISSION IS THE BEST EVIDENCE THAT AN OPPOSITE PARTY CAN RELY UPON AND, THOUGH NOT CONCLUSIVE, YET COULD BE D ECISIVE OF THE MATTER UNLESS SUCCESSFULLY WITHDRAWN OR PROVED ERRONEOUS. 58. THOUGH THERE IS NOTHING SPECIFIC IN THE INCOME-TA X ACT OR IN THE INDIAN EVIDENCE ACT TO MAKE ADMISSIONS AS CONCLUSIVE PRO OF OR AS ALWAYS BINDING ON THE MAKER, YET IT IS ALMOST A SETTLED POSITION BY WAY OF JUDICIAL DECISIONS THAT IN THE ABSENCE OF REBUT TAL OR RETRACTION THE EARLIER STATED FACTS IN MOST OF THE CASES, MAY BE C ONCLUSIVE AND CAN BE ACTED UPON. SPECIFIC PROVISIONS OF THE INCOME- TAX ACT AS CONTAINED UNDER SECTIONS 132(4), 133A(5), ETC., PROVI DE THAT STATEMENTS RECORDED M THE INCOME-TAX PROCEEDINGS HAVE EVIDENTIARY VALUE. THOUGH THEY HAVE EVIDENTIARY VAL UE, YET THEY ARE NOT ALWAYS CONCLUSIVE PROOF. THE SUPREME COURT IN THE CASE OF AVADH KISHORE DAS V. RAM GOPAL AIR 1979 SC 861 HAS HEL D THAT EVIDENTIARY ADMISSIONS ARE NOT CONCLUSIVE PROOF OF THE FACTS ADMITTED AND MAY BE EXPLAINED OR SHOWN TO BE WRONG, BUT THEY DO RAISE AN ESTOPPEL AND SHIFT THE BURDEN OF PROOF ON TO THE PERSON MAKING THEM. THE SUPREME COURT FURTHER HE LD THAT UNLESS SHOWN OR EXPLAINED TO BE WRONG, THEY ARE AN EFF ICACIOUS PROOF OF THE FACTS ADMITTED. 59. IN THE INSTANT CASE THE EXPLANATION GIVEN BY SHRI D. A. BHAT WAS RETRACTED BY HIM VIDE A LETTER WRITTEN TO THE ADDL. DIT (INV.) ON 11/10/2009. SHRI D. A. BHAT IS AN EMPLOYEE DIRECTOR OF THE APPELLANT COMPANY. THIS LETTER IS WRITTEN JUST A DAY BEFORE THE FINAL STATEMENT OF SHRI RAVINDRA D. SHINDE, PROMOTER AND MANAGING D IRECTOR OF THE APPELLANT COMPANY, WAS RECORDED U/S. 132(4) ON 12/10/2009. IN THE 21 LETTER DATED 11/10/2009, SHRI D. A. BHAT HAS INTIMAT ED THAT THE EARLIER ADMISSION MADE BY HIM WAS ON A MISTAKEN UNDERSTA NDING AND MISCONCEPTION OF FACTS. HE ALSO STATED THAT HE WAS U NDER MENTAL STRESS AT THE TIME OF MAKING THE STATEMENT. HOWEVER, WH AT IS OF RELEVANCE IS THE FACT THAT IT IS NOT THE CASE OF SHRI D. A. BHAT THAT THE STATEMENTS WERE UNTRUE, OR INVOLUNTARY; OR WERE MADE UNDER UNDUE INFLUENCE, PRESSURE OR COERCION. 60. LOGICALLY THE BURDEN TO PROVE THE ADMISSION AS INE FFECTIVE IS ON THE MAKER. THUS, ON THE FAILURE OF THE MAKER TO PROV E THAT EARLIER STATED FACTS WERE WRONG, HIS EARLIER STATEMENTS ARE SUFFI CIENT TO CONCLUDE A MATTER. AT THIS JUNCTURE, IT MUST BE NOTED THAT THE STATEMENT TO BIND THE MAKER MUST BE VOLUNTARY AND ONL Y IF IT APPEARS TO HAVE BEEN OBTAINED BY COERCION, INDUCEMEN T OR THREAT IT MUST BE REJECTED. ON RETRACTION, EARLIER STATED FACTS OR ADMISSIONS, LOSE THEIR EFFECT AS A BINDING EVIDENCE AND IT MAY NO T BE PERMISSIBLE FOR THE INCOME-TAX AUTHORITY TO CONCLUDE A MATTER O N THE BASIS OF EARLIER STATEMENT ALONE. AT THE SAME TIME, BALD RETRA CTIONS OF EARLIER ADMISSIONS WILL NOT BE ENOUGH AND EVEN AFTER RETRACTI ON SUCH STATEMENTS CANNOT AUTOMATICALLY BECOME NULLITIES. MERE LY BECAUSE A STATEMENT IS RETRACTED, IT CANNOT BECOME AS INVOLUNTAR Y OR UNLAWFULLY OBTAINED. FOR ANY RETRACTION TO BE SUCCESSF UL IN THE EYES OF LAW THE MAKER HAS TO SHOW AS TO HOW EARLIER RECORDE D STATEMENTS DO NOT STATE THE TRUE FACTS OR THAT THERE WAS COERCIO N, INDUCEMENT OR THREAT WHILE RECORDING HIS EARLIER STATEMENTS. 61. IN SPECIFIC REFERENCE TO THE INCOME-TAX PROCEEDI NGS, IT WOULD BE USEFUL TO REFER TO THE DECISION OF THE MADRAS BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL M THE CASE OF T.S. KUMARASAMY V. A SSTT. CIT [1998] 65 ITD 188 WHERE, TAKING NOTE OF THE FACT TH AT ITOS ARE NOT POLICE OFFICERS AND, AS SUCH, THEY DO NOT USE OR RESORT TO, UNFAIR MEANS IN RECORDING OATH STATEMENTS DURING THE SEARCH OP ERATIONS OR DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM, IT WAS HELD THAT SUCH STATEMENTS, ADMISSIONS AND CONFESSIONS ARE BINDING AND CANNOT BE RETRACTED, UNLESS AND UNTIL IT IS PROVED BY LEGALLY ACCEPTABLE EVIDENCE THAT SUCH ADMISSION, CONFESSION OR O ATH STATEMENT WAS INVOLUNTARY OR WAS TENDERED UNDER COERCI ON OR DURESS. DRAWING SUPPORT FROM THE DECISION OF THE SUPREM E COURT IN THE CASE OF SURJEET SINGH CHHABRA V. UNION OF INDIA [1997] 1 SCC 508 THE TRIBUNAL DISALLOWED PLEA OF RETRACTION OF THE ASSE SSEE ON THE GROUND THAT NEITHER THE GROUND OF COERCION OR DURESS NOR THE GROUND OF INVOLUNTARY STATEMENT WAS PROVED TO HAVE EX ISTED AT THE TIME OF RECORDING OF THE STATEMENT. THIS DECISION OF T HE TRIBUNAL GOES TO INDICATE THAT ADMISSIONS OR CONFESSIONS MADE IN TH E STATEMENTS RECORDED DURING SEARCH OR SURVEY, WITHOUT TH ERE BEING ANY OTHER EVIDENCE TO SUPPORT SUCH ADMISSIONS, CAN SUCCE SSFULLY BE MADE USE OF TO ASSESS THE INCOME, UNLESS THEY ARE PROVED TO BE INVOLUNTARY OR ARE PROVED TO HAVE BEEN TAKEN UNDER DURESS, COERCION, MISCONCEPTION, ETC. FURTHER, INSTEAD OF RET RACTING INITIAL STATEMENTS OR ADMISSIONS IN A BALD MANNER, ONE HAS TO BRI NG ON RECORD COGENT REASONS OR EVIDENCES, BECAUSE IN THE ABSE NCE OF THIS EVEN AFTER RETRACTION MATTERS MAY BE DECIDED AGAINST HIM ON THE BASIS OF INITIAL STATEMENT ITSELF. GENERALLY, AS COMPARE D TO A SUBSEQUENT STATEMENT WHEREBY EARLIER ADMITTED FACTS OR POSITIONS ARE RETRACTED, THE FIRST STATEMENT MUST BE PRESUMED TO BE MORE RELIABLE FOR THE REASON THAT SUCH WAS THE STATEMENT WHI CH WAS RECORDED FIRST IN POINT OF TIME AND WAS MADE ON THE SP OT. POSSIBILITY OF AN AFTERTHOUGHT OR TO CONCOCT AN EXPLANATION AND FABRICATE THE EVIDENCE IN SUBSEQUENT STATEMENT CANNOT BE RULED OUT. A RETRACTION 22 TO HAVE ANY EVIDENTIARY VALUE MUST PREFERABLY BE IN A STATEMENT NOT ONLY DENYING THE EARLIER STATED FACTS BUT EXPLAINING THE REASONS FOR MAKING A STATEMENT EARLIER AND GIVING SUBSTITUTED FACT S IN SUPPORT OF RETRACTION. TOTAL DENIAL OF WHAT HAS BEEN STATED IN T HE PREVIOUS STATEMENT CANNOT BE SAID TO BE EFFECTIVE AND IT SHALL AT BEST BE DEEMED MERELY AS A PLEA OF DENIAL WHICH MAY NOT BE O F MUCH HELP. 62. THE IMPORTANT ASPECT OF THE MATTER IS THAT DURIN G THE COURSE OF SEARCH SHRI D. R. BHAT CAME WITH AN EXPLANATION THAT AMOUNTS WRITTEN IN THE PAPERS AND DOCUMENTS DISCOVERED FROM HI M WERE IN THE NATURE OF SPEED MONEY OR GRATUITOUS PAYMENTS MADE FOR THE PURPOSE OF ACQUIRING THE CONTRACT FOR GHODZHARI PROJECT BY THE JOINT VENTURE BETWEEN THE APPELLANT AND B. T. PATIL AND S ONS (BELGAUM) LTD. THE EXPLANATION PROFFERED HAD TWO LIMBS VIZ. O NE PERTAINING TO THE NATURE OF EXPENSE RECORDED AND THE OTHER PERTAIN ING TO THE PERIOD IN WHICH THE EXPENSE WAS INCURRED. IN RESPECT O F THE NATURE OF ENTRIES, SHRI RAVINDRA D. SHINDE, MANAGING DIRECT OR OF THE ASSESSEE COMPANY, DID NOT ACCEPT THAT THE RECORDINGS MAD E BY SHRI BHAT INDICATED INSTANCES OF PAYMENT OF SPEED MONEY. WH AT HE ADMITTED IN THE STATEMENT MADE UNDER SECTION 132(4) O N 12/10/2009 WAS THAT THE AMOUNTS IN QUESTION REFLECTED THE INCOME OF THE APPELLANT GENERATED BY INFLATING THE EXPENSES OF MAHALAXMI INFRAPROJECTS LTD. AND RDS CONSTRUCTION COMPANY. HENC E, IT WAS STATED THAT THE AMOUNT IN QUESTION REVEALED THE CONCE ALED BUSINESS INCOME OF THE APPELLANT. THIS PART OF THE EXPLANATIO N WAS ACCEPTED IN SEARCH AND SEIZURE PROCEEDING AND IN ASSESSMENT WHEREI N THE DECLARATION WAS TREATED AS BUSINESS INCOME OF THE APPELL ANT EARNED BY INFLATING THE EXPENSES. IN RESPECT OF THE SECOND LIM B OF THE ADMISSION, SHRI RAVINDRA SHINDE AVERRED THAT SHRI D. A. BHAT, BEING A TECHNICAL DIRECTOR NOT CONCERNED WITH FINANCIAL ASPE CTS OR ACCOUNTS OF THE COMPANY, HAS GIVEN CONTRADICTORY STATEMENTS IN AS MUCH AS HE MENTIONS DIFFERENT RATES OF EXPENSES ALLEGEDLY INCUR RED FOR PROCURING THE CONTRACT. HE EXPRESSED INABILITY TO UND ERSTAND HOW THE FIGURES HAVE BEEN GENERATED BY SHRI BHAT IN THE LOOSE PAPERS AND DOCUMENTS MAINTAINED BY HIM. SHRI RAVINDRA D. SH INDE ACCEPTED THE FIGURES WRITTEN BY SHRI D. A. BHAT AS TH E AMOUNT OF CONCEALED INCOME. SIGNIFICANTLY, SHRI RAVINDRA D. S HINDE DID NOT QUESTION THE AUTHENTICITY OF DOCUMENTS IN RESPECT OF T HE FIGURES MENTIONED AND WRITTEN THEREIN AND ACCEPTED THE SAME. IN FACT THESE DOCUMENTS HAVE BEEN RELIED UPON TO MAKE CLAIMS ABOUT SHIFTING OF EXPENSES INCURRED IN RESPECT OF AMOUNTS RECORDED AGAINST AN ENTITY 'AB'. HE MERELY STATED THAT THE IMPUGNED AMOUNTS IN R ESPECT OF GHODZHARI PROJECT RELATED TO FINANCIAL YEARS 2007 -08, 2008-09 AND 2009-10, AND THAT EXPENSES PERTAINING TO KOYNA PROJECT RELATED TO THE FINANCIAL YEAR 2009-10 FOR THE REASON THAT MAJOR AMOUNTS WERE REALISED FROM THESE PROJECTS WHEN R.A. BILLS WERE ACCEP TED AND CORRESPONDING FUNDS WERE RELEASED BY THE CONCERNED AUT HORITIES. THAT PART OF EXPLANATION OF SHRI RAVINDRA D. SHINDE IS FOUND TO BE INCORRECT BY THE ASSESSING OFFICER WITH REFERENCE TO T HE DOCUMENTS MAINTAINED BY SHRI D. A. BHAT. THE ASSESSING OFFICER HA S ELABORATELY AND ABLY DEMONSTRATED, AFTER A SCRUTINY OF ALL THE SEI ZED MATERIAL AT HAND, THE REASONS FOR NOT ACCEPTING THE EXPLANATION O F SHRI RAVINDRA D. SHINDE. 63. AS ALREADY MENTIONED, SHRI D A BHAT IS A TRUSTED AND LOYAL EMPLOYEE OF THE APPELLANT COMPANY APART FROM BEING A CLOSE CONFIDANT OF THE MANAGING DIRECTOR, SHRI R D SHINDE . IT IS APPARENT FROM THE DOCUMENTS SEIZED FROM HIS RESIDENCE WHICH PERT AINED TO THE JOINT VENTURE BETWEEN THE APPELLANT COMPANY AND B T PATIL AND 23 SONS (HEREINAFTER REFERRED TO AS 'BHAT DOCUMENTS') THA T SHRI BHAT WAS INVOLVED IN THE PROJECT SINCE INCEPTION IN MORE W AYS THAN JUST BEING RESPONSIBLE FOR TECHNICAL MATTER. THE FACT THAT HE USED TO MAINTAIN THE ACCOUNT OF UNACCOUNTED PAYMENTS AND WAS THE APPELLANT COMPANY'S MAIN INTERFACE WITH THE JOINT VE NTURE PARTNER B T PATIL AND SONS IS APPARENT FROM THE FACT THAT B T P ATIL AND SONS USED TO SEND THE FINANCIAL RECONCILIATION STATEMENT T O SHRI BHAT ON REGULAR BASIS. THE ASSESSING OFFICER HAS ELABORATELY DISC USSED THE ISSUE BETWEEN PAGES NO. 3 TO 43 OF THE ASSESSMENT ORDER F OR THE ASSESSMENT YEAR 2007-08. THIS ASPECT OF ASSESSMENT IS REPEATED IN ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. THE ASSESSI NG OFFICER HAS ALSO MADE THE SEIZED DOCUMENTS A PART OF TH E ASSESSMENT ORDER IN THESE PAGES. THE EVIDENCES INDICATE THAT CER TAIN AMOUNTS WERE PAID TO VARIOUS PERSONS ON SPECIFIC DATES. IN ALL T HE PAPERS, THE WORD 'PAID' IS VERY CONSPICUOUS. THE SEIZED MATERIAL AL SO REFERS TO THE PERSONS WHO HAVE MADE THE PAYMENT I.E. EITHER B T PATIL AND SONS OR MAHALAXMI CONSTRUCTION CORPORATION LTD. AS THE APPELLANT COMPANY WAS KNOWN ITS EARLIER AVATAR. PAGE NO. 39 MEN TIONS VARIOUS DATES ON WHICH PAYMENTS WERE MADE AND THE AMOU NTS PAID ON THESE DATES. PAGE NO. 38 IS A DATA SHEET CONTAINING THE DATES OF PAYMENT, LOOSE IDENTITY OF THE PERSONS TO WHOM THE PA YMENTS WERE MADE AND THE DATES OF PAYMENT. SIMILARLY, PAGE NO. 1 8 CONTAINS THE SAME DATA. THE FACT THAT THESE PAGES ARE CONTEMPORANEO US DOCUMENTS REGARDING THE PAYMENTS ON A PARTICULAR DATE , IS EVIDENT FROM PAGE NO. 32 AND PAGES NO. 1 TO 5 AND 7 OF THE B HAT DOCUMENTS. PAGE NO. 32 AND REVERSE OF PAGE NO. 16 CONTAINS ENTR IES OF OVERHEADS AS ON 26/02/2008 AGGREGATING TO RS. 48.90 CRORES OF WH ICH RS. 26.64 CRORES WAS ALREADY DISBURSED TO VARIOUS ENTITIES A ND PERSONS. THIS PAGE ALSO CONTAINS DETAILS OF SITE EXPENSES AND PURCH ASES OF MACHINERY WHICH WERE ENTERED INTO THE REGULAR BOOKS OF ACCOUNT OF THE FINANCIAL YEAR 2007-08. SIMILARLY, PAGE 31 IS A RECONCILIATION OF THE SEIZED BILLS IN RESPECT OF PAYMENTS MADE TILL 16/06 /2007 BETWEEN THE PARTNERS IN THE JOINT VENTURE WHICH WAS G IVEN TO SHRI BHAT BY B T PATIL AND SONS. SO IS PAGE NO. 28. THIS PAGE ALSO CONTAINS THE DETAILS LIKE IDENTITY OF THE PERSONS WHO HAVE MADE THE PAYMENTS ON BEHALF OF B T PATIL AND SONS AND THE DATES ON WHIC H THE PAYMENTS WERE MADE. IT ALSO GIVES THE BALANCE OF PAYMENT AS ON 14/04/2007. PAGE 17 HAS SIMILAR CONTENTS AS ON PAGE 28. THIS WAS FAXE D BY B T PATIL AND SONS TO SHRI D A BHAT AND IT SHOWS THE STATE OF AFFAIRS OF VARIOUS PAYMENTS AS ON 18/07/2007. PAGE 16 IS A SUMMARY SHEET OF PAYMENTS MADE BY THE PARTNERS IN THE JOINT VENTURE AS ON 28/01/2008. AS AGAINST THESE OVERWHELMING EVIDENCES, TH E APPELLANT MERELY STATES THAT THE PAYMENT OF RS.43 CRO RES IS HIGHLY UNREASONABLE. SHRI SHINDE DISMISSED THE EVIDENCE GATHE RED DURING THE COURSE OF SEARCH WHICH SHOWS THAT EXPENSES HAVE BEEN INCURRED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEARS 20 07-08, 2008-09 AND 2009-10 TO THE TUNE OF RS. 2191.82 LAKHS (50% OF TOTAL EXPENSES OF RS.4383.64 LAKHS) AND MADE A DISCLOSURE OF ADDITIONAL INCOME FOR THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YE ARS 2009-10 AND 2010-11 OF RS.1801. 19 CRORES ONLY. IN VIEW OF TH E DISCUSSION ABOVE AND THE REASONS MENTIONED IN PARAGRAPHS 7.14 ON PAGES 12- 13 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11 (CORRESPONDING PARAGRAPH 7.7 FOR ASSESSMENT YEARS 2007-08 , 2008- 09 AND 2009-10), I HOLD THAT THE ASSESSING OFFICER HAS CORRECTLY TAKEN COGNIZANCE OF THE LOOSE PAPERS FOUND IN THE RESI DENCE OF SHRI D A BHAT AND ACCORDINGLY TAXED THE UNEXPLAINED EXPE NSES IN THE ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10. 24 64. CONSEQUENTLY, THE PROTECTIVE ADDITIONS OF RS.3.20 CRORES IN ASSESSMENT YEARS 2009-10 AND RS.10.55 CRORES IN 2010-11 ST ANDS DELETED. THE DECISION AND THE REASONS GIVEN IN THE CASE OF MAHAL AXMI INFRAPROJECTS LTD. WILL HOLD GOOD IN THE INSTANT CASE AS WELL. CONSEQUENTLY, THE ADDITIONS MADE ON PROTECTIVE BASIS O F RS.5,05,03,000/- AND RS.12,60,82,000/- IN ASSESSMENT YEA RS 2009- 10 AND 2010-11, RESPECTIVELY, STANDS DELETED SINCE THESE AMOUNTS HAVE BEEN SHIFTED AND BROUGHT TO TAX IN ASSESSMENT YEAR S 2007-08, 2008-09 AND 2009-10. 29. IN RESPECT OF THE CONTENTION OF THE APPELLANT TH AT SHRI D A BHAT IS A TECHNICAL DIRECTOR OF MAHALAXMI INFRAPROJECTS LTD. AND, THEREFORE, THERE WAS NO QUESTION OF SHARING OF INFORMATION WITH H IM IS AS ALSO THE CONTENTION THAT THE MATERIAL SEIZED FROM SHRI D A BHAT'S POSSESSION IS NOT RELIABLE AND HAS NO EVIDENTIARY VALUE BECAUSE PRESUMPTION UNDER SECTION 132(4)/292C OF THE INCOME-T AX ACT IS NOT AVAILABLE IF THE BOOKS OF ACCOUNT ETC. IS RECOVER ED FROM A THIRD PARTY, I NEED TO POINT OUT THAT THE CONTRACT FOR T HE GHODZHARI PROJECT WAS GIVEN TO THE JOINT VENTURE OF B T PATIL AND SONS BELGAUM CONSTRUCTION PVT. LTD AND MAHALAXMI INFRAPROJECTS LTD . IT WAS NOT GIVEN INDIVIDUALLY AND SEPARATELY TO THE TWO PARTIES. THE JOINT VENTURE WAS RESPONSIBLE FOR COMPLETION OF THE PROJECT AND COULD BE HELD LIABLE FOR ANY ACTS OF OMISSION OR COMMISSION INCUR RED IN EXECUTION OF THE PROJECT. THE RA BILLS WERE ISSUED IN THE NAME OF THE JOINT VENTURE AND THE PAYMENT WAS ALSO RELEASED M THE NAME OF THE JOINT VENTURE. THAT THE INDIVIDUAL MEMBERS OF THE JO INT VENTURE WOULD BE JOINTLY AND SEVERALLY LIABLE FOR COMPLETIO N OF THE PROJECT AND ALL ASSOCIATED LEGAL FALLOUTS IS BEYOND DOUBT. THE PAPERS SEIZED FROM SHRI D A BHAT'S RESIDENCE PERTAINED TO PAYMENT O F ON MONEY TO CERTAIN PEOPLE FOR BAGGING THE PROJECT BY THE JOINT VENTURE. SHRI D A BHAT WAS THE NOMINEE OF THE JOINT VENTURE PARTNER, M AHALAXMI INFRAPROJECTS LTD. ON BOARD OF THE JOINT VENTURE AND IT APPEARS FROM THE LOOSE PAPERS WHICH WERE FOUND AT HIS RESIDENCE THAT HE WAS RESPONSIBLE FOR KEEPING A DETAILED RECORD ON ALL MONE TARY TRANSACTIONS UNDERTAKEN ON BEHALF OF THE JOINT VENTUR E. AS PER THE TERMS OF JOINT VENTURE, BOTH THE MEMBERS IN THE JOINT VENTURE WERE ENTITLED TO 50% OF ALL RECEIPTS. IT IS ALSO EVIDENT FR OM THE PAPERS SEIZED THAT BOTH JOINT VENTURE PARTNERS WERE EQUALLY RESPONSIBLE TO INCUR THE INCIDENTAL EXPENSES IN EQUAL MEASURES. THE STA TEMENTS OF SHRI D A BHAT ARE CORROBORATED BY UNDISPUTABLE EVIDE NCES WHICH DEPICT THE AMOUNT OF PAYMENTS, DATES OF THE PAYMENT, DETAILS OF THE PAYER AND RECIPIENTS. THE DOCUMENTS SEIZED FROM SHRI B HAT'S RESIDENCE REFLECT THAT THE APPELLANT HAD SENT SPEED MO NEY STATEMENTS TO SHRI D A BHAT FOR RECONCILIATION FROM T IME TO TIME. IT IS ALSO A FACT THAT THE DIRECTOR OF THE APPELLANT'S COMP ANY SHRI B B PATIL AND THE DIRECTOR OF MAHALAXMI INFRAPROJECTS LTD, SHR I R D SHINDE HAVE ADMITTED TO PAYMENT OF SPEED MONEY UNDER SECTION 132(4) ON THE STRENGTH OF THE PAPERS FOUND IN THE PREMISES OF SHR I D A BHAT. HOWEVER, FOR THE PURPOSE OF ALLOCATING IT TO RESPECTI VE ASSESSMENT YEARS, BOTH PARTNERS IN THE JOINT VENTURE SYNCED IN UN ISON AND SAY THAT THE AMOUNTS WERE PAYABLE OR PAID IN THE PREVIOU S YEARS RELEVANT TO ASSESSMENT YEARS 2009-10 AND 2010-11. THE ASSE SSING OFFICER HAS DEALT WITH ALL THE CONTENTIONS RAISED IN T HIS APPELLATE PROCEEDING BETWEEN PAGES 3 TO 41 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007-08 (REPEATED IN OTHER ASSESSMENT YEARS ) AND I CONCUR WITH THE FINDINGS GIVEN THEREIN. 25 30. THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRIES WITH THE RECIPIENT OF THE UN EXPLAINED EXPENDITURE CAN BE, AT BEST, DESCRIBED AS AN ANECDOTE. FIRSTLY, THE APPELLANT HAS NOT PROVIDED THE FULL DETAILS INCLUDING NAMES AND ADDRESSES OF THE PERSONS WHO ARE THE RECIPIENTS OF SPEED M ONEY. SECONDLY, I DOUBT EVEN IF THESE PERSONS WERE CONTACTED THEY WOULD ACCEPT THE RECEIPT OF THE AFORESAID AMOUNTS WHICH IS A GAINST PUBLIC POLICY AND WHICH LIES IN THE REALM OF PREVENTION OF CORRUPTION ACT. 31. THE CONTENTION OF THE APPELLANT THAT THE EXCEL FILE WAS PREPARED TWO DAYS PRIOR TO THE SEARCH WAS AN ACT OF COINCIDENC E, IS PRODUCED HERE ONLY TO BE REJECTED. IT IS COMMON KNOWLEDGE THA T CONSEQUENTIAL SEARCH AND SEIZURE ARE UNDERTAKEN ON ALL PERSONS CONNEC TED WITH A GROUP. HENCE, ANY PERSON WHO IS CLOSELY ASSOCIATED WITH ANOTHER PERSON IN A WORK JOINTLY UNDERTAKEN NORMALLY EXPECTS A SEARCH AND SEIZURE ACTION EITHER IMMEDIATELY OR WITHIN A REASONA BLE PERIOD. THEREFORE, THE CONTENTION OF THE APPELLANT THAT IT WOULD BE IMPOSSIBLE TO ANTICIPATE A CONSEQUENTIAL SEARCH AFTER A GAP OF ONE MONTH CANNOT BE ACCEPTED. 32. THE CONTENTION OF THE APPELLANT THAT THE DOCUME NTS SEIZED AT SHRI BHAT'S RESIDENCE WAS NEVER BROUGHT TO THE APPELLA NT'S NOTICE IS INCORRECT BECAUSE ALL THE FACTS WERE BROUGHT TO THE A PPELLANT'S NOTICE VIDE SHOW CAUSE NOTICE DATED 16/12/2011 AND 21/12/201 1 FOR WHICH A REPLY WAS PROVIDED BY THE APPELLANT ON 21/0 1/11 ITSELF. THE ASSESSING OFFICER HAS DEALT WITH THE ISSUES RAISED IN PARAG RAPH 10 OF THE ASSESSMENT ORDER. 33. REGARDING THE CONTENTION OF THE APPELLANT THAT THE DOCUMENTS SEIZED AT APPELLANT'S PREMISES HAVE SUPERIOR EVIDENTIARY VALUE HAS TO BE WEIGHED IN THE CONTEXT OF THE CASE. IT IS APPAR ENT FROM THE CONTENTS OF THE DOCUMENTS SEIZED FROM THE APPELLANT TH AT THE SAME IS A CAREFULLY CRAFTED, PREMEDITATED, DIVERSIONARY TA CTICS TO SHIFT THE YEARS OF PAYMENT OF SPEED MONEY FROM THE PREVIOUS YEAR S RELEVANT TO ASSESSMENT YEARS 2007 -08, 2008-09 AND 2009-10 TO PRE VIOUS YEARS RELEVANT TO ASSESSMENT YEARS 2009-10 AND 2010-1L. THE EVIDENCES FOUND IN THE RESIDENCE OF ONE OF THE DIRECT ORS IN THE JOINT VENTURE TO WHOM PART OF GHODZHARI PROJECT WAS AWARDE D AND ON WHOSE BEHALF SPEED MONEY WAS PAID TO VARIOUS PERSONS VIZ . SHRI D A BHAT, OVERWHELMINGLY OVERRULE THE EVIDENTIARY VALUE OF THE DOCUMENTS FOUND IN THE PREMISES OF THE APPELLANT WHO W AS ONE OF THE PARTNERS M THE JOINT VENTURE. THE EVIDENCE FOUND WITH THE APPELLANT IS NON-CONTEMPORANEOUS AND APPEARS TO BE PRE PARED FROM THE DOCUMENTS SEIZED EARLIER. MOREOVER, THEY HAV E BEEN PREPARED AFTER THE ORIGINAL SEARCH HAS TAKEN PLACE. T HEREFORE, THE DATES, FIGURES ETC. WERE MORE PRONE AND LIABLE TO BE MANIPULATED THAN THE ORIGINAL CONTEMPORANEOUS DOCUMENTS FOUND FRO M THE RESIDENCE OF THE DIRECTOR OF THE JOINT VENTURE OF WH ICH THE APPELLANT IS A PARTNER. UNDER THESE CIRCUMSTANCES, I HOLD THAT TH E EVIDENTIARY VALUE OF THE DOCUMENTS SEIZED FROM THE APPELLANT'S RESI DENCE IS INFERIOR THAN THE EVIDENTIARY VALUE OF THE DOCUMENT S SEIZED FROM THE RESIDENCE OF ONE OF THE DIRECTORS OF THE JOINT VENTUR E OF WHICH THE APPELLANT IS A PARTNER. THE EVIDENCES CREATED BY THE APPELLANT ARE UNRELIABLE AND ARE MEANT TO CREATE CONFUSION AND OBST RUCT THE JUDICIAL PROCESS. 34. WITH THESE OBSERVATIONS, I HOLD THAT THE ASSESSMG OFFI CER HAS RIGHTLY TAXED THE AMOUNTS OF SPEED MONEY IN VARIOUS ASSE SSMENT YEARS AS STATED IN PARAGRAPH 23 OF THIS APPELLATE ORDER . 26 33. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 34. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED A SUM OF RS. 21,91,82,000/- AS UNEXPLAINED EXPENDITURE OUT OF INFLATION OF EXPENSES AS IT WAS UNABLE TO RECONCILE TH E SAID EXPENDITURE INCURRED IN A.YRS. 2009 - 2010 AND 2010 - 20 11 ON THE BASIS OF THE EXCEL FILE FOUND IN THE ASSESSEE'S PREMISES DUR ING THE COURSE OF SEARCH ON 23-10-2009 AND CASH FOUND AND THE STATEMENT OF ITS DIRECTOR SHRI B. B. PATIL. HE SUBMITTED THAT THE AO HA S ASSESSED THE SAID SUM OF RS. 21,91,82,000/- IN A.YRS. 2007 - 2008, 2008 - 2009 AND 2009 - 2010 ON THE BASIS OF PAPERS FOUND DURING THE COURSE OF SEARCH AT MAHALAXMI INFRAPROJECTS LTD. ON 23-09-2009 FROM THE POSSESSION OF ITS TECHNICAL DIRECTOR SHRI D. A. BHAT AND THE STATEMENT RECORDED OF SHRI D. A. BHAT ON THE BASIS OF SUCH PAPERS. HE SUBMITTED THAT THE CIT(A) HAS UPHELD THE ORDER OF THE AO DISREGARD ING THE PAPERS FOUND AT THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH AND THE STATEMENT OF THE ASSESSEES DIRECTOR. 35. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHRI D.A. BHAT IS ONLY THE TECHNICAL DIRECTOR OF MIL AND IS NOT INVOLVED IN THE FINANCIAL ASPECT OF THE PROJECT. THIS HAS BEEN CONFIRMED BY THE MANAGING DIRECTOR OF MIL SHRI R. D. SHINDE IN HIS STATEMENT RECORDED U/S.132(4). REFERRING TO QUESTION NO.7 OF THE STATEMENT OF SHRI D. A. BHAT HE SUBMITTED THAT MR. BHAT HAS STATED THAT HE IS NOT AWARE HOW THE MONEY FOR UNEXPLAINED EXPENDITURE IS GENERATED. HENCE THE STATEMENT OF SHRI D. A. BHAT CANNOT BE RELIED UPON. FURTHE R, STATEMENT OF SHRI D. A. BHAT IS RECORDED AT 1.00 AM AFTER A WHOLE DAY OF SEARCH FOR WHICH THE STATEMENT CANNOT BE CONSIDERED VOLUNTARY. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF THE HON'BLE 27 GUJARAT HIGH COURT IN THE CASE OF KAILASHBEN MANHARILAL C HOKSHI REPORTED IN 328 ITR 411 (GUJ) WHEREIN THE HON'BLE HIGH CO URT HAS HELD THAT A STATEMENT RECORDED AFTER MIDNIGHT CANNOT B E CONSIDERED AS VOLUNTARY AND THE REVENUE CANNOT RELY ON SUCH INVO LUNTARY STATEMENT. HE SUBMITTED THAT THERE IS INHERENT CONTRAD ICTION IN THE STATEMENT OF SHRI D. A. BHAT. REFERRING TO QUESTION NO.4 AN D 5 OF HIS STATEMENT HE SUBMITTED THAT SHRI BHAT IN HIS ANSWER TO QUESTION NO. 4 HAS STATED THAT AN EXPENDITURE OF 10 TO 12% OF CONTR ACT VALUE IS INCURRED TO GET THE CONTRACT AND IMMEDIATELY IN ANSWER TO QUESTION NO. 5 HAS STATED THAT AN EXPENDITURE OF 6-7% OF THE CON TRACT VALUE IS INCURRED TO GET THE CONTRACT. THEREFORE, SUCH SELF CONTR ADICTORY STATEMENT CANNOT BE RELIED UPON. THIS REFLECTS THE MENTAL PRESSURE AND STATE OF MIND OF THE PERSON GIVING THE STATEMENT WHIC H CANNOT BE RELIED UPON. 36. HE SUBMITTED THAT AT THE END OF THE STATEMENT S HRI D. A. BHAT HAS NOWHERE CERTIFIED THAT THE STATEMENT IS NOT UNDER M ENTAL TENSION AND PRESSURE NOR ANY SUCH QUESTION WAS PUT FORWARD. FU RTHER, THE STATEMENT OF SHRI D. A. BHAT HAS NO EVIDENTIARY VALUE SINC E THE SAME WAS NOT RECORDED IN FRONT OF ANY WITNESS. THERE IS NO S IGNATURE OF ANY WITNESS TO THE SAID STATEMENT APPENDED ANYWHERE IN THE STATEMENT CLEARLY DEMONSTRATES THE SAME. FURTHER THE SAID STATEMENT HAS BEEN RETRACTED IMMEDIATELY WITHIN A GAP O F 18 DAYS AND THE AO HAS FAILED TO RECORD ANY FURTHER STATEMENT O F THE SAID SHRI D. A. BHAT AFTER THE RETRACTION LETTER TO PROVE THAT THE EARLIER STATEMENT ON 23/09/2009 WAS TRUE. HE SUBMITTED THAT S HRI D. A. BHAT HAS RETRACTED THE SAID STATEMENT BY HIS LETTER DA TED 11-10-2009 AND SUBSEQUENTLY ALSO FILED AN AFFIDAVIT FOR THE SAME. THE SA ID STATEMENT HAS BEEN RETRACTED ON THE GROUND THAT HE WAS UNDER MENTAL TENSION AND PRESSURE DUE TO SEARCH AND THE SAID STATEMENT 28 WAS MADE ON MISTAKEN BELIEF AND HEARSAY BASIS. 37. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TR IBUNAL IN THE CASE OF JYOTICHAND BHAICHAND REPORTED IN 139 ITD 10 (PUNE) HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT A STATEMENT MADE UNDER MISTAKEN BELIEF CAN BE WITHDRAWN. FURTHER, NO DECLARATION REGARDING ANY INCOME OR YEAR HAS BEEN MA DE IN THE SAID STATEMENT OF SHRI D. A. BHAT. HE SUBMITTED THAT THE MANAGING DIRECTOR OF MIL SHRI SHINDE IN HIS STATEMENT RECORDED U/S . 132(4) OF THE ACT HAS CLEARLY MENTIONED OTHERWISE. THE AO HAS NOT BROUGHT ANY INDEPENDENT CORROBORATIVE EVIDENCE ON RECORD SO AS TO ESTABLISH THE PAYMENT OF THE SAID UNEXPLAINED EXPENDITURE. THE AO HAS RELIED UP ON THE LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH AT T HE PREMISES OF SHRI D. A. BHAT. THUS THE AO HAS RELIED UPON THIRD PARTY EVIDENCE WITHOUT BRINGING ANY CORROBORATIVE INDEPENDENT EVIDENCE O N RECORD JUSTIFYING WHAT HAS BEEN MENTIONED IN SUCH LOOSE PAPERS IS TRUE. HE SUBMITTED THAT IT IS THE SETTLED PRPOSITION OF LAW THAT LO OSE AND UNSIGNED PAPERS DO NOT HAVE ANY EVIDENTIARY VALUE UNLES S IT IS SUPPORTED BY ANY INDEPENDENT EVIDENCE, WHICH IS CLEARLY ABSENT IN CASE OF THE ASSESSEE. 38. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E STATEMENT OF SHRI D. A. BHAT RELIED UPON BY THE AO TO SUPPORT SUCH LOOSE PAPERS HAS BEEN RETRACTED AND THE AO HAS FAILED TO BRING ANYTH ING FURTHER ON RECORD EXCEPT FOR RELYING UPON THE SAID RETRACTED STAT EMENT TO CORROBORATE THE LOOSE PAPERS. HE SUBMITTED THAT THE AO HAS MERELY ALLEGED THAT THE SAID EXPENDITURE MENTIONED IN THE PAPER S FOUND IS SPEED MONEY WITHOUT BRINGING ANY EVIDENCE ON RECORD. THE DIRECTOR OF THE ASSESSEE COMPANY AND MANAGING DIRECTOR OF MIL HAD CLEARLY STATED DURING RECORDING OF THEIR STATEMENTS THAT THEY ARE UNABLE TO RECONCILE CERTAIN EXPENDITURE WHICH HAS BEEN EXPENDED OU T OF FUNDS 29 GENERATED BY INFLATION OF EXPENSES WHICH, TO SOME EXTENT IS PAID AND BALANCE IS PAYABLE. NO FURTHER EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO THAT THE SAID UNEXPLAINED EXPENDITURE HAS ALRE ADY BEEN INCURRED AND THE AMOUNTS ARE PAID. HE SUBMITTED THAT T HE LOOSE PAPERS NO. 17, 22, 28 AND 31 FOUND AT THE PREMISES OF M R. D. A. BHAT AND ALLEGED BY THE AO THAT THEY BELONG TO ASSESSEE AND WERE SENT BY ASSESSEE FOR RECONCILIATION NOWHERE MENTIONS THE NAME OF T HE ASSESSEE AS THE SENDER. IT IS A MERE UNPROVED ALLEGATION AND PRESUMPTION. 39. AS REGARDS THE ALLEGATION OF THE AO THAT THE ASSESS EE WAS AWARE THAT SEARCH ACTION WAS GOING TO TAKE PLACE AT ITS PREMIS ES CONSEQUENT TO THE SEARCH AT MIL AND HENCE THE PAPERS FOUND AT A SSESSEE'S PREMISES ARE FABRICATED, HE SUBMITTED THAT IT IS THE SETTLE D POSITION THAT CONSEQUENTIAL SEARCH TAKES PLACE IMMEDIATELY AND NO T AFTER A PERIOD OF ONE MONTH AS IN THE CASE OF ASSESSEE. IF THE A SSESSEE WAS AWARE THAT SEARCH ACTION IS GOING TO TAKE PLACE AT ITS PREMISES IT WO ULD HAVE DESTROYED ALL THE EVIDENCE OF UNEXPLAINED EXPENDITURE RATHER THAN FABRICATING THEM AS ALLEGED BY THE AO. FURTHER NO C ASH WOULD HAVE BEEN FOUND NOR IT WOULD HAVE OPENED A BANK ACCOUN T AND DEPOSIT SUBSTANTIAL CASH IN IT. IT IS AGAINST ALL HUMAN PRO BABILITY. HE SUBMITTED THAT EVEN OTHERWISE AS PER PROVISIONS OF SECTIO N292C OF THE ACT IT IS SETTLED PROPOSITION OF LAW THAT WHEN ANY DOCUMENT IS FOUND IN COURSE OF SEARCH THE SAME IS PRESUMED TO BE TRUE UNLES S IT IS PROVED OTHERWISE BY THE PERSON ALLEGING IT TO BE UNTRUE. IT IS ST ATED THAT THE CONTENTS OF THE EXCEL FOUND IN THE COMPUTER AT THE PREM ISES BEING PAGES 1 TO 17 FORMING ANNEXURE TO THE ORDER OF THE AO ARE PRESUMED TO BE TRUE UNLESS THE AO PROVES IT OTHERWISE. 40. HE SUBMITTED THAT THE AO HAS MISERABLY FAILED TO DISC HARGE THE ONUS CAST UPON HIM. HENCE THE CONTENTS OF THE EXCEL FILE FO UND AT THE 30 ASSESSEES PREMISES ARE PRESUMED TO BE TRUE AND CONS EQUENTIALLY THE INCOME HAS TO BE ASSESSED IN THE YEAR 2009 - 2010 AND 2010 - 2011 AS OFFERED BY THE ASSESSEE. HE SUBMITTED THAT EVEN ON THE BASIS OF THE CASH FOUND IN THE ASSESSEE'S PREMISES AND DEPOSITS IN ITS BANK ACCOUNT LED CREDENCE TO THE EVIDENCE FOUND IN THE NATUR E OF EXCEL FILE IN THE ASSESSEE'S PREMISES AND THE STATEMENT OF THE DIR ECTOR OF THE ASSESSEE. THE SAID CASH FOUND CLEARLY SHOWS THAT CERTAIN SUMS ARE STILL PAYABLE. IF THE VERSION OF THE AO IS ACCEPTED THAT ALL TH E AMOUNTS ARE PAID THEN NO CASH WOULD HAVE BEEN FOUND AT THE ASS ESSEE'S PREMISES. 41. AS REGARDS THE ALLEGATION OF THE AO THAT THE STATEM ENT OF SHRI D. A. BHAT HAS MORE EVIDENTIARY VALUE AS IT HAS THE ELEMENT OF SURPRISE HE SUBMITTED THAT THE STATEMENT OF ITS DIRECTOR SHRI B.B . PATIL HAS THE SAME ELEMENT OF SURPRISE AS IT WAS ALSO RECORDED DURING T HE COURSE OF SEARCH AT ITS PREMISES, MORE SO WHEN IT WASN'T EXPECTING ANY SUCH ACTION AFTER ONE MONTH OF THE SEARCH AT THE PREMISES OF MIL. THEREFORE, THE STATEMENT OF ASSESEEE'S DIRECTOR OUGHT TO HAVE BEEN ACCEPTED BY THE AO AND SHOULD NOT HAVE BEEN DISCARDED CASUALLY. 42. HE SUBMITTED THAT AO HAS ALSO NOT BROUGHT ON RECO RD ANY EVIDENCE THAT THERE WAS INFLATION OF EXPENSES IN THE YEARS IN WHICH THE UNEXPLAINED EXPENDITURE IS SOUGHT TO BE ASSESSED IN SPITE OF ACCEP TING THE FACT THAT SUCH EXPENDITURE IS OUT OF INFLATION OF EXPEND ITURE. EVEN OTHERWISE ALSO THERE IS NO INDEPENDENT EVIDENCE ON RECOR D OTHER THAN LOOSE PAPERS FOUND AT THE PREMISES OF SHRI D. A. BHAT THA T THE MONEY HAS ALREADY BEEN EXPENDED. HE ACCORDINGLY SUBMITTED TH AT THE STATEMENT OF SHRI D. A. BHAT WAS NOT VOLUNTARY AND HAS B EEN SUBSEQUENTLY RETRACTED AND THEREFORE, HAS NO EVIDENTIA RY VALUE. THE LOOSE PAPERS ARE NOT SUPPORTED BY ANY CORROBORATIVE IN DEPENDENT EVIDENCE. THE PAPERS FOUND AT ASSESSEES PREMISES ARE PRESUME D TO BE 31 TRUE AS PER SECTION 292C OF THE ACT AS THE AO HAS FAILED TO PROVE OTHERWISE. THE PAPERS FOUND AT THE ASSESSEE'S PREMISES ARE SUPPORTED BY THE STATEMENT OF THE DIRECTOR OF THE ASS ESSEE COMPANY AND CASH FOUND IN THE BANK AND PREMISES OF THE ASSESSEE . HE ACCORDINGLY SUBMITTED THAT THE SAID UNDISCLOSED INCOME OU GHT TO BE ASSESSED IN THE A.YRS. 2009 - 2010 & 2010 - 2011 AS OFFERED BY THE ASSESSEE AS AGAINST SPREAD OVER BY THE AO IN A.YRS. 2007 -08, 2008-09 AND 2009-10. 43. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE AO. 44. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUN AL IN THE CASE OF THE JOINT VENTURE PARTNER OF M/S. MAHALAXMI INFRA P ROJECTS LTD. WE FIND THE TRIBUNAL AFTER CONSIDERING THE RIVAL SUBMISS IONS MADE BY BOTH THE SIDES UPHELD THE ACTION OF THE AO AT P ARA 97 OF THE ORDER IN ITA NOS. 2571 TO 2577/PN/2012 AND ITA NOS. 50 TO 56/PN/2013 FOR A.YRS. 2004-05 TO 2010-11 ORDER DATED 0 9-12-2015. THE RELEVANT OBSERVATION OF THE TRIBUNAL READS AS UNDER : 97. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE THE AO MADE THE ADDITION ON THE GROUND THAT THESE LOOSE PAPERS INDICAT E THE DATES OF PAYMENTS OF VARIOUS AMOUNTS AS SPEED MONEY PAID TO DIFF ERENT PERSONS DATE-WISE WITH THE NAMES OF THE PAYERS AND THE RECIPIE NT. BASED ON THE BIFURCATION OF PAYMENTS OF ALLEGED SPEED MONEY AT PAG E 30 OF THE ASSESSMENT ORDER THE AO TAXED THE AMOUNT OF RS.2,75,17,5 00/- BEING 50% SHARE OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. SIMILAR ADDITIONS WERE MADE IN A.Y. 2008-09 AT RS.1490.675 LA KHS AND RS.425.97 LAKHS IN A.Y. 2009-10 WHICH HAS BEEN UPHELD BY THE CI T(A). IT IS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NOTI NGS ON THE LOOSE PAPERS ARE NOT ABOUT THE PAYMENTS ACTUALLY MADE BUT THESE ARE PROJECTED EXPENSES TO BE INCURRED. FURTHER, IT IS ALSO HIS CONTE NTION THAT THE SEIZED PAPERS DO NOT INDICATE ANY PAYMENT OF SPEED MONEY AND THEREFORE THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN HOLDING THAT THE PAYMENT NOTED ON THE SEIZED PAPERS REFLECT SPEED MONEY PAID BY THE ASSESSEE COMPANY ESPECIALLY WHEN MR. BHAT HAD RETRACTED HIS STATEMENT I MMEDIATELY AT THE EARLIEST OPPORTUNITY. WE DO NOT FIND ANY SUBSTANCE IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. THE AO HA S MADE ADDITION NOT ONLY ON THE BASIS OF THE PAPERS SEIZED FROM THE PRE MISES OF SHRI D.A. 32 BHAT, BUT ALSO ON THE BASIS OF STATEMENTS RECORDED FROM RESPONSIBLE PERSONS OF THE ASSESSEE COMPANY NAMELY MR. D.A. BHAT, TE CHNICAL DIRECTOR, SHRI R.D. SHINDE, MANAGING DIRECTOR, MR. GURJAR, PROJECT MANAGER AND MR. B.T. PATIL, THE ACCOUNTANT OF THE COMPANY. THEREFORE, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE NOTINGS INDICATE PROJECTED EXPENSES IS NOT CORRECT. HOWEVER, WE ALSO F IND THAT THE NOTINGS EQUALLY DID NOT CLEARLY INDICATE THE NATURE OF THE EXPENSES NOTED. NOWHERE ON THE SEIZED PAPERS THERE IS ANY EVIDENCE THA T THE EXPENDITURE NOTED ON SAID PAPERS INDICATE PAYMENT OF SPEED MONEY/B RIBE. NO CORROBORATIVE EVIDENCE IS BROUGHT ON RECORD BY THE L OWER AUTHORITIES TO SUPPORT THE CASE THAT THE PAYMENTS INDICATE SPEED MON EY. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS NOT CARRIED OUT ANY VERIFICATION IN SUPPORT HIS CONTENTION THAT NOTINGS CO NCLUSIVELY PROVE THAT THE ENTRIES IN THE LOOSE PAPERS ARE INFACT SPEED MON EY/BRIBE PAID TO VARIOUS PERSONS WHOSE NAMES ARE MENTIONED AGAINST EACH FI GURE. ON A POINTED QUERY RAISED BY THE BENCH DURING THE COURSE O F HEARING THE LD. DEPARTMENTAL REPRESENTATIVE ALSO CANDIDLY ADMITTED TH AT NO SUCH EXERCISE HAS BEEN DONE EITHER BY THE INVESTIGATION WIN G AFTER THE SEARCH OR BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, IT IS NOT CORRECT TO HOLD THAT THE PAYMENTS NOTED ON THE SEIZED PAPERS INDICATE SPEED MONEY/BRIBE PAID BY THE ASSESSEE COMPANY TO VARIOUS PERSONS. HOWEVER, CONSIDERING THE PRESUMPTION LAID DOW N IN SECTION 132(4A) OF THE I.T. ACT, SINCE THESE PAPERS ARE FOUND WITH THE ASSESSEE COMPANY, THEREFORE, THE AO IS JUSTIFIED IN HOLDING TH AT THE ASSESSEE COMPANY HAS PAID THE AMOUNT NOTED ON THE SEIZED PAPER S AND THE CIT(A) IS JUSTIFIED IN UPHOLDING THE ADDITION. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) W E UPHOLD THE ORDER OF LD.CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE ASSE SSEE ARE DISMISSED. 45. SINCE A VIEW HAS ALREADY BEEN TAKEN IN THE CASE OF ONE OF THE JOINT VENTURE PARTNER, THEREFORE, THE SAME VIEW HAS TO BE FOLLOWED IN THE CASE OF THE OTHER JOINT VENTURE PARTNER. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (TO WHICH BOTH OF US ARE PARTIES) WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. GROUNDS RAIS ED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 46. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GRO UND OF APPEAL NO.2 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 47. GROUND OF APPEAL NO.3 BY THE ASSESSEE READS AS UNDER : 3.0 HAVING ALLOWED THE DEDUCTION U/S 80IA(4)(I) IN RESPECT OF PROFIT EARNED BY THE ASSESSEE FROM DEVELOPMENT OF INFRASTRUCTUR E FACILITIES, LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING SUCH DEDUCTION I N RESPECT OF INTEREST INCOME OF RS. 25,90,058 RECEIVED FROM BANK GUARANTEE DEPOSITS PROVIDED TO THE PROJECT AUTHORITIES, IN RESPECT OF SUCH PROJECT S. 33 48. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE D URING THE COURSE OF APPEAL PROCEEDINGS RAISED A FRESH CLAIM OF DEDUCT ION U/S.80IA(4) IN RESPECT OF INTEREST ON BANK GUARANTEE DEPO SITS HELD IN RESPECT OF DEVELOPMENT OF INFRASTRUCTURE PROJECTS. IT WA S CONTENDED THAT WHILE AVAILING BANK GUARANTEE, WHICH WAS TO BE GIVEN T O THE CONCERNED AGENCIES AS EARNEST MONEY DEPOSIT AND SECUR ITY DEPOSIT, THE ASSESSEE HAD TO KEEP 10% OF BANK GUARANTEE AMOUN T AS FIXED DEPOSIT. INTEREST EARNED ON SUCH DEPOSIT, ACCORDING TO THE ASSES SEE, IS ELIGIBLE FOR DEDUCTION U/S.80IA(4) BEING INCIDENTAL TO ITS MAIN BUSINESS. A STATEMENT SHOWING WORKING OF INTEREST INCOME RECEIVED FROM THE BANKS FOR SUCH DEPOSITS WAS FILED. IT WAS ACCO RDINGLY ARGUED THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80 IA(4) ON SUCH INTEREST INCOME. 49. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE ARGUMEN TS ADVANCED BY THE ASSESSEE. HE NOTED THAT SUCH CLAIM CAN NOT BE ALLOWED FOR THE REASON THAT SECTION 80IA ALLOWS THE BENEFIT OF DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM INFRASTRUCTUR AL DEVELOPMENT WITH THE SOURCE OF THE PROFITS ELIGIBLE FOR DEDUC TION SHOULD BE THE BUSINESS ITSELF AND NOT ANY ACTIVITY WHICH CO NSTITUTES SECONDARY SOURCE OF INCOME. RELYING ON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF CANBAY ELECTRIC SUPPLY IND USTRIAL COMPANY LTD. VS. CIT REPORTED IN 113 ITR 84, CIT VS. ST ERLING FOODS REPORTED IN 237 ITR 579 AND LIBERTY INDIA VS. CIT REPOR TED IN 317 ITR 218 AND VARIOUS OTHER DECISIONS HE DECIDED THE ISSUE AGA INST THE ASSESSEE. 50. AGGRIEVED WITH SUCH ORDER OF THE CIT THE ASSESSEE IS IN APPEAL BEFORE US. 34 51. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAP ITALS PVT. LTD. VS. CIT AND CIT VS. BHARAT RASAYAN LTD. REPORTED IN 343 ITR 89 SUBMITTED THAT NETTING OF INTEREST IS PERMITTED FOR DEDUC TION U/S.80HHC. REFERRING TO THE DECISION OF HONBLE GUJARAT HIG H COURT IN THE CASE OF CIT VS. RAMCHANDRA S. PATEL REPORTED IN 41 TAXMANN.COM 446 HE SUBMITTED THAT THE HONBLE HIGH COUR T HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL FILED BY THE REVENUE BY HOLDING THAT INTEREST EARNED ON D EPOSIT IS TO BE INCLUDED FOR THE PURPOSE OF WORKING OF DEDUCTION U/S.80IA. HE ACCORDINGLY SUBMITTED THAT NETTING SHOULD BE ALLOWED FOR D EDUCTION U/S.80IA. 52. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 53. AFTER HEARING BOTH THE SIDES, WE FIND MERIT IN THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NETTING OF INTEREST SHOULD BE ALLOWED FOR COMPUTATION OF DEDUCTION U/S.80IA IN THE LIGHT OF THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AC G ASSOCIATED CAPITALS VS. CIT. WE ACCORDINGLY SET ASIDE TH E ORDER OF THE CIT(A) AND DIRECT THE AO TO RECOMPUTE THE DEDUCTION U/S .80IA BY NETTING THE INTEREST. GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 54. GROUND OF APPEAL NO.4 BY THE ASSESSEE BEING GENERAL IN NATURE IS DISMISSED. 35 ITA NO.452/PN/2013 (A.Y. 2007-08 (BY REVENUE) : 55. GROUND OF APPEAL NO.1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.69 B ON ACCOUNT OF DIFFERENCE IN VALUATION TO THE TUNE OF RS.56,676/-. 56. AFTER HEARING BOTH THE SIDES WE FIND THE AO MADE ADDIT ION OF RS.56,676/- BEING THE DIFFERENCE BETWEEN THE VALUE DECLARED BY THE ASSESSEE AND THE VALUE DETERMINED BY THE DVO IN RESP ECT OF PURCHASE OF FLAT NO.8 AT STAR TOWER, KHANAPUR ROAD, BELGAUM. IN AP PEAL THE LD.CIT(A) DELETED THE ADDITION FOR WHICH THE REVENUE IS IN A PPEAL BEFORE US. 57. WE FIND THE ABOVE GROUND IS IDENTICAL TO THE GROUND RA ISED BY THE REVENUE IN ITA NO.451/PN/2013 FOR A.Y. 2005-06. WE HA VE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. FOLLOWING THE SAME REASONING THIS GROUND B Y THE REVENUE IS DISMISSED. 58. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSES OF RS.10,33,466/. 59. FACTS OF THE CASE, IN BRIEF ARE THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAD SHOWN HUGE AMOUNTS IN THE NATURE OF ADVA NCES TO PIECE WORKERS UNDER THE HEAD 'ADVANCES RECOVERABLE IN CASH OR KIND' IN THE BALANCE SHEET. HE FURTHER NOTICED THAT THE BALANCES AS SHOWN IN THE LEDGER ACCOUNTS OF THE PIECE WORKERS REMAINED UNCHANGED THROUGHOUT THE YEAR. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT SINC E NO WORK WAS CARRIED OUT BY THESE PARTIES, THE BUSINESS RE QUIREMENT OF THESE ADVANCES COULD NOT BE ESTABLISHED. HE HELD THE AM OUNT SHOWN 36 AS ADVANCES TO BE DIVERSION OF FUNDS FOR NON-BUSINESS PUR POSES AND ACCORDINGLY DISALLOWED INTEREST @ 12.5% ON THESE ADVANCES , I.E. RS.10,33,466/- IN EACH OF THE ASSESSMENT YEARS, I.E. A.Y. 2007 -08 TO 2010-11 U/S.36(1)(III). WHILE DOING SO, THE AO RELIED ON THE DECIS ION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. V.I. BA BY AND CO. REPORTED IN 254 ITR 248. 60. BEFORE CIT(A) IT WAS SUBMITTED THAT THE AO HAD DISALLOWE D THE INTEREST U/S.36(1)(III) IN AN ADHOC MANNER WITHOUT SEEKING THE FACTUAL INFORMATION. IT WAS EXPLAINED THAT AFTER ADJUSTMENT OF BILLS RECEIVED FROM THE SUB CONTRACTORS, I.E., SUNIL CONSTRUCTION AND ASHO K CHIPRE BALANCE AMOUNTS CONTINUED TO REMAIN AS ADVANCE SINCE 20 01-02 AND 2002-03. IT WAS ARGUED THAT THE ASSESSEE HAD SUBSTAN TIAL OWN FUNDS IN THE FORM OF RESERVES AND SURPLUS AND THE PAYMENTS MA DE BY IT FORMED PART OF SUCH FUNDS. THE ASSESSEE FILED A STATEMENT SHOWING AMOUNTS PAID, BILLS ADJUSTED AND THE BALANCE AMOUNTS IN RE SPECT OF THE SUB CONTRACTORS. THE STATEMENT OF NET WORTH FROM 1999-2000 TO 2000-01 WAS ALSO FILED BEFORE CIT(A) WHICH IS AS UNDER : ASSTT. YEAR SHARE CAPITAL RESERVE & SURPLUS TOTAL NET WORTH 99 - 2000 500.00 983.05 1483.05 2000 - 01 500.00 1255.43 1755.43 2001 - 02 500.00 1874.87 2374.87 2002 - 03 500.00 2242.53 2742.53 2003 - 04 500.00 1683.36 2183.36 2004 - 05 500.00 1041.37 1541.37 2005 - 06 500.00 1572.03 2072.03 2006 - 07 500.00 1889.88 2389.88 2007 - 08 500.00 2348.49 2818.49 2008 - 09 500.00 2578.11 3078.11 2009 - 10 500.00 2999.86 3499.86 2010 - 11 500.00 5265.83 5765.83 IT WAS ACCORDINGLY ARGUED THAT NO DISALLOWANCE OF PROPOR TIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSE IS CALLED FOR. 37 61. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 44. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLAN T. IT IS APPARENT FROM THE ASSESSMENT ORDER THAT AN OPPORTUNITY OF BEING HEARD ON THIS DISALLOWANCE WAS NOT GIVEN TO THE APPELLANT. HENCE, T HE ADDITION APPEARS TO BE MADE ON AN ADHOC BASIS. THE APPELLANT HAS POINTED OUT THAT ADVANCES WERE MADE TO SUNIL CONSTRUCTION AND ASHOK CHI PRE AS FAR AS BACK AS 2001-02 AND 2002-03. HENCE, IF THERE WAS A DI VERSION OF FUNDS FOR NON-BUSINESS PURPOSES, THE SAME WOULD HAVE BEEN INCURRED IN THE RELEVANT PREVIOUS YEARS. IT WOULD BE PRUDENT TO DISALL OW INTEREST IF THE NEXUS IS OF ADVANCES WITH INTEREST BEARING FUNDS WAS ESTA BLISHED IN THE RESPECTIVE YEARS. HAVING SAID THAT, IT WOULD BE PERTIN ENT IN THE SUCCEEDING YEARS TO FIND OUT IF THE ASSESSEE HAD THE NECESSARY FUNDS I N THE FORM OF RESERVES AND SURPLUSES IN THE BOOKS OF ACCOUNT WHICH WOUL D BE SUFFICIENT TO TAKE CARE OF SUCH ADVANCES. THE STATEMENT SHOWING T HE NET WORTH FROM ASSESSMENT YEAR 1999-2000 TO 2000-01 CLEARLY INDICATES T HAT THE APPELLANT WAS IN POSSESSION OF OWN FUNDS WHICH WOULD BE SUFFICIENT TO TAKE CARE OF THESE ADVANCES AND THAT NO INTEREST BEARI NG FUNDS WERE UTILIZED TO CARRY THE LOAD OF THESE ADVANCES IN THE F UTURE YEARS. IF THE ASSESSING OFFICER WOULD HAVE CONFRONTED THE APPELLANT W ITH HIS INTENTION TO MAKE THE DISALLOWANCE THEN, THESE FACTS WOULD HAVE BEEN MADE AVAILABLE TO THE ASSESSING OFFICER. UNDER THESE CIRCUMST ANCES, WHERE THE ADDITION HAS BEEN MADE ON AD HOC BASIS WITHOUT CONSIDERING THE FINANCIAL STRENGTH OF THE APPELLANT WHICH WOULD BE AVAILABLE E VEN FROM THE BALANCE SHEET OF ALL THE YEARS ON RECORD, I HOLD THAT THE ADD ITIONS ARE MADE ON CONJECTURES AND SURMISES AND DESERVE TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 62. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 63. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE THAT NO OPPORTUNITY OF BEING HEARD ON THIS DISALLOWANCE WAS GIVEN BY THE AO AND THE DISALLOWANCE WAS MADE IN AN ADHOC MANNER COULD NOT BE CONTROVERTED BY THE LD. DEPARTMEN TAL REPRESENTATIVE. FURTHER, THE FACTUAL FINDING GIVEN BY THE C IT(A) THAT THE ADVANCES WERE MADE TO THE SUB CONTRACTORS NAMEL Y SUNIL CONSTRUCTION AND ASHOK CHIPRE SINCE 2001-02 AND 2002-0 3 AND THEREFORE DISALLOWANCE, IF ANY, COULD HAVE BEEN MADE IN THOSE YEARS AND NOT IN THIS YEAR ALSO COULD NOT BE CONTROVERTED BY THE LD. DR. 38 FURTHER THE FINDING GIVEN BY THE LD.CIT(A) THAT THE OWN CAP ITAL AND FREE RESERVES OF THE ASSESSEE COMPANY IS MUCH HIGHER TH AN THE AMOUNT OF ADVANCES GIVEN AND NO INTEREST BEARING FUNDS W ERE UTILIZED TO CARRY THE LOAD OF THESE ADVANCES IN THE FUTURE YEARS ALSO COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASONING GIVEN BY LD.CIT(A) WHILE DELETING THE ADDITION AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD. DEPARTMENTAL REPRESEN TATIVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A). ACCORDINGLY, W E UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 64. GROUND OF APPEAL NO.3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON INVESTMENT IN NON BUSINESS ACTIVITIES OF RS.11 ,20,935/-. 65. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD INVESTED BORROWED FUNDS FOR ACQUIRING EQUITY SHARES OF GROUP COMPA NIES AND HAD ALSO INTRODUCED CAPITAL IN A FIRM WHEREIN IT WAS A PARTN ER. THE ASSESSING OFFICER TAKING RECOURSE TO THE PROVISIONS OF SECT ION 14A OF THE ACT INSERTED BY FINANCE ACT 2002 W.E.F. 11-05-2010 AN D NOTICING THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 36(1)(III) IN RESPECT OF INTEREST PAID ON THESE BORROWED FUNDS HELD TH AT THE ASSESSEE HAD DIVERTED INTEREST BEARING FUNDS FOR NON-BUS INESS ACTIVITIES OR TO EARN INCOME WHICH IS EXEMPT FROM INCOME-TA X. IN VIEW OF THE ABOVE, HE DISALLOWED PROPORTIONATE INTEREST @ 12.5% ON THE AVERAGE BORROWINGS AND ADDED THE SAME TO TOTAL INCOME. SIMILAR ADDITIONS WERE ALSO MADE IN SUBSEQUENT YEARS. THE DETAILS AS APPEARING IN THE ASSESSMENT ORDERS FOR DIFFERENT YEARS IN THIS REGARD ARE AS UNDER: 39 ASSESSMENT YEARS 2007 - 08 2008 - 09 2009 - 10 2010 - 11 BTP INFOSERVER 3000000 3000000 3000000 3000000 BATPASCO PATSON JV 5967481 4290788 3267697 1968504 ARA DEVELOPERS, PUNE -- 1252041 -- -- TOTAL 8967481 8542829 6267697 4968504 PROPORTIONATE INTEREST @12% ADDED 1120935 1067853 783462 621063 66. BEFORE CIT(A) IT WAS SUBMITTED THAT IDENTICAL ISSUE WAS D ECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A) IN PRECEDING YEAR AS WELL AS THE TRIBUNAL AND THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE TRIBUNAL DISMISSING THE APPEAL FILED BY THE REVENUE. ACCORDINGLY, IT WAS ARGUED THAT THE ADDITION MADE SHOULD BE DELETED . 67. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 48. I CONCUR WITH THE CONTENTIONS RAISED BY THE APP ELLANT. I FIND THAT HONOURABLE ITAT HAD VIDE THEIR APPELLATE ORDERS IN I TA NO. 1139/PN/2009, 1140/PN/09, 1141/PN/09 AND 1142/PN/09 DATED 07/04/2010 FOR ASSESSMENT YEARS 2003-04 TO 2006-07 HAD D ECIDED IN FAVOUR OF THE APPELLANT. THE RELEVANT PORTION OF TH IS ORDER IS REPRODUCED BELOW : ............. ONCE THE ADMITTED FACTUAL POSITION IS T HAT THE ASSESSEE HAD SUFFICIENT OWN CAPITAL AS ALSO RESERVES AND THOSE WERE AVAILABLE FOR ADVANCING TO SISTER CONCERN, THEN THE PRESUMPTION CAN BE MADE THAT ASSESSEE'S OWN FUNDS WOULD HAVE BEEN ADVANCED. THIS VIEW WAS EXPRESSED BY THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. 221 CTR 435 (BO RN). FOLLOWING THIS VERDICT OF THE HON 'BLE JURISDICTIONAL HIGH COUR T, WE HEREBY AFFIRM THE VIEW OF THE LEARNED CIT(A), THIS PART OF THE GROUND OF THE REVENUE IS THEREFORE, DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONO URABLE ITAT, PUNE, THE ADDITION MADE FOR THE YEARS UNDER CONSIDERA TION ALSO IS DELETED. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED . 68. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 69. AFTER HEARING BOTH THE SIDES WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE CIT(A) WHO HAS DELETED THE ADDITION BASED ON THE ORDER OF 40 THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2003-04 T O 2006-07. SINCE ADMITTEDLY THE OWN CAPITAL AND FREE RESERVES OF THE ASSESSEE COMPANY ARE FAR MORE THAN THE INVESTMENT IN GROUP COMP ANIES, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2003-04 TO 2006-07 AND IN ABSENCE O F ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORD ER OF CIT(A) WE FIND NO INFIRMITY IN THE ORDER OF THE CITA) DELETING THE DISALLO WANCE MADE BY THE AO. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 70. GROUND OF APPEAL NO.4 BY THE REVENUE READS AS UNDER : 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON ADVANCES FOR NON BUSINESS PURPOSES OF RS.18,83, 125/-. 71. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD, O N THE ONE HAND, ADVANCED CERTAIN SUMS ADMITTEDLY FOR NON-BUSINESS PURPOSES AND ON THE OTHER HAND, IT HAD CLAIMED EXPENDITURE UNDER SECTION 36(1)(III) ON ACCOUNT OF INTEREST PAID FOR LOANS BORROWED FOR BU SINESS PURPOSES. UNDER THESE CIRCUMSTANCES, THE AO HELD THE AD VANCES MADE TO VARIOUS PARTIES FOR NON-BUSINESS PURPOSES TO BE DIVERSION OF INTEREST BEARING FUNDS AND ACCORDINGLY BROUGHT TO TAX P ROPORTIONATE INTEREST @ 12.5%. THE DETAILS IN THIS REGARD ARE AS UNDER: ASSESSMENT YEARS 2007 - 08 2008 - 09 M.D. LENGADE 65,000 65,000 M/S. GOOFY GRAPHICS PVT. LTD., 1,50,00,000/ - -- TOTAL 1,50,65,000/ - 65,000/ - PROPORTIONATE INTEREST @ 12% ADDED 18,83,125/ - 8,125/ - 72. BEFORE CIT(A) IT WAS SUBMITTED THAT IDENTICAL ISSUE WAS D ECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES O WN CASE 41 DURING A.Y. 2003-04 TO 2006-07 AND THE DEPARTMENT HAS NOT CHALLENGED THE ORDER OF THE TRIBUNAL. IT WAS FURTHER SUBM ITTED THAT SINCE THE ASSESSEE HAD SUFFICIENT OWN FUNDS IN THE FORM OF RESERVES AND SURPLUS AND NET PROFIT OF RS.6.03 CORES WERE EARNED D URING THE YEAR TO ABSORB THE PAYMENT MADE TO THE ABOVE PARTIES , THEREFORE, NO DISALLOWANCE IS CALLED FOR 73. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 52. I AGREE WITH THE CONTENTIONS OF THE APPELLANT. THE APPELLANT HAS GIVEN THE FOLLOWING DETAILS SHOWING THE POSITION OF RE SERVES AND SURPLUS FUNDS AVAILABLE FOR THE FOUR ASSESSMENT YEARS: FIGURES IN LAKHS ASSESSMENT YEARS PARTICULARS 2007 - 08 2008 - 09 2009 - 10 2010 - 11 SHARE CAPITAL 500.00 500.00 500.00 500.00 RESERVE & SURPLUS 2348.48 2578.10 2999.86 5265.83 TOTAL 2348.48 3078.10 3499.86 5765.83 IN VIEW OF THE ABOVE IT IS AMPLY CLEAR THAT THE APPE LLANT HAD SUFFICIENT FUNDS TO ABSORB THE PAYMENTS MADE TO THE ABOVE PARTIES. FURTHER, I FIND THAT THE THIS ISSUE WAS ALREADY COVERED BY THE HONOURAB LE ITAT HAD VIDE THEIR APPELLATE ORDERS IN ITA NO. 1139/PN/2009, 1140 /PN/09, 1141/PN/09 AND 1142/PN/09 DATED 07/04/2010 FOR ASSESSME NT YEARS 2003-04 TO 2006-07 AND HAD DECIDED IN FAVOUR OF THE APPELLANT. THE RELEVANT PORTION OF THIS ORDER IS REPRODUCED BELOW: ............ CONSIDERING THE FACTS AND FIGURES AND THE AVAILABILITY OF OWN FUNDS, THE IMPUGNED AMOUNTS ADVANCED TO THE SAID THREE PARTIES CAN BE SAID TO BE OUT OF ASSESSEE'S OWN FUNDS, HENCE, THER E WAS NO NECESSITY FOR INVOKING THE PROVISIONS OF SECTION 36(1)(I II) FOR SUCH DISALLOWANCE. THE ACTION OF THE A.O WAS REVERSED AND T HE VIEW TAKEN BY THE LEARNED CIT(A) IS HEREBY AFFIRMED. THIS GROUND OF THE REVENUE IS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONO URABLE ITAT, PUNE, THE ADDITION MADE FOR THE YEARS UNDER CONSIDERATION A LSO IS DELETED. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED. 74. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 75. AFTER HEARING BOTH THE SIDES WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE CIT(A). ADMITTEDLY THE OWN CAPITAL AND FREE R ESERVES OF 42 THE ASSESSEE COMPANY ARE FAR MORE THAN THE ADVANCES GIVEN TO VAR IOUS PARTIES FOR NON BUSINESS PURPOSES. IDENTICAL ISSUE HAS A LREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2003-04 TO 2006-07 WHICH HAS BEEN FOLLOWED BY THE CIT(A) WHILE DELETING THE ADDITION. THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BR OUGHT TO OUR NOTICE BY THE LD. DEPARTMENTAL REPRESENTATIVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE UPHOLD T HE SAME AND THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 76. GROUND OF APPEAL NO.5 BY THE REVENUE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF POOJA EXPENSES OF RS.74,836/-. 77. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DISALLOWED AN AMOUNT OF RS.74,836/- DEBITED BY THE ASSESSEE UNDER THE HEAD POOJA EXPENSES ON THE GROUND THAT EXPENSES ON ACCOUNT OF POOJA IS NOT IN NATURE OF BUSINESS EXPENSES. IN APPEAL THE LD.CIT(A) DELET ED THE SAME ON THE GROUND THAT SAME CAN BE TREATED AS BUSIN ESS EXPENDITURE OF THE ASSESSEE. IT CREATES HARMONY AND HAS POSITIVE E FFECT ON THE MORALE OF THE WORKERS. ACCORDING TO HIM IT IS CUS TOMARY AND ESTABLISHED PRACTICE IN ALMOST EVERY OFFICE AND FACTORY. HE ACCORDINGLY DELETED THE DISALLOWANCE MADE BY THE AO. 78. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 79. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. IN OUR OPINION THE EXPENDIT URE INCURRED IN POOJA COULD NOT BE TREATED AS EXPENDITURE W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION OF A COMPANY AND THE ASSESSEE COULD NOT BE ALLOWED ANY DEDUCTION U/S .37(1) OF THE 43 ACT TOWARDS SUCH EXPENDITURE. FOR THE ABOVE PROPOSITION , WE FIND SUPPORT FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KOLHAPUR SUGAR MILLS VS. CIT REPORTED IN 119 ITR 387 WH EREIN IT HAS BEEN HELD THAT EXPENSES INCURRED FOR POOJA IS NOT AN ALLOWABLE DEDUCTION. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE CHA TTISGARH HIGH COURT IN THE CASE OF HIRA FERRO ALLOYS LTD. VS. DCIT REPORTED IN 326 ITR 261 ACCORDING TO WHICH THE EXPENDITURE INCURRED IN POOJA COULD NOT BE TREATED AS EXPENDITURE U/S.37(1) OF THE ACT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSU E AND THE GROUND RAISED BY THE REVENUE IS ALLOWED. 80. GROUND OF APPEAL NO.6(A) AND 6(B) BY THE REVENUE READ AS UNDER : 6(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF U/S.80IA(4) OF RS.2,38,71,620/- WHICH WAS EARLIER CONFIRMED BY THE L D.CIT(A) FOR A.Y. 2000-01 & 2001-02 AS THE ASSESSEE IS ONLY WORK CONTRACTO R AND NOT A DEVELOPER AS PER THE EXPLANATION BELOW 80IA(13). 6(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL DEDUCTION U/ S.80IA(4) OF THE ADDITIONAL DEDUCTION 80IA(4) OF RS.2,80,04,066/-, WH ICH IS THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARCH PROCEEDIN GS, ON ACCOUNT OF EXPENSES FROM UNEXPLAINED SOURCES WHICH ATTRACT PROVISIO NS OF S.69C OF THE I.T. ACT WHICH IS NOT AN INCOME FROM THE BUSINESS U NDERTAKING REFERRED IN SECTION 80IA(4). 81. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE IN THE RETURN OF INCOME HAS CLAIMED DEDUCTION U/S.80IA OF THE ACT AMOUNTIN G TO RS.2,38,71,620/-. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DEDUCTION U/S.80IA(4) SHOULD NOT BE DISALLOWED. IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS DEVELOPED DIFFERENT INFRASTRU CTURAL FACILITIES IN IRRIGATION/WATER SUPPLY/HYDRO ELECTRIC POWER GENERATION PROJECTS DURING THE IMPUGNED ASSESSMENT YEAR AND THE PROFIT EARN ED BY IT IS ELIGIBLE FOR DEDUCTION U/S.80IA(4). RELYING ON VARIOUS DECISIONS 44 INCLUDING THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF PATEL ENGINEERING LTD. VS. DCIT REPORTED IN 84 TTJ 646 IT W AS SUBMITTED THAT THOUGH THE ASSESSEE IS ENGAGED IN CONS TRUCTION OF INFRASTRUCTURAL FACILITIES IT IS ENTITLED TO DEDUCTION U/S.80IA(4 ) OF THE ACT AS THE TERM CONTRACTOR IS NOT ESSENTIALLY CONTR ADICTORY TO THE TERM DEVELOPER. IT WAS ARGUED THAT ENTERING INTO AGREEMEN T FOR CONSTRUCTION AND THEREBY BECOMING CONTRACTOR SHOULD IN NO WAY BE A BAR TO THE ONE BEING DEVELOPER. THE DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF M/S. ABG HEAVY INDUSTRIES LTD. WA S ALSO RELIED UPON. 82. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE FOLLOWING REASONS : (I) ONLY A PART OF THE TOTAL INFRASTRUCTURE PROJECT WORK WAS CARRIED OUT BY THE APPELLANT. (II) THE INTENT OF INTRODUCTION OF SUB-SECTION (4A) O F SECTION 80IA WAS FOR INVESTMENT OF FUNDS BY PRIVATE ENTERPRISES AND TO COLLECT INCOME FROM OPERATING THE FACILITY. (III) ALL THREE FUNCTIONS, I.E. DEVELOPING, OPERATIN G AND MAINTAINING WERE TO BE DONE CUMULATIVE BY THE ASSESSEE TO AVAIL BEN EFITS OF SECTION 80IA(4). BUT THE APPELLANT HAD FAILED TO CARRY OUT FUNCTIONS RELATING TO OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE PROJ ECT. (IV) EXPLANATION BELOW SECTION 80IA(3) INTRODUCED BY FINANCE ACT, 2007 WHICH WAS FURTHER AMENDED BY FINANCE ACT, 2009 SPECIFICALLY DEBARS A WORK CONTRACTOR FROM THE BENEFIT OF DEDUCTI ON. 82.1 REJECTING THE ARGUMENTS ADVANCED BY THE ASSESSEE AND DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IA(4) OF THE I.T. ACT. 83. BEFORE CIT(A) THE ASSESSEE GAVE THE DETAILS OF THE WOR K UNDERTAKEN FOR CONSTRUCTION OF TUNNEL/CANAL, MANUFACTURE OF CREST GATES, CRANES AND HOIST ETC. IN VARIOUS INFRASTRUCTURE PR OJECT IN PURSUANCE TO AGREEMENT ENTERED INTO WITH THE GOVERNME NT OF MAHARASHTRA THE DETAILS OF WHICH ARE AS UNDER : 45 SR.NO. INFRASTRUCTURE PROJECT PURPOSE OF THE PROJECT 1 MHAISAL LIFT IRRIGATION PROJECT, JATH, SANGLI IRRIGATION & MULTIPURPOSE 2 JIHE KHATAPUR LIFT IRRIGATION PROJECT IRRIGATION & MULTIPURPOSE 3 BHIMA SINA LINK CANAL TUNNEL IRRIGATION PROJECT IRRIGATION & WATER SUPPLY 4 GODZARI IRRIGATION PROJECT IRRIGATION & WATER SUPPLY 5 KOYNA HYDRO POWER PROJECT POWER GENERATION & IRRIGATION 6 KOYNA HYDRO POWER PROJECT (FOR SUPPLY, ERECTION & MAINTENANCE OF CREST GATES & OTHER EMBEDDED PARTS) POWER GENERATION & IRRIGATION 7 KOYNA HYDRO POWER PROJECT (FOR SUPPLY & ERECTION OF EOT CRANES & ELECTRICALLY OPERATED HYDRAULIC HOISTS ETC.) POWER GENERATION & IRRIGATION 84. IT WAS EXPLAINED THAT FOR DEVELOPING THE ABOVE INFRASTR UCTURE PROJECTS THE ASSESSEE HAD INVESTED IN TECHNICAL EXPERTIS E, MANPOWER, MATERIAL AND MACHINERY. THE ASSESSEE WAS RESPONSIBLE FOR R ISKS INVOLVED IN THE PROCESS OF DEVELOPMENT OF INFRASTRUCTURE PR OJECTS. BANK GUARANTEES WERE PROVIDED BY THE ASSESSEE AS SEC URITY. OWN FUNDS AND BORROWED FUNDS WERE UTILIZED IN DEVELOPMENT OF TH ESE PROJECTS. RELYING ON THE DECISION OF THE JAIPUR BENCH OF TH E TRIBUNAL IN THE CASE OF OM METALS INFRA PROJECTS LTD. REPORTED IN (2009) 26 DTR (JP)(TRIB) 359 AND THE DECISION IN THE CASE OF ABG HEAVY IN DUSTRIES LTD. REPORTED IN 322 ITR 323 IT WAS ARGUED THAT THE AS SESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80IA(4). 85. FURTHER, THE ASSESSEE DURING THE COURSE OF APPEAL PR OCEEDINGS RAISED CERTAIN CLAIM OF DEDUCTION U/S.80IA(4) IN RESPECT OF TH E ADDITIONAL INCOME OFFERED IN RETURN OF INCOME FOR A.YRS. 2009-1 0 AND 2010-11. IT WAS CONTENDED THAT ON THE BASIS OF THE LOO SE PAPERS SEIZED FROM ITS PREMISES, IT HAD DECLARED ADDITIONAL BUSINESS INCOME AND ACCORDINGLY OFFERED THE SAME IN THE RETURN OF INCOME. THEREFORE, SINCE THE ADDITIONAL INCOME DECLARED AS ASSESSEES BUSINES S INCOME, THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S.80IA(4)(I) ON SUC H INCOME 46 IN PROPORTION TO THE TOTAL BUSINESS TURNOVER TO ELIGIBLE TU RNOVER. IT WAS SUBMITTED THAT THE ASSESSEE HAD RAISED THE ABOVE ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WAS NOT CON SIDERED BY THE AO. RELYING ON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF GOETZ INDIA LTD. VS. CIT REPORTED IN 284 ITR 323 AND VARIOUS OTHER DECISIONS THE ASSESSEE REQUESTED THE CIT(A) TO CONSIDER AND ALLOW THE CLAIM OF THE ASSESSEE. 85.1 THE ASSESSEE SIMILARLY SUBMITTED THAT IF SHIFTING OF BOT H UNDISCLOSED INCOME AND UNDISCLOSED EXPENDITURE ON GODZARI PROJECT TO EARLIER YEARS IS CONFIRMED THE ADDITIONAL DEDUCTION U/S.80 IA(4)I) IN RESPECT OF ADDITIONAL INCOME SHOULD BE GIVEN FOR EARLIER YEARS. 86. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. VS. CIT REPORTED IN 187 ITR 688 AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREH OLDERS PVT. LTD. REPORTED IN 23 TAXMANN.COM 23 ALLOWED THE ADDITIONAL G ROUND MADE DURING THE COURSE OF APPEAL PROCEEDINGS. 87. THE LD.CIT(A) FOLLOWING VARIOUS DECISIONS INCLUDING THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ABG HEAVY IN DUSTRIES LTD. (SUPRA) ALLOWED THE CLAIM OF DEDUCTION U/S.80IA(4) OF THE ACT. 88. SO FAR AS THE ADDITIONAL CLAIM MADE U/S.80IA DURING APPE AL PROCEEDINGS IS CONCERNED, HE ALLOWED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER : 83. THE APPELLANT CONTENDED THAT ON THE BASIS OF TH E LOOSE PAPERS SEIZED FROM ITS PREMISES, IT HAD DECLARED ADDITIONAL BU SINESS INCOME AND ACCORDINGLY OFFERED THE SAME IN THE RETURN OF INCOME . THEREFORE, SINCE THE ADDITIONAL INCOME WAS DECLARED AS APPELLANTS BUSIN ESS INCOME, THE APPELLANT WAS ENTITLED FOR DEDUCTION UNDER SECTION 8 0IA(4)(I) ON SUCH INCOME IN PROPORTION TO TOTAL BUSINESS TURNOVER TO ELI GIBLE PROJECT TURNOVER. 47 84. THE APPELLANT FURTHER CONTENDED THAT THE ABOVE ISSUES WERE ALSO RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT WER E NOT CONSIDERED. THE APPELLANT THEREFORE URGED THAT THESE FRESH CLAIMS BE CONSIDERED AND ALLOWED IN APPELLATE PROCEEDINGS IN VI EW OF THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. VIS CIT (2006) 284 ITR 323 (SC). I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLA NT. IN CONNECTION WITH THE ADMISSIBILITY OF THE ADDITIONAL G ROUND THE HON 'BLE BOMBAY HIGH COURT HAS EXPLAINED THE DECISION GIVEN I N THE CASE OF JUTE CORPORATION OF INDIA LIMITED V. CIT [1991] 187 ITR 688 (SC) IN CIT, CENTRAL-I V. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. [2012] 23 TAXMANN.COM 23 (BOMBAY) AND HELD- (B) IT IS CLEAR, THEREFORE, THAT AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTH ORITIES, BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH ADD ITIONAL CLAIMS TO BE RAISED. IT CANNOT, HOWEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THEY HAVE THE JURISDICTION TO ENTER TAIN THE NEW CLAIM. THAT THEY MAY CHOOSE NOT TO EXERCISE THEIR JURISDICTIO N IN A GIVEN CASE IS ANOTHER MATTER. THE EXERCISE OF DISCRETION IS ENTIRELY DIFFERENT FROM THE EXISTENCE OF JURISDICTION. 85. THEREAFTER, IT REFERRED TO THE OBSERVATIONS OF T HE HONBLE SUPREME COURT ON PAGE 694 IN THE DECISION GIVEN IN THE CASE O F ADDITIONAL COMMISSIONER OF INCOME-TAX V. GURJARGRAVURES P. LTD., [1978] 111 ITR 1 (SC), AND HELD AS UNDER- THE UNDERLINED OBSERVATIONS IN THE ABOVE PASSAGE DO NOT CURTAIL THE AMBIT OF THE JURISDICTION OF THE APPELLATE AUTHORITI ES STIPULATED EARLIER. THEY DO NOT RESTRICT THE NEW/ADDITIONAL GROUNDS THAT MAY BE TAKEN BY THE ASSESSEE BEFORE THE APPELLATE AUTHORITIES TO THOSE THAT W ERE NOT AVAILABLE WHEN THE RETURN WAS FILED OR EVEN WHEN THE ASSESSMENT O RDER WAS MADE. THE SENTENCE READ AS A WHOLE ENTITLES AN ASSESSEE TO RAISE NEW GROUNDS/MAKE ADDITIONAL CLAIMS:- 'IF THE GROUND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER W AS MADE .... ' 'OR' IF 'THE GROUND BECAME AVAILABLE ON ACCOUNT OF CHANG E OF CIRCUMSTANCES OR LAW' THE APPELLATE AUTHORITIES, THEREFORE, HAVE JURISDIC TION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILA BLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIO NAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE FIRST PART VIZ. 'IF THE GROUND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSM ENT ORDER WAS MADE ... ' CLEARLY RELATE TO CASES WHERE THE GROUND WAS AVAILABLE WHEN THE RETURN WAS FILED AND THE ASSESSMENT ORDER WAS MADE BUT 'COULD NOT HAVE BEEN RAISED' AT THAT STAGE. THE WOR DS ARE 'COULD NOT HAVE BEEN RAISED' AND NOT 'WERE NOT IN EXISTENCE'. GROUNDS WHICH WERE NOT IN EXISTENCE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE FALL WITHIN THE SECOND CA TEGORY VIZ. WHERE 'THE GROUND BECAME AVAILABLE ON ACCOUNT OF CH ANGE OF CIRCUMSTANCES OR LAW.'[EMPHASIS SUPPLIED BY ME] 48 THE HON'BLE BOMBAY HIGH COURT HAS LOOKED INTO THE JU DGMENT GIVEN IN THE CASE OF GOETZE (INDIA) LIMITED V. COMMISSIONER OF INCOME-TAX, [2006] 157 TAXMAN 1 (SC) IN CENTRAL-I V. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. (SUPRA) AND EXPLAINED THAT- IT IS CLEAR TO US THAT THE SUPREME COURT DID NOT HO LD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSI NG OFFICER, IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEG ATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER SECTION 254. [EMPHASIS SUPPLIED BY ME.] 86. THUS IT IS CLARIFIED THAT THE DECISION IN GOETZE I NDIA (SUPRA) WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY TO ENTE RTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN AND DID NOT IMPINGE ON THE POWERS OF THE APPELLATE AUTHORITIES. I HAVE ALREADY R EFERRED TO THE DECISIONS IN ADDITIONAL COMMISSIONER OF INCOME-TAX V. G URJARGRAVURES P. LTD., [1978] 111 ITR 1 (SC), JUTE CORPORATION OF IN DIA LIMITED V. CIT [1991] 187 ITR 688 (SC), AMALGAMATED ELECTRICITY CO MPANY LIMITED V. COMMISSIONER OF INCOME-TAX, [1974] 97 ITR 334 (BOM)(F B), AND NATIONAL THERMAL POWER COMPANY LIMITED V. CIT [1998] 229 ITR 383 (SC) WHICH CLEARLY UPHOLD THE PRINCIPAL ENUNCIATED IN THE CASE OF CIT V. KANPUR COAL SYNDICATE[1964] 53 ITR 225 (SC), IN WHICH THE HON'B LE SUPREME COURT HELD AS UNDER- 'IF AN APPEAL LIES, SECTION 31 OF THE ACT DESCRIBES TH E POWERS OF THE APPELLATE ASSISTANT COMMISSIONER IN SUCH AN APPEAL. UNDER SECTION 31(3)(A) IN DISPOSING OF SUCH AN APPEAL THE APPELLA TE ASSISTANT COMMISSIONER MAY, IN THE CASE OF AN ORDER OF ASSESS MENT, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; UNDER CLAU SE (B) THEREOF HE MAY SET ASIDE THE ASSESSMENT AND DIRECT THE INCO ME TAX OFFICER TO MAKE A FRESH ASSESSMENT. THE APPELLATE ASSISTANT COMMISSIONER HAS, THEREFORE, PLENARY POWERS IN DISPOSING OF AN A PPEAL. THE SCOPE OF HIS POWER IS CO-TERMINUS WITH THAT OF THE INCOME -TAX OFFICER. HE CAN DO WHAT THE INCOME-TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO.' [EMPHASIS SUPPLIED BY ME.] 87. IN VIEW OF THE ESTABLISHED POSITION IN LAW AS DISCUSSE D ABOVE, I ADMIT THE ADDITIONAL GROUND RAISED IN APPELLATE PROCEEDING S. THESE GROUNDS EMANATE FROM THE ASSESSMENT ORDER. I HAVE ALREADY HELD THAT DEDUCTION UNDER SECTION 80IA(4) SHALL BE APPLICABLE TO THE APPE LLANT. HOWEVER, IT WILL BE IN RESPECT OF ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 IN RESPECT OF BUSINESS INCOME DETERMINED IN ASSESSMENT ORDER. THE ADDITIONAL CLAIM UNDER SECTION 80IA(4) WAS MADE BY TH E APPELLANT FOR ASSESSMENT YEARS 2007-08 TO 2010-11 IN RESPECT OF THE ADD ITIONAL BUSINESS INCOME OFFERED FOR TAX AS A RESULT OF SEARCH AND SEIZURE. THE CLAIM WAS NOT MADE ALONG WITH THE RETURN FILED UNDER SECTION 153A. HOWEVER, THE SAME WAS MADE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. THERE IS NOTHING IN THE ASSESSMENT ORDER TO SHOW AS TO WHY THE CLAIM WAS REJECTED. IN ALL PROBABILITIES, THE CLA IM WAS REJECTED BECAUSE DEDUCTION WAS DISALLOWED TO THE APPELLANT IN RESPECT O F THE ORIGINAL CLAIM ITSELF. AS A MATTER OF PRINCIPLE, THE ADDITIONAL CLAI M IN RESPECT OF BUSINESS INCOME DECLARED DURING THE COURSE OF SEARCH AND SEIZUR E IS NOT INSULATED FROM THE PROVISIONS OF SECTION 80IA(4) AND AN ASSESSEE IS E NTITLED TO MAKE THE CLAIM AS LONG AS IT REMAINS THE BUSINESS INCOME OF AN ASSESSEE WHO IS 49 ENTITLED TO MAKE THE CLAIM UNDER THIS SECTION. RECEN TLY, THE HONOURABLE BOMBAY HIGH COURT IN THE CASE OF CIT(CENTRAL-II V/S S HETH DEVELOPERS PVT. LTD. IN ITA NO.3724 OF 2010 DATED 27/07/2012 HAVE H ELD IN THE CONTEXT OF ASSESSMENT OF UNDISCLOSED INCOME IN CHAPTER XIVB OF TH E INCOME-TAX ACT THAT WHERE THE TOTAL INCOME / LOSS FOR THE BLOCK PERIOD HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE SAID ACT AND THE SAME WOULD INCLUDE CHAPTER VIA OF THE SAID ACT WHILE COMP UTING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD THEN THE RESPO NDENT ASSESSEE IS ENTITLED TO CLAIM DEDUCTION FROM ITS INCOME UNDER SEC TION 80IB OF THE ACT. THE RATIO OF THIS DECISION APPLIES UNEQUIVOCALLY TO THE PROVISIONS OF SECTION 153A. SIMILARLY, THE HONOURABLE GUJARAT HIGH COURT IN THE CASE OF SUMAN PAPER AND BOARDS LTD. [2009] 314 ITR 119 HAS HE LD THAT DEDUCTION UNDER SECTION 80IA IS AVAILABLE IN RESPECT O F UNDISCLOSED INCOMES ALSO. SIMILARLY, IN THE CASE OF MEDICOR LABORA TORIES PUT. LTD. ITA NO. 402/ PN/ 2009, THE HONOURABLE PUNE TRIBUNAL HAS UPHELD THE ALLOWABILITY OF DEDUCTION UNDER CHAPTER VI A IN RESP ECT OF ALL ADDITIONS TO THE INCOME MADE IN ASSESSMENT WHEN THERE WAS NO SPECIFIC FINDING THAT INCOME WAS REQUIRED TO BE TAXED UNDER ANY HEAD OTHER THAN 'BUSINESS INCOME'. HENCE, THE ADDITIONAL CLAIM IS ALLOWED. HOW EVER, THE ASSESSING OFFICER IS DIRECTED TO CHECK THE COMPUTATION OF THE CLAIM AND THEN ALLOW THE SAME. 88. REGARDING THE CLAIM OF THE APPELLANT IN RESPECT OF ENTITLEMENT OF DEDUCTION UNDER SECTION 801A(4) IN RESPECT OF ADDITIO NAL INCOME OFFERED FOR ASSESSMENT YEARS 2009-10 AND 2010-11, I HOLD THAT TH E CLAIM IS UNTENABLE BECAUSE THERE IS NO ADDITIONAL INCOME OF TH E APPELLANT DERIVED FROM BUSINESS SOURCES EXCEPT TO THE EXTENT OF RS. 425.97 LAKHS IN THE ASSESSMENT YEAR 2009-10, WHICH WOULD BE ELIGIBLE FOR DE DUCTION UNDER SECTION 80IA(4). THE ISSUE OF DEDUCTION FOR THIS ASSESSMENT YEAR HAS ALREADY BEEN COVERED IN MY DECISION IN THE FOREGOING PARAGRAPHS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93. IN ADDITION TO THE ABOVE, THE APPELLANT HAS ALSO RAISED CERTAIN ALTERNATE CLAIMS FOR DEDUCTION U/S.80IA(4)(I) WHICH A RE DEALT WITH AS UNDER : (I) IF SHIFTING OF BOTH, UNDISCLOSED INCOME AND UNEXPLAINE D EXPENDITURE OF GHODZARI PROJECT TO EARLIER YEARS IS CONFIRMED, THE ADDITIONAL DEDUCTION U/S.80IA(4)(I) I N RESPECT OF ADDITIONAL INCOME SHOULD BE GIVEN FOR EARL IER YEARS. THIS CLAIM IS ALLOWED. (II) THERE WERE CERTAIN DISCREPANCIES IN THE FIGURES WORKE D OUT BY THE ASSESSING OFFICE IN RESPECT OF SHIFTING OF ADDITI ONAL INCOME FOR ASSESSMENT YEAR 2007-08. THE CHEQUE PAYMENT OF RS.1.5 CRORE AND 50% OF RS.2.00 CRORES WRITTEN BEFO RE THE ALPHABETS AB SHOULD BE DELETED FROM APPELLANTS ADDITIONAL INCOME FOR ASSESSMENT YEAR 2007-08 AND THE ALTERNATE CLAIM U/S.80IA(1)(4) BE ALLOWED FOR THE RE VISED UNDISCLOSED BUSINESS INCOME. THIS CONTENTION CANNOT BE ACCEPTED BECAUSE BOTH THE CHEQUE PAYMENTS OF RS.1.5 CRORE MADE BY THE APPELLAN T AND 50% OF RS.2 CRORES WRITTEN AGAINST ALPHABETS AB ARE A PART OF THE DOCUMENTS SEIZED FROM SHRI BHATS RESIDENCE AND ARE 50 A PART OF THE PAYMENT OF SPEED MONEY TO VARIOUS PERSO NS. THE DOCUMENTS ALSO INDICATE THAT THESE ENTRIES ARE REVERSED ONLY WHEN CASH PAYMENTS ARE MADE. HENCE, TH ERE IS NO DISCREPANCY IN THE FIGURES ADOPTED BY THE ASSESSIN G OFFICER. (III) CLAIM OF DEDUCTION U/S.80IA(1)(4) BE ALLOWED IN CASE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE ARE CONFIRMED IN APPELLATE PROCEEDINGS. THIS CLAIM IS ALREADY ALLOWED. 89. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 90. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSE D THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IS O NLY A WORKS CONTRACTOR AND NOT A DEVELOPER AS PER EXPLANATION BELOW 80IA(13), THEREFORE, DEDUCTION U/S.80IA(4) SHOULD NOT HAVE BEEN GRAN TED BY THE CIT(A). 91. AS REGARDS THE ALLOWANCE OF DEDUCTION U/S.80IA(4) AMOUN TING TO RS.2,80,04,066/- OUT OF THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARCH PROCEEDINGS IS CONCERNED THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDITIONAL INCOME SO DE CLARED IS ON ACCOUNT OF EXPENSES FROM UNEXPLAINED SOURCES WHICH ATTRA CT PROVISIONS OF SECTION 69C. THEREFORE, THE CIT(A) WAS NOT JU STIFIED IN ALLOWING DEDUCTION U/S.80IA(4) ON SUCH ADDITIONAL INCOME. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE RE VERSED AND THAT OF THE ORDER OF THE AO BE RESTORED. 92. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF CITA) AND THE DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF ABG HEAVY INDUSTRIES (SUPRA) AND T HE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAHALAKSHMI INFRA PROJECTS LTD.(SUPRA). HE ALSO RELIED ON THE DECISION OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2001-02 VIDE ITA NOS. 1408/ PN/2003 51 AND 1409/PN/2003 ORDER DATED 28-02-2013 WHERE TRIBUN AL FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80IA(4). HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MATTER IN FAVOUR OF THE ASSESSEE, THE GROUNDS R AISED BY THE REVENUE SHOULD BE DISMISSED. 93. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. SO FAR AS GROUND OF APPEAL NO.6(A ) IS CONCERNED, WE FIND THE ISSUE STANDS DECIDED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS.2000- 02 AND 2001-02. WE FIND THE TRIBUNAL VIDE ITA NOS. 1408 AND 1409/PN/2003 ORDER DATED 28-02-2013 WHILE ALLOWING THE C LAIM OF DEDUCTION U/S.80IA(4) HAS OBSERVED AS UNDER : 11. THE ASSESSEE COMPANY HAS BEEN INCLUDED AS A SUB CONTR ACTOR FOR THE ALL THE OTHER PROJECTS EITHER THE CONTRACTS ARE DIREC TLY IN THE NAME OF ASSESSEE COMPANY OR IN THE NAME OF THE JOINT VENTURE EN TERPRISE. THE ASSESSEE HAS UNDERTAKEN THE WORK ON BACK TO BACK AGREEM ENT CONCEPT UNDER SUB CONTRACT FROM PATEL ENGINEERING COMPANY LI MITED (HEREINAFTER REFERRED TO AS PEC) VIDE SUB-CONTRACT A GREEMENT DATED 15.10.1992 FOR CONSTRUCTION OF TUNNEL WHICH SUPPLIES T HE WATER FORM RIVER KOYNA AND MAKES IT AVAILABLE TO POWER HOUSE. I N FACT THE ASSESSEE AND PEC HAD PROPOSED A JOINT VENTURE TO THE RELEVANT AUTHORITIES FOR THE EXECUTION OF THE SAID PROJECT. AS THE PROJECT WAS BEI NG FINANCED BY WORLD BANK THE RELEVANT AUTHORITIES FORWARDED THE PROPOSAL TO WORLD BANK. WORLD BANK HOWEVER DID NOT ACCEPT THE PROPOSAL BUT THEY SUGGESTED THAT M/S. PATEL ENGINEERING COMPANY LTD., MAY EMPLOY THE ASSESSEE COMPANY AS SUB CONTRACTOR. IT WAS AT THE SUGGESTION OF WORLD BAN K THAT THE ASSESSEE COMPANIES NAME WAS INCLUDED AS A SUB CONTRACTOR IN STEAD OF FORMING OF A JOINT VENTURE. THE PROJECT AUTHORITIES INCLUDING WORLD BANK HAVE APPROVED AND CERTIFIED THE ASSESSEE AS SUB-CONTRACTO R FOR THE ABOVE SAID WORK AFTER THOROUGH SCRUTINY AND DETAIL DESCRIPTI ON OF THE WORK TO BE UNDERTAKEN BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY NAME IS INCLUDED IN MAIN CONTRACT AGREEMENT ENTERED INTO BE TWEEN THE EMPLOYER AND PEC AS SUB CONTRACTOR FOR KOYNA PROJECT WORKS BY P ROJECT AUTHORITIES. IN FACT THE GOVERNMENT OF MAHARASHTRA HA S ENTERED IN TRIPARTITE AGREEMENT WITH THE ASSESSEE COMPANY AND PEC. WORKS COMPLETION CERTIFICATE HAS BEEN ISSUED IN FAVOUR OF TH E ASSESSEE COMPANY FOR THE EXECUTION OF THE WORK. POWER OF ATTORNEY IS GIVEN BY PRIME CONTRACTOR TO SUB CONTRACTOR AND ACCEPTED AND EXCEE DED BY PROJECT AUTHORITIES. 52 12. THE FACT THAT THE ASSESSEE HAS A TRIPARTITE AGREEMEN T WITH THE RELEVANT AUTHORITIES MAKES THE ASSESSEE A PARTY TO THE M AIN CONTRACT WORK ITSELF AND WHICH CLEARLY SHOWS THAT THE ASSESSEE ON THEIR OWN RIGHT ARE CONTRACTORS AND NOT JUST SUB CONTRACTORS AS NORMALLY UNDERSTOOD. THE ASSESSEE IS THE CONTRACTOR VIS-A-VIS THE PORTION ALLOTTE D TO THEM AND NOT ONLY SUBCONTRACTORS, I.E. A DIRECT PARTY TO THE MAIN AGREEMENT. THE ASSESSEE HAS ENTERED INTO A MAIN AGREEMENT, IN THEIR OWN RIGHT, CAN CLAIM THE BENEFIT OF SECTION 80IA. AS THE ASSESSEE BEING DIRECT LY UNDER CONTRACT TO THE CONCERN FOR THE WORK DONE AND ARE ALSO DIREC TLY DEALING WITH THE GOVERNMENT ON WHOSE BEHALF THE ASSESSEE ARE DOING THE W ORK, THEY CAN BE CONSIDERED AS MAIN CONTRACTORS ALONGWITH PEC AND AR E NOT SIMPLY SUB CONTRACTORS VIS-A-VIS THE WORK UNDERTAKEN BY THEM. AS SUCH THE ASSESSEE IS OTHERWISE FULFILLING ALL THE CONDITIONS THEY ARE EN TITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTION 80IA. SIMILAR VIEW HAS BEEN TAKEN BY ITAT INDORE IN THE CASE OF AYUSH AJAY CONSTRUCTION LT D. VS ITO 79 ITD 213, WHEREIN THE ENTIRE PROJECT WAS ASSIGNED BY THE PA RTY GETTING THE TENDER TO ANOTHER COMPANY. IN SUCH CIRCUMSTANCES THE I TAT INDORE, HAS HELD AS UNDER: 'IT IS A SETTLED POSITION OF LAW THAT THAT WHILE CON STRUING THE TAX PROVISIONS BESIDES DETERMINING THE INTENTION OF THE LEG ISLATURE FOR ITS INTRODUCTION TO THE STATUTE, THE EXPRESSION USED THEREI N SHOULD ORDINARILY BE UNDERSTOOD IN A SENSE IN WHICH THEY BEST HARMONISE W ITH THE OBJECT OF THE STATUTE AND WHICH EFFECTUATE THE OBJECT OF THE L EGISLATION. THE PROVISIONS OR PROMOTING ECONOMIC GROWTH SHOULD BE INTE RPRETED LIBERALLY AND THE RESTRICTION ON IT TOO HAS TO BE CO NSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISIONS AND NOT TO FRUSTRATE I T. IF THE FACTS OF THE CASE WERE PUT WITHIN THE ABOVE PA RAMETER, THE ASSESSEE, THOUGH IT NOT ENTERED INTO AN AGREEMENT WITH THE ST ATE GOVERNMENT AT THE INITIAL STAGE, HAD OBTAINED THE TENDER/CONTRACT BY VIRTUE OF A VALID ASSIGNMENT, WHICH WAS DULY RECOGNISED BY THE STATE GOVE RNMENT. THEREFORE, IT SHOULD BE DEEMED TO HAVE ENTERED INTO AN AGREEMENT WITH THE STATE GOVERNMENT FOR CONSTRUCTION OF THE SAID BR IDGE ON BOT BASIS. IT WAS NOT THE CASE OF THE REVENUE THAT THE ENTIRE EXPEN DITURE INCURRED IN THE CONSTRUCTION OF THE AFORESAID BRIDGE WAS NOT BORNE BY THE ASSESSEE BUT BY 'A ', THE MAIN TENDERER.' THE REVENUE HAD REJECTED THE CLAIM OF THE ASSESSEE FOR THE SIMPLE REASON THAT THE ASSESSEE HAD NEVER ENTERED INTO ANY CONTRACT W ITH THE STATE GOVERNMENT AND THE ASSESSEE-COMPANY WAS NOTHING BUT A CO LOURABLE DEVICE TO EVADE TAX. IT IS A SETTLED POSITION OF LAW T HAT THE COMPANY IS A JURISTIC ENTITY AND IT SHOULD BE CONSIDERED INDEPENDEN T FROM THE SHAREHOLDERS OR THE DIRECTORS. THE ACTION OF THE ASSIGNI NG AND THE WORK OF CONSTRUCTION UNDERTAKEN BY THE ASSESSEE WAS RECOGNISED BY THE STATE GOVERNMENT AND A TRIPARTITE AGREEMENT WAS EXECUTED B ETWEEN THE ASSESSEE A AND THE STATE GOVERNMENT THROUGH WHICH THE STATE GOVERNMENT HAD RECOGNISED THAT THE ASSESSEE HAD STEPPED I NTO THE SHOES OF A AND NOTIFIED AUTHORISING THE ASSESSEE TO COLLECT THE TOLL TAX FOR A PARTICULAR PERIOD. SINCE THE ASSESSEE COMPANY HAD RECTI FIED ALL ACT AND DEEDS OF ITS PROMOTER U' AND OWNED ALL THE ASSETS AND LIABILITIES OF ITS PROMOTER THROUGH AN AGREEMENT OF ASSIGNMENT EXECUTED BETWEEN THE ASSESSEE AND A AFTER OBTAINING APPROVAL FROM THE STAT E GOVERNMENT, THE ASSESSEE SHOULD BE DEEMED TO HAVE UNDERTAKEN THE CONSTRUC TION WORK SINCE 1-4-1995. SINCE THE GOVERNMENT HAD PROVIDED TH IS DEDUCTION IN ORDER TO ENCOURAGE ECONOMIC GROWTH OF THE COUNTRY, THE PLENITUDE OF EXEMPTION SHOULD NOT BE WHITTLED DOWN, BY LAYING STRE SS ON AMBIGUITY 53 HERE AND THERE. IF IT WAS PROVED THAT, THE ASSESSEE-CO MPANY HAD OBTAINED THE STATUS OF A TENDERER BY VIRTUE OF A VALID ASSIGNME NT, IT SHOULD NOT BE DENIED THE BENEFIT OF DEDUCTION PROVIDED BY THE CEN TRAL GOVERNMENT THROUGH INTRODUCTION OF SUB-SECTION (4A) OF SECTION 80 IA. THE ACTION OF 'A' AND THE ASSESSEE COULD ONLY BE TERMED AS A VALID TAX PLANNING WHICH WAS PERMISSIBLE UNDER THE LAW. THEREFORE, THE ASSESSEE HAD FULFILLED THE REQUIREMENTS PROVIDED IN SECTION 80IA (4A)(II) FOR CL AIMING DEDUCTION, AND, THEREFORE, THE ASSESSING OFFICER SHOULD HAVE ALLOW ED THE DEDUCTION CLAIMED BY THE ASSESSEE COMPANY. 13. IT WAS FURTHER CLARIFIED ON BEHALF OF THE ASSESSEE THAT WITH REGARDS TO BHIMA SINA LINK TUNNEL PROJECT, THE ORIGINAL AGREEM ENT IS BETWEEN THE OWNER AND JOINT VENTURE FROM CONSISTING OF THE ASSESSEE C OMPANY AND M/S.SWAPNALI CONSTRUCTIONS WHICH WAS FORMED TO SHARE TH E WORK IN 60% & 40%. M/S.SWAPNALI CONSTRUCTIONS EXPRESSED THEIR INABIL ITY TO UNDERTAKE THE WORK AND HAD TRANSFERRED THEIR SHARE OF 40% OF WORK TO THE ASSESSEE COMPANY ON BACK TO BACK AGREEMENT BASIS FOR A CONSIDERATION VIDE AGREEMENT DATED 28/04/97. THUS THE ASSESSEE COMPANY HAD EXECUTED 100% OF THE WORK. IT IS FURTHER STATED THAT THE ASSESSEE COMPANY WERE ISSUING R.A. BILLS FOR 100% OF THE W ORK DONE TO JOINT VENTURE FIRM AND JOINT VENTURE FIRM IN TURN I SSUED R.A. BILLS TO THE OWNERS. JOINT VENTURE FIRM HAD NOT EXECUTED ANY PORT ION OF WORK UNDER THE PROJECT. THE JOINT VENTURE FIRM HAS FILED ITS RET URN OF INCOME WITH NIL PROFIT OR LOSS. IN FACT THE WORK COMPLETION CERTI FICATE ISSUED BY PROJECT AUTHORITIES IS IN FAVOUR OF THE ASSESSEE COMPANY ONLY AND NOT IN FAVOUR OF JOINT VENTURE, ALSO THE WHOLE AMOUNT OF IN ITIAL SECURITY DEPOSIT, THE BANK GUARANTEES WERE GIVEN BY THE ASSESSEE COMPANY ONLY IN THE NAME OF THE ASSESSEE AND NOT BY THE JOINT VENTURE, AS TH E JOINT VENTURE PARTNER IS IN NO WAY CONNECTED WITH THE EXECUTION OF THE WORK AND TO THAT EFFECT IT HAD ALREADY SUBMITTED NECESSARY INSTRUME NT LIKE 'ASSIGNMENT DEED, 'POWER OF ATTORNEY', UNDERTAKING WI TH BANKERS ETC. 14. IN THIS BACKGROUND, THE ASSESSEE COULD CERTAINLY CLA IM THE DEDUCTIONS UNDER THE PROVISION OF SECTION 80IA. ONE HAS TO SEE TH E SUBSTANCE AND NOT THE FORM ESSENTIALLY, THOUGH IT WAS A JOINT VENTURE, I T WAS CONVERTED INTO ASSESSEE'S VENTURE. THE OTHER VENTURER WITHDREW AND THE ENTIRE WORK WAS EXECUTED BY THE ASSESSEE THOUGH IN THE NAME OF JOIN T VENTURE. THE JOINT VENTURE IS NOTHING BUT THE VENTURE OF THE ASSESSE E COMPANY AND THE OTHER PERSON NOT BEING A PARTY AFTER WITHDRAWING THE QUESTION OF JOINT VENTURE DOES NOT ARISE. THE VENTURE WAS FULLY CARRIED OUT BY THE ASSESSEE AND IT WAS ENTIRELY EXECUTED BY THE ASSESSEE COMPANY. TA KING THE SUBSTANCE OF THE TRANSACTION, THE ASSESSEE ARE ENTITLED TO ALL THE PROFITS IN RESPECT OF THE CONTRACT EXECUTED BY THEM, HENCE THE ASSESSEE WOULD CERTAINLY BE ENTITLED TO DEDUCTION UNDER THE PROVISI ONS OF 80IA AS THEY HAVE FULFILLED ALL THE OTHER CONDITIONS. THIS VIEW G ET STRENGTH FROM DECISION IN THE CASE OF ITAT, INDORE BENCH, IN CASE OF AYUSH AJAY CONSTRUCTIONS LTD. (SUPRA). THUS, WHILE GIVING EFFECT T O THE OPINION OF THIRD MEMBER U/S.255(4) OF THE ACT, WE TAKE VIEW IN CONFORMITY WITH ORDER OF JURISDICTIONAL HIGH COURT IN CASE OF ABG HE AVY INDUSTRIES LTD. (SUPRA) AVAILABLE AT THIS TIME THOUGH CONTRARY TO THE OPINION EXPRESSED BY THE THIRD MEMBER. SO IN VIEW OF ABOVE DISCUSSION, F OLLOWING THE RATIO OF JURISDICTIONAL HIGH COURT IN CASE OF ABG HEAVY IND USTRIES LTD. (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S. 80IA(4) OF THE ACT TO THE ASSESSEE WITH REGARD TO THE PROJECTS IN QUESTI ON FOR BOTH THE YEARS. THE MATTER IS DISPOSED OFF ACCORDINGLY. 54 94. SO FAR AS GROUND OF APPEAL NO.6(B) IS CONCERNED, WE FIND T HE SAME ALSO STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE TRIBUNAL IN THE CASE OF MAHALAXMI INFRA PROJECTS LTD. VIDE ITA NOS.2571 TO 2577/PN/2012 AND ITA NOS. 50 TO 56/PN/201 3 FOR A.YRS. 2004-05 TO 2010-11. WE FIND THE TRIBUNAL IN THE CON SOLIDATED ORDER DATED 09-12-2015 (TO WHICH BOTH OF US ARE PARTIES ) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 127. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPE R BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARI OUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE, IN THE RETURN FI LED IN RESPONSE TO NOTICE U/S.153A, HAD CLAIMED DEDUCTION U/S.80IA(4) AM OUNTING TO RS.7,88,92,588/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS APART FROM REITERATING THE DEDUCTION U/S.80IA(4) AS CLAIMED IN THE ORIGINAL RETURN THE ASSESSEE ALSO CLAIMED DEDUCTION U/S.80IA(4) IN RESPECT OF ADDITIONAL INCOME SO DECLARED. WE FIND THE AO REJEC TED THE CLAIM OF DEDUCTION U/S.80IA(4) ON THE GROUND THAT THE ASESSEE IS A CONTRACTOR AND IN VIEW OF EXPLANATION TO SECTION 80IA(4) THE ASSESSEE I S NOT ENTITLED TO DEDUCTION U/S.80IA(4), WE FIND THE LD.CIT(A) ALLOWE D THE CLAIM OF THE ASSESSEE BY RELYING ON VARIOUS DECISIONS ON THE DEDUCTION CLAIMED U/S.80IA(4) IN THE RETURN AS WELL AS ON THE ADDITIONAL INCOME DECLARED. 128. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IA(4) AS PER THE RETURN AS WELL AS THE DEDUCTION ON THE ADDITIONAL INCOME. SO FAR AS THE C LAIM OF DEDUCTION U/S.80IA(4) CONSIDERING THE IRRIGATION PROJECT OF THE ASSESSEE AS AN INFRA PROJECT IS CONCERNED WE FIND THE ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR A.Y. 2003-04 VIDE ITA NO.433/PN/2007 ORDER DATED 06-02-2012. THE RELEVAN T OBSERVATION OF THE TRIBUNAL FROM PARA 7 TO 9 READS AS UNDER : 7. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH CO URT IN THE APPEAL PREFERRED BY THE ASSESSEE HAS BEEN PLEASED TO RESTO RE THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION ON THE ISSUE IN ACC ORDANCE WITH LAW. ON EARLIER OCCASION THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVO UR OF THE REVENUE BY RELYING UPON THE DECISION OF THIRD MEMBER BENCH OF THE TRIB UNAL IN THE CASE OF B.T. PATIL & SONS BELGAM CONSTRUCTION (P) LTD VS. ACIT 126 TTJ (MUM) (TM) 577. THE HONBLE HIGH COURT HAS OBSERVED THAT IT IS NOT IN D ISPUTE THAT THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF B.T. PATIL & SONS (SUPR A) HAS BEEN RECALLED BY THE TRIBUNAL BY ORDER DATED 18.2.2011 AS EVIDENT FROM T HE ORDER PASSED BY THE TRIBUNAL IN ITA NO.766/PN/2009 DATED 8.6.2011. THE HONBLE HIGH COURT HAS ACCORDINGLY QUASHED AND SET ASIDE THE IMPUGNED ORDE R OF THE TRIBUNAL DATED 24.2.2010 PASSED IN ITA NO.433/PU/2003 RELATING TO AY 2003-04, AND HAS RESTORED THE MATTER TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION. 8. HAVING GONE THROUGH THE CITED DECISIONS BY THE L EARNED AR WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ABG HEAVY INDUSTR IES LTD & ORS (SUPRA). RELEVANT PARA NOS. 22 & 23 OF THE SAID DECISION OF HONBLE HIGH COURT IS BEING REPRODUCED HERE UNDER FOR A READY REFERENCE. 55 22. ANOTHER SUBMISSION WHICH WAS URGED ON BEHALF O F THE REVENUE IS THAT UNDER CL. (III) OF SUB-SEC. (4A) OF SEC. 80-IA , ONE OF THE CONDITIONS IMPOSED WAS THAT THE ENTERPRISE MUST START OPERATING AND MA INTAINING THE INFRASTRUCTURE FACILITY ON OR AFTER 1 ST APRIL, 1995. THE SAME REQUIREMENT IS EMBODIES IN SUB-CL. (C) OF SUB-SEC. (4) OF THE AMEN DED PROVISIONS OF SEC. 80-IA. ON THIS BASIS, IT WAS URGED THAT SINCE THE ASSESSEE WAS NOT OPERATING AND MAINTAINING THE FACILITY, HE DID NOT FULFIL THE CON DITION. THIS SUBMISSION IS FALLACIOUS BOTH IN FACT AND IN LAW. AS A MATTER OF FACT, THE TRIBUNAL HAS ENTERED A FINDING THAT THE ASSESSEE WAS OPERATING THE FACIL ITY AND THIS FINDING HAS BEEN CONFIRMED EARLIER IN THIS JUDGMENT. THAT THE ASSES SEE WAS MAINTAINING THE FACILITY IS NOT IN DISPUTE. THE FACILITY WAS COMME NCED AFTER 1 ST APRIL, 1995. THEREFORE, THE REQUIREMENT WAS MET IN FACT. MOREOV ER, AS A MATTER OF LAW, WHAT THE CONDITION ESSENTIALLY MEANS IS THAT THE INFRAST RUCTURE FACILITY SHOULD HAVE BEEN OPERATIONAL AFTER 1 ST APRIL, 1995. AFTER SEC. 80-IA WAS AMENDED BY THE FINANCE ACT OF 2001, THE SECTION APPLIED TO AN ENTE RPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING; OR (II) OPERATING AND M AINTAINING; OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILI TY WHICH FULFILS CERTAIN CONDITIONS. THOSE CONDITIONS ARE : (I) OWNERSHIP O F THE ENTERPRISE BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM; (II) AN AGR EEMENT WITH THE CENTRAL OR STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY ; AND (III) THE START OF OPERATION AND MAINTENANCE OF THE INFRASTRUCTURE FAC ILITY ON OR AFTER 1 ST APRIL, 1995. THE REQUIREMENT THAT THE OPERATION AND MAINT ENANCE OF THE INFRASTRUCTURE FACILITY SHOULD COMMENCE AFTER 1 ST APRIL, 1995 HAS TO BE HARMONIOUSLY CONSTRUED WITH THE MAIN PROVISION UNDE R WHICH A DEDUCTION IS AVAILABLE TO AN ASSESSEE WHO DEVELOPS OR OPERATES A ND MAINTAINS, OR DEVELOPS, OPERATES AND MAINTAINS AN INFRASTRUCTURE FACILITY. UNLESS BOTH THE PROVISIONS ARE HARMONIOUSLY CONSTRUED, THE OBJECT AND INTENT U NDERLYING THE AMENDMENT OF THE PROVISION BY THE FINANCE ACT OF 2001 WOULD B E DEFEATED. A HARMONIOUS READING OF THE PROVISION IN ITS ENTIRETY WOULD LEAD TO THE CONCLUSION THAT THE DEDUCTION IS AVAILABLE TO AN ENTERPRISE WHICH (I) D EVELOPS; OR (II) OPERATES AND MAINTAINS; OR (III) DEVELOPS, MAINTAINS AND OPERATE S THAT INFRASTRUCTURE FACILITY SHOULD BE AFTER 1 ST APRIL, 1995. IN THE PRESENT CASE, THE ASSESSEE CLE ARLY FULFILLED THIS CONDITION. 23. IN VIEW OF WHICH WE HAVE TAKEN, ALL THE ASSESS MENT YEARS IN QUESTION TO WHICH THIS BATCH OF APPEALS RELATES WOU LD BE GOVERNED BY THE SAME PRINCIPLE. THE SUBSEQUENT AMENDMENT OF SEC. 80-IA( 4A) OF THE ACT TO CLARIFY THAT THE PROVISION WOULD APPLY TO AN ENTERPRISE ENG AGED IN (I) DEVELOPING; OR (II) OPERATING AND MAINTAINING; OR (III) DEVELOPING , OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILITY WAS REFLECTIVE OF A POSI TION WHICH WAS ALWAYS CONSTRUED TO HOLD THE FIELD. BEFORE THE AMENDMENT THAT WAS BROUGHT ABOUT BY PARLIAMENT BY FINANCE ACT OF 2001, WE HAVE ALREADY NOTED THAT THE CONSISTENT LINE OF CIRCULARS OF THE BOARD POSTULATED THE SAME POSITION. THE AMENDMENT MADE BY PARLIAMENT TO SEC. 80-IA(4) OF THE ACT SET THE MATTER BEYOND ANY CONTROVERSY BY STIPULATING THAT THE THREE CONDITION S FOR DEVELOPMENT, OPERATION AND MAINTENANCE WERE NOT INTENDED TO BE CUMULATIVE IN NATURE. 9. WE FIND FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN AFORESAID CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUP RA) THAT EVEN IN THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE ACTED A S A CONTRACTOR FOR GOVERNMENT AGENCY, WAS HELD ELIGIBLE FOR THE PURPOS ES OF CLAIM OF DEDUCTION U/S 80-IA(4) OF THE INCOME TAX ACT. AS PER THE SAID DE CISION OF THE HONBLE HIGH COURT ASSESSEE WHO ONLY DEVELOPS INFRASTRUCTURAL FA CILITY (EVEN AS A CONTRACTOR) BUT DOES NOT HAVE AN OCCASION TO OPERATE AND MAINTA IN IS ALSO ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80-IA(4) OF THE ACT. THE HONBLE HIGH COURT HAS BEEN PLEASED TO OBSERVE THAT QUA SUCH A PERSON THE CONDITION STA TED IN SUB-SECTION (C) OF SEC.80-IA(4)(I) HAS TO BE READ HARMONIOUSLY WITH TH E MAIN PROVISION UNDER WHICH DEDUCTION IS AVAILABLE TO AN ASSESSEE, WHO DE VELOPS; OR OPERATES AND MAINTAIN; OR DEVELOPS, MAINTAINS AND OPERATES AN IN FRASTRUCTURAL FACILITY. IN OTHER WORDS A DEVELOPER WHO ONLY DEVELOPS (I.E., CO NSTRUCTS) AN INFRASTRUCTURAL FACILITY IS NOT ENVISAGED TO OPERATE AND MAINTAIN S UCH FACILITY, CANNOT BE ACCEPTED TO FULFIL THE CONDITION IN CLAUSE (C) OF S EC. 80-IA(4) SINCE IT WOULD BE AN IMPOSSIBILITY. THEREFORE, IN VIEW OF THE CONSTRUCT ION PLACED BY THE HONBLE BOMBAY HIGH COURT ON THE REQUIREMENTS OF CLAUSE (C) OF SEC. 80-IA(4)(I) 56 REQUIRING IT TO BE HARMONIOUSLY READ WITH THE MAIN SEC. 80-IA(4), WE DO NOT FIND SUBSTANCE IN THE OBJECTION RAISED BY THE REVENUE. WE THUS RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH C OURT ON THE ISSUE IN THE CASE OF CIT VS. ABG HEAVY INDUSTRIES LTD & ORS (SUPRA) D ECIDE THE MATTER IN FAVOUR OF THE ASSESSEE WITH THIS FINDING THAT ASSESSEE IS ELI GIBLE TO CLAIM THE DEDUCTION IN QUESTION U/S 80-IA (4). THE ISSUE IS THUS DECIDED I N FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS ARE THUS ALLOWED WITH THIS DIRECTIO N TO THE AO TO ALLOW THE CLAIMED DEDUCTION TO THE ASSESSEE. 10. CONSEQUENTLY THE APPEAL IS ALLOWED. 129. THEREFORE, THE ISSUE AS TO WHETHER THE ASSESSEE BEING A CONTRACTOR AND NOT A DEVELOPER AND THEREFORE IS NOT IS ENTITLED TO DEDUCTION U/S.80IA(4) OF THE I.T. ACT HAS TO BE DECIDED IN FAVO UR OF THE ASSESSEE. 130. NOW COMING TO THE CLAIM OF DEDUCTION U/S.80IA(4 ) ON THE ADDITIONAL INCOME DECLARED IS CONCERNED THE QUESTION THAT ARISE IS AS TO WHETHER THE ASSESSEE CAN MAKE A NEW CLAIM DURING THE CO URSE OF ASSESSMENT PROCEEDINGS U/S.153A. THIS ISSUE ALSO HAS BEEN D ECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL I N THE CASE OF D.J. MALPANI VS. ACIT AND VICE VERSA VIDE ITA NOS. 1148 TO 1154/PN/2013 AND ITA NOS. 1183 TO 1188/PN/2013 ORDER DATED 30-10- 2015. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 52 TO 53 ARE AS UNDER : 52. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE IN THE INSTA NT CASE FILED HIS RETURN OF INCOME U/S.139(1) ON 31-10-2007. THE SEARCH TOOK P LACE ON 06-10-2009. AT THE TIME OF SEARCH THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS NOT COMPLETED. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A ON 24-06-2010 DISCLOSING TOTAL INCOME OF R S.12,80,97,695/- AFTER CLAIMING DEDUCTION OF RS.5,36,44,728/- U/S.80IA(4) OF THE I.T. ACT. THE AO DISALLOWED THE CLAIM OF DEDUCTION U/S.80IA(4) ON TH E GROUND THAT THE SAME WAS NOT CLAIMED IN THE ORIGINAL RETURN FILED U/S.139(1) OF THE I.T. ACT. RELYING ON THE PROVISIONS OF SECTION 80AC AND 80IA (5) THE AO DISA LLOWED THE CLAIM MADE BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOT ICE U/S.153A. WE FIND THE LD.CIT(A) UPHELD THE ABOVE ACTION OF THE AO. WE FI ND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF B.G. SHIRKE CONSTRUCTION TE CHNOLOGY PVT. LTD. (SUPRA) HAD AN OCCASION TO DECIDE SUCH AN ISSUE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 9 ONWARDS READ AS UNDER : 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THIS CASE, SEARCH U/S 132(1) OF THE ACT WAS CARRIED OUT ON 18.12.2008. ON THE BASIS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT, WHICH READS AS UNDER :- 'PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THIS [SUB-SECTION] PENDING ON THE DATE OF INITIATIO N OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE.' IN THE PRESENT CASE, THE ASSESSMENTS WHICH ARE PEND ING ON THE DATE OF INITIATION OF SEARCH ARE FOR ASSESSMENT YEARS 2007-08 AND 2008 -09, AND THUS SUCH ASSESSMENTS ABATE. BEFORE US, THE LD. COUNSEL FOR T HE ASSESSEE CONCEDED THAT ASSESSMENTS FOR ASSESSMENT YEARS 2003-04 AND 2006-0 7 WERE NOT PENDING ON THE DATE OF INITIATION OF SEARCH AND THUS THE SAME DO NOT ABATE AS PER THE AFORESAID PROVISO TO SECTION 153A(1) OF THE ACT. TH E AFORESAID POSITION IS NOT DISPUTED BY THE REVENUE ALSO. 10. IN THE ABOVE UNDISPUTED FACT SITUATION, NOW WE MAY EXAMINE THE SCOPE OF ASSESSMENTS TO BE MADE U/S 153A(1)(B) OF THE ACT FO R THE ASSESSMENT YEARS 57 2007-08 AND 2008-09, WHICH HAVE ABATED AND FOR THE ASSESSMENT YEARS 2003-04 AND 2006-07, WHICH DO NOT ABATE. FOLLOWING THE REAS ONING LAID DOWN IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) , IT HAS TO BE HELD THAT IN SO FAR AS THE ASSESSMENT YEARS 2003-04 AND 2006-07 ARE CONCERNED, ASSESSMENTS U/S 153A(1)(B) OF THE ACT WOULD BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH HAS BEEN EXPLAINED TO MEAN (I) BOOKS OF ACCOU NT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COU RSE OF ORIGINAL ASSESSMENT; AND, (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. OF COURSE, THE INCOME SO DETERMINED SHALL BE IN ADDITI ON TO THE INCOME ALREADY ASSESSED IN REGULAR ASSESSMENT PROCEEDINGS FOR THE SAID TWO ASSESSMENT YEARS. NOW, THE MOOT POINT IS AS TO WHETHER THE IMPUGNED C LAIM OF THE ASSESSEE FOR EXCLUDING INCOME ON ACCOUNT OF RETENTION MONEY CAN FALL IN THE SCOPE AND AN AMBIT OF AN ASSESSMENT MADE U/S 153A(1)(B) OF THEI. T ACT FOR THE ASSESSMENT YEARS 2003-04 AND 2006-07. OSTENSIBLY, AS OBSERVED EARLIER ON THE BASIS OF THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CASE O F ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), AN ASSESSMENT U/S 153A(1)(B) FOR THE ASSES SMENT YEARS 2003-04 AND 2006-07 WOULD BE BASED ON INCRIMINATING MATERIAL, BOOKS OF ACCOUNTS, OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRO DUCED IN THE COURSE OF ORIGINAL ASSESSMENT OR ANY UNDISCLOSED INCOME OR PR OPERTY DISCOVERED IN THE COURSE OF SEARCH. AT THE TIME OF HEARING, THE LD. C OUNSEL FOR ASSESSEE FAIRLY CONCEDED THE POSITION THAT IMPUGNED CLAIM RELATING TO EXCLUSION OF INCOME ON ACCOUNT OF RETENTION MONEY DOES NOT FALL IN THE AFO RESAID CATEGORY AND THUS, IT IS BEYOND THE SCOPE AND AMBIT OF AN ASSESSMENT ENVISAG ED U/S 153A(1)(B) OF THE ACT FOR ASSESSMENT YEARS 2003-04 AND 2006-07. THERE FORE, ON THIS POINT ITSELF, WE UPHOLD THE STAND OF THE REVENUE FOR ASSESSMENT Y EARS 2003-04 AND 2006-07 IN DENYING ASSESSEE'S CLAIM FOR EXCLUDING INCOME ON ACCOUNT OF RETENTION MONEY. 11. ACCORDINGLY, THE APPEALS OF THE ASSESSEE FOR AS SESSMENT YEARS 2003-04 AND 2006-07 ARE DISMISSED. 12. NOW, IN SO FAR AS THE ASSESSMENTS FOR ASSESSMEN T YEARS 2007-08 AND 2008- 09 ARE CONCERNED, THE ORIGINAL ASSESSMENTS WERE PEN DING ON THE DATE OF INITIATION OF SEARCH, AND THE SAME STAND ABATED IN TERMS OF THE SECOND PROVISO TO SECTION 153A(1) OF THE ACT. FOLLOWING THE REASON ING LAID DOWN IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), IN SO FAR AS ASSESSMENT YEARS 2007-08 AND 2008-09 ARE CONCERNED, THE ASSESSING OFFICER RE TAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S 153A OF THE ACT. IN THIS CONTEXT, THE PRELIMINARY ISSUE IS AS TO WHETHER THE SCOPE OF ASSESSMENTS U/S 153A(1)(B) OF THE ACT FOR ASSESSMENT YEARS 2007-08 AND 2008-09 CAN INCLUDE CONSIDERATION OF ASSESSEE'S PLEA TO EXCLUDE INCOME ON ACCOUNT OF RETENTION MONEY, CONSIDERING THE FACT THE RETURNS OF INCOME F ILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2007-08 AND 2008-09 U/S 139(1) OF THE ACT DID NOT CONTAIN ANY SUCH CLAIM. IN THE ASSESSMENTS U/S 153A(1)(B) O F THE ACT, ASSESSEE CLAIMED THAT INCOME ON ACCOUNT OF RETENTION MONEY BE EXCLUD ED IN THE YEARS WHEN THE CUSTOMERS HAD WITHHELD THE RETENTION MONEY AND INST EAD TAX IT IN THE YEAR OF ITS ACTUAL RECEIPT. NO DOUBT, THE SAID CLAIM DOES NOT P ERTAIN TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH, SO HOWEVER, ON ACCOUNT OF THE FACT THAT THE ASSESSING OFFICER RETAINS HIS ORIGINAL JURISDIC TION AS WELL IN THE ASSESSMENTS FOR THE YEARS 2007-08 AND 2008-09 TO BE MADE U/S 15 3A(1)(B) OF THE ACT, IN OUR CONSIDERED OPINION, AS THE FOLLOWING DISCUSSION WOU LD SO, SUCH A CLAIM THOUGH MADE FOR THE FIRST TIME IN THE IMPUGNED ASSESSMENT PROCEEDING, WOULD FALL WITHIN THE AMBIT AND SCOPE OF IMPUGNED ASSESSMENT C ARRIED OUT U/S 153A(1)(B) OF THE ACT. PERTINENTLY, THE ORIGINAL JURISDICTION VESTED WITH THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 EMPOWE RS HIM TO CONSIDER THE IMPUGNED CLAIM; AND, TO PUT IT IN OTHER WORDS, ASSE SSEE WAS COMPETENT TO RAISE SUCH A FRESH CLAIM IN THE CONTEXT OF THE ORIGINAL J URISDICTION VESTED WITH THE ASSESSING OFFICER, THOUGH IT WAS NOT RAISED IN THE RETURNS OF INCOME ORIGINALLY FILED. 13. WE MAY ALSO CONSIDER THIS FROM ANOTHER ANGLE. A S ON THE DATE OF INITIATION OF SEARCH I.E. 18-12-2008, THE RETURNS OF INCOME FILED BY ASSESSEE U/S 139(1) OF THE ACT FOR ASSESSMENT YEARS 2007-08 AND 2008-09 WERE P ENDING FOR ASSESSMENT AND THE IMPUGNED CLAIMED WAS NOT MADE IN THE RETURN S OF INCOME ORIGINALLY 58 FILED. SO, HOWEVER, U/S 139(5) OF THE ACT, ASSESSEE WAS COMPETENT TO FURNISH A REVISED RETURN AND MAKE SUCH A CLAIM, AND THUS THE ASSESSING OFFICER WAS REQUIRED TO ENTERTAIN SUCH A CLAIM IN THE COURSE OF EXERCISING HIS ORIGINAL JURISDICTION TO MAKE AN ASSESSMENT U/S 143(3) OF TH E ACT. NOW, CONSEQUENT TO SEARCH ACTION, FOR ASSESSMENT YEARS 2007-08 AND 200 8-09, ASSESSING OFFICER NOT ONLY ACQUIRES JURISDICTION TO MAKE ADDITIONS BASED ON THE INCRIMINATING MATERIAL BUT ALSO RETAINS THE ORIGINAL JURISDICTION, AS EXPL AINED BY THE SPECIAL BENCH OF TRIBUNAL IN THE CASE ALL CARGO GLOBAL LOGISTICS LTD . (SUPRA). THUS, THE ENSUING ASSESSMENTS U/S 153A(1)(B)OF THE ACT FOR ASSESSMENT YEARS 2007-08 AND 2008- 09 WOULD ENABLE THE ASSESSING OFFICER TO CONSIDER T HE IMPUGNED CLAIM WHICH HAS BEEN JUSTIFIABLY MADE BY THE ASSESSEE. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES AND IN LAW, WE, THEREFORE, HOLD THAT IN SO FAR AS T HE ASSESSMENTS FOR THE ASSESSMENT YEARS A.Y. 2003-04, 2006-07, 2007-08 & 2 008-09 2007-08 AND 2008-09 ARE CONCERNED, THE INCOME-TAX AUTHORITIES E RRED IN NOT ENTERTAINING THE IMPUGNED CLAIM OF THE ASSESSEE MERELY BECAUSE IT WA S MADE IN THE COURSE OF AN ASSESSMENT U/S 153A(1)(B) OF THE ACT AND WAS NOT MA DE IN THE RETURNS OF INCOME ORIGINALLY FILED U/S 139(1) OF THE ACT. 14. FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09, A NOTHER OBJECTION RAISED BY THE REVENUE IS TO THE EFFECT THAT THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A(1)(A) O F THE ACT, BUT WAS SUBMITTED BY WAY OF A LETTER DURING THE ASSESSMENT PROCEEDING S AND THEREFORE FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF GOETZE (INDIA) LTD. VS. CIT, (2006) 284 ITR 323 (SC), THE ASSESSING OFFICER WAS JUSTIFIED IN NOT ENTERTAINING SUCH A CLAIM. 15. ON THIS ASPECT, THE LEARNED COUNSEL FOR THE ASS ESSEE POINTED OUT THAT IN THE RETURN OF INCOME SUBMITTED IN RESPONSE TO NOTICE U/ S 153A(1)(A) OF THE ACT, ASSESSEE HAD ENCLOSED A NOTE DATED 14.09.2009, A CO PY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 1 TO 2, PUTTING-FORTH ITS CLAIM FOR EXCLUDING INCOME ON ACCOUNT OF RETENTION MONEY, BUT IN THE COMPUTATION OF INCOME NO SPECIFIC CLAIM WAS MADE BECAUSE THE QUANTIFICATION OF THE CLAIM CO ULD NOT BE MADE IN THE LIMITED TIME PERIOD ALLOWED TO FILE A RETURN IN RES PONSE TO NOTICE U/S 153A(1)(A) OF THE ACT. IN THE COURSE OF THE SUBSEQUENT ASSESSM ENT PROCEEDINGS, ASSESSEE QUANTIFIED THE CLAIM FOR THE RESPECTIVE ASSESSMENT YEARS AND ALSO FILED COPIES OF THE AGREEMENTS WITH THE CUSTOMERS WHICH CONTAINED T HE RELEVANT CLAUSES PERMITTING RETENTION OF A PORTION OF THE CONTRACT V ALUE. IT IS POINTED OUT THAT STRICTLY SPEAKING THE JUDGEMENT OF THE HON'BLE SUPR EME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS NOT APPLICABLE IN TH E PRESENT CASE AS NO FRESH CLAIM WAS MADE IN THE ASSESSMENT PROCEEDINGS, BUT IT IS A CASE WHERE A CLAIM PUT-FORTH IN THE RETURN OF INCOME WAS ONLY QUANTIFIED DURING ASSESSMENT PROCEEDINGS AND THUS THE ASSESSING OFFICER OUGHT TO HAVE ENTERTAINE D THE IMPUGNED CLAIM. ALTERNATIVELY, IT IS CONTENDED THAT THE CIT(A) ENJO YS PLENARY POWERS OF THE ASSESSING OFFICER, AND FOLLOWING THE JUDGMENT OF T HE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. VS. CIT, (1991) 187 ITR 688, THE CLAIM SHOULD HAVE BEEN ENTERTAINED BY HIM AS THE COMPLETE FACTS WERE ON RECORD. IN THIS CONTEXT, THE LEARNED COUNSEL REFERRED TO THE D ECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF JAIN IRRIGATION SYSTEMS LTD. VIDE ITA NO.1319/PN/2009 DATED 30.01.2012 WHEREIN THE IMPORT OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) HAS BEEN EXPLAINED ON THE BASIS OF THE JUDGMENT OF THE HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD., (2008) 306 ITR 42 (DEL), IN THE FOLLOWING WORDS :- '5. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. IN OUR VIEW, THE PLEA OF THE ASSESSEE IS WELL-REASONED, INASMUCH AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) DO ES NOT IMPINGE ON THE POWERS OF THE APPELLATE AUTHORITIES TO ENTERTAIN A FRESH C LAIM WHICH WAS HITHERTO NOT PREFERRED BY THE ASSESSEE IN THE RETURN OF INCOME. IN FACT, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS L TD. 306 ITR 42 (DEL) SUPPORTS THE PROPOSITION THAT THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) WAS LIMITED TO THE POWE R OF THE ASSESSING OFFICER TO 59 ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THAN BY A R EVISED RETURN AND DOES NOT PUT FETTERS ON SUCH POWERS OF THE APPELLATE AUTHORI TIES.' 16. ON THE BASIS OF AFORESAID, IT IS SOUGHT TO BE M ADE OUT THAT THE CLAIM OF THE ASSESSEE OUGHT TO HAVE BEEN ENTERTAINED BY THE LOWE R AUTHORITIES AND DECIDED ON ITS MERITS. 17. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE APPEARING FOR THE REVENUE HAS CONTENDED THAT THE LOWER AUTHORITIE S WERE JUSTIFIED IN NOT ENTERTAINING THE IMPUGNED CLAIM AS IT WAS A FRESH C LAIM MADE ONLY DURING THE ASSESSMENT PROCEEDINGS AND NOT IN THE RETURN OF INC OME. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) OP INED THAT A FRESH CLAIM OF THE ASSESSEE CAN BE ENTERTAINED AT THE TIME OF ASSESSME NT ONLY IF IT IS MADE BY WAY OF A REVISED RETURN OF INCOME; AND, THE AFORESAID P ROPOSITION HAS BEEN INVOKED BY THE INCOME-TAX AUTHORITIES IN THE PRESENT CASE T O DENY ASSESSEE'S CLAIM FOR EXCLUSION OF INCOME ON ACCOUNT OF RETENTION MONEY, A CLAIM WHICH WAS MADE DURING THE ASSESSMENT PROCEEDINGS. 19. FACTUALLY SPEAKING, WE FIND THAT IN TERMS OF A COMMUNICATION DATED 14.09.2009 FILED ALONG WITH THE RETURN OF INCOME FI LED IN RESPONSE TO NOTICE ISSUED U/S 153A(1)(A) OF THE ACT, ASSESSEE INTER-AL IA, STATED AS UNDER :- 'THE BUSINESS OF OUR COMPANY IS TO EXECUTE CONSTRUC TION CONTRACTS. IN RESPECT OF SOME OF THE CONTRACTS EXECUTED BY THE COMPANY THERE IS A CLAUSE IN THE CONTRACT WHICH ENTITLES THE CUSTOMER TO RETAIN BETWEEN 5% TO 10% OF CONTRACT VALUE TILL THE COMPLETION OF DEFECT LIABILITY PERIOD CONTAINED IN THE CONTRACT WHICH IS GENERALLY BETWEEN 12 TO 24 MONTHS AFTER THE COMPLET ION OF THE CONSTRUCTION. INADVERTENTLY IN THE ORIGINAL RETURN FILED THIS AMO UNT WAS NOT EXCLUDED WHILE COMPUTING THE TOTAL INCOME. IN THE SHORT SPAN OF TI ME ALLOWED TO US TO FILE THE RETURN U/S. 153A, THE EXACT QUANTIFICATION OF THE R ETENTION MONEY COULD NOT BE WORKED OUT. HENCE WE WILL SUBMIT THE DETAILS THEREO F LATER. BUT FOR THE TIME BEING, WE SUBMIT THAT THE RETENTION MONEY IN THE VA RIOUS CONTRACTS IS NOT TAXABLE IN VIEW OF THE VARIOUS DECISIONS INCLUDING THE DECI SIONS CITED BELOW WHEREIN IT IS HELD THAT THE TAXABILITY OF THIS AMOUNT IS TO BE CO NSIDERED IN THE YEAR IN WHICH THIS AMOUNT IS DUE TO THE ASSESSEE FROM THE CONTRAC TEE. (A) CIT V ASSOCIATED CABLES P. LTD. (2006) 286 ITR 596 (BOM.) (B) DCIT V SPIRAX MARSHALL LTD. (2007) 109 TTJ (PUNE) 593 (C) NATIONAL HEAVY ENGG. CO. OP. L TD. V DCIT (2007) 105 ITD 485 (PUNE) INADVERTENTLY, IN THE ORIGINAL RETURN OF INCOME THI S AMOUNT WAS NOT CLAIMED AS DEDUCTION. WE REQUEST YOUR HONOUR TO KINDLY GRANT U S APPROPRIATE DEDUCTION WHILE COMPLETING ASSESSMENT. WE SHALL SUBMIT THE NE CESSARY DETAILS AND QUANTIFICATION OF CLAIM DURING THE COURSE OF ASSESS MENT.' 20. THE AFORESAID NOTE CLEARLY DEPICTS THE CLAIM OF THE ASSESSEE TO THE EFFECT THAT THE RETENTION MONEY IN VARIOUS CONTRACTS RETAINED/D EDUCTED BY THE CUSTOMERS IS NOT TAXABLE; AND, VARIOUS CASE LAWS HAVE ALSO BEEN CITED, INCLUDING THAT OF THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN ASSO CIATED CABLES (P) LTD. (SUPRA) IN SUPPORT OF THE SAID PROPOSITION. OF COUR SE, THE CLAIM WAS NOT REFLECTED IN THE ACTUAL COMPUTATION OF INCOME IN THE ABSENCE OF ITS QUANTIFICATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE NOT ONLY QUANTIFIED ITS CLAIM YEAR-WISE BUT ALSO EXPLAINED THE FACTUAL MATRIX OF THE CLAIM BASED ON THE RELEVANT CLAUSES OF THE CONTRACTS WITH VARIOUS CONT RACTEES/CUSTOMERS, AS IS EVIDENT FROM COPY OF ASSESSEE'S COMMUNICATION TO T HE ASSESSING OFFICER PLACED IN THE PAPER BOOK AT PAGES 3-6. IN THIS FACTUAL BAC KGROUND, CAN IT BE SAID THAT THE ASSESSEE MADE A FRESH CLAIM DURING THE ASSESSMENT P ROCEEDINGS SO AS TO FALL WITHIN THE PURVIEW OF THE RATIO LAID DOWN BY THE HO N'BLE SUPREME COURT IN THE 60 CASE OF GOETZE (INDIA) LTD. (SUPRA)? IN OUR VIEW, T HE FACT SITUATION IN THE PRESENT CASE IS QUALITATIVELY DIFFERENT THAN THAT CONSIDERE D BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA). O STENSIBLY, THE ASSESSEE COMPANY MADE A CLAIM FOR EXCLUDING INCOME ON ACCOUN T OF RETENTION MONEY IN THE RETURN OF INCOME ITSELF, THOUGH THE QUANTIFICAT ION WAS ABSENT, AND THE ACTUAL QUANTIFICATION OF SUCH CLAIM WAS MADE DURING THE AS SESSMENT PROCEEDINGS; THUS, SUBSTANTIVELY SPEAKING IT CANNOT BE SAID THAT ASSES SEE MADE A NEW CLAIM DURING ASSESSMENT PROCEEDINGS WHICH WAS NOT MADE IN THE RE TURN OF INCOME. CONSIDERING THE ABOVE FACT SITUATION, IN OUR VIEW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN REFUSING TO ENTERTAIN THE IMPUGNED CLAIM BASED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA). 21. IN ANY CASE, THE JUDGEMENT OF THE HON'BLE SUPRE ME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) DOES NOT IMPINGE ON THE POWERS OF APPELLATE AUTHORITIES TO ENTERTAIN A FRESH CLAIM WHICH WAS HI THERTO NOT PREFERRED BY THE ASSESSEE IN THE RETURN OF INCOME, AS EXPLAINED BY T HE HON'BLE DELHI HIGH COURT IN THE CASE OF JAI PARABOLIC SPRINGS LTD. (SUPRA). ACC ORDINGLY, THERE WAS NO IMPEDIMENT FOR THE CIT(A) TO HAVE ENTERTAINED THE I MPUGNED CLAIM ESPECIALLY WHEN THE REQUIRED FACTS TO ADJUDICATE THE CONTROVER SY WERE ALREADY ON RECORD. 22. THUS, CONSIDERED IN THE AFORESAID LIGHT, WE FIN D NO JUSTIFICATION FOR THE REVENUE TO REJECT ASSESSEE'S IMPUGNED CLAIM FOR ASS ESSMENT YEARS 2007-08 AND 2008-09 ON THE GROUND THAT THE CLAIM WAS MADE BY WA Y OF A LETTER DURING THE COURSE OF ASSESSMENTS AND NOT IN THE RETURN OF INCO ME. 23. THE THIRD OBJECTION WHICH HAS BEEN RAISED BY TH E REVENUE IS IN TERMS OF A DISCUSSION MADE BY THE CIT(A) IN PARA 3.6 OF THE IM PUGNED ORDER. ACCORDING TO THE CIT(A), IF THE CLAIM FOR EXCLUDING RETENTION MO NEY WAS ENTERTAINED AND ALLOWED, IT WOULD RESULT IN THE DETERMINATION OF TO TAL INCOME AT A FIGURE BELOW THE INCOME ORIGINALLY RETURNED/ASSESSED AND THUS TH E SAME WAS NOT PERMISSIBLE. THIS OBJECTION OF THE REVENUE, IN OUR VIEW IS NO BA R TO ENTERTAIN THE AFORESAID CLAIM, KEEPING IN MIND THE RATIO OF THE JUDGEMENT O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS & ANR., (200 3) 261 ITR 367 (SC) AND ALSO THE JUDGEMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT GAS CO. LTD. VS. CIT, 245 ITR 54 (GUJ). 24. ON THE BASIS OF THE AFORESAID DISCUSSION, IN CO NCLUSION WE HOLD THAT IN SO FAR AS THE ASSESSMENT YEARS 2007-08 AND 2008-09 ARE CON CERNED, THE CLAIM OF THE ASSESSEE FOR EXCLUSION OF INCOME ON ACCOUNT RETENTI ON MONEY WITHHELD BY CONTRACTEES/CUSTOMERS HAS BEEN WRONGLY REJECTED BY THE LOWER AUTHORITIES. 53. SINCE THE ASSESSMENT FOR THE IMPUGNED ASSESSMEN T YEAR WAS PENDING ON THE DATA OF SEARCH, THEREFORE, RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (SUPRA) WE H OLD THAT THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM MADE U/S.80IA(4) O F THE I.T ACT MERELY BECAUSE THE ASSESSEE HAD NOT MADE THE CLAIM IN THE ORIGINAL RETURN. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE ASSESSE ARE ALLOWED. 131. IDENTICAL ISSUE HAS ALSO BEEN DECIDED BY THE HONB LE BOMBAY HIGH COURT IN THE CASE OF SHETH DEVELOPERS (P) LTD.(SUPRA) WHEREIN THE HONBLE BOMBAY HIGH COURT FOLLOWING THE DECISION IN THE CASE OF PRITHVI BROKERS AND SHAREHOLDERS (P) LTD. REPORTED IN 23 TAXM ANN.COM 23 HAS HELD THAT ASSESSEE CAN MAKE A FRESH CLAIM BEFORE THE APP ELLATE AUTHORITIES EVEN IF THE CLAIM WAS NOT MADE IN THE RET URN OF INCOME FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE ISSUE REGA RDING A NEW CLAIM IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 132. NOW COMING TO THE ALLOWABILITY OF DEDUCTION U/ S.80IA(4) ON THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARC H IS CONCERNED WE 61 FIND THE SAME ISSUE HAS ALSO TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IT IS AN ADMITTED FACT THAT THE ASSESSEE COMPANY HAS DEBITED N ON GENUINE EXPENDITURE IN ITS BOOKS OF ACCOUNT AND GENERATED CASH , A FACT WHICH HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT ORDER. THERE FORE, THE CONTENTION RAISED BY THE REVENUE IN THE GROUNDS OF AP PEAL THAT THE ADDITION ON ACCOUNT OF EXPENSES FROM UNEXPLAINED SOURC ES ATTRACTS PROVISIONS OF SECTION 69C AND THEREFORE THE ASSESSEES INCO ME IS NOT INCOME FROM BUSINESS OF UNDERTAKING REFERRED TO IN SECT ION 80IA(4) IN OUR OPINION IS INCORRECT. THE AO IN THE ASSESSMENT ORD ER HAS ACCEPTED THAT THE ASSESSEE COMPANY HAS DEBITED NON GENUINE EXPEND ITURE IN ITS BOOKS OF ACCOUNT. THEREFORE, ONCE THE NON GENUINE E XPENDITURE IS DISALLOWED CORRESPONDINGLY THE BUSINESS INCOME OF THE ASSE SSEE INCREASED ON ACCOUNT OF DISALLOWANCE OF SUCH EXPENDITU RE. THEREFORE, IN THAT EVENT, THE DEDUCTION U/S.80IA(4) HAS TO INCREASE CORRESPONDINGLY. THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSE SSEE ON THIS ISSUE SUPPORT THE CASE OF THE ASSESSEE WHERE IT HAS BEEN HELD T HAT IF THE INCOME GOES UP BECAUSE OF THE ADDITION MADE IN THE ASSE SSMENT, THE DEDUCTION U/S.10A OR CHAPTER VIA AS THE CASE MAY BE, SH ALL BE GRANTED ON SUCH ENHANCED INCOME. 133. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF GEM PLUS JEWELLERY INDIA LTD. REPORTED IN 333 ITR 175 HAS OBSE RVED AS UNDER ; 11. FOR THE PURPOSES OF THE APPEAL IT IS NECESSAR Y TO REFER TO THE ADMITTED POSITION WHICH IS THAT THE ASSESSEE HAD DEPOSITED B OTH THE EMPLOYER'S AND THE EMPLOYEES' CONTRIBUTION TOWARDS PROVIDENT FUND AND ESIC, THOUGH BEYOND THE DUE DATE INCLUDING THE GRACE PERIOD. THE ASSESSING OFFICER ADDED THESE PAYMENTS TO THE TOTAL INCOME OF THE ASSESSEE AND MA DE AN ADDITION IN THE AMOUNT OF RS.71.59 LACS. HOWEVER, FOR THE DEDUCTION UNDER SECTION 10A, THE ADDITION MADE ON ACCOUNT OF THE EMPLOYEES' CONTRIBU TION WAS IGNORED IN CALCULATING THE PROFITS ELIGIBLE FOR DEDUCTION ON T HE GROUND THAT THESE RECEIPTS WERE NOT GENERATED OUT OF THE MANUFACTURING ACTIVIT Y OF THE ASSESSEE COMPANY. 12. BY REASON OF THE JUDGMENT OF THE SUPREME COURT IN COMMISSIONER OF INCOME TAX V. ALOM EXTRUSIONS LIMITED4 THE EMPLOYER 'S CONTRIBUTION WAS LIABLE TO BE ALLOWED, SINCE IT WAS DEPOSITED BY THE DUE DA TE FOR THE FILING OF THE RETURN. THE PECULIAR POSITION, HOWEVER, AS IT OBTAINS IN TH E PRESENT CASE ARISES OUT OF THE FACT THAT THE DISALLOWANCE WHICH WAS EFFECTED BY TH E ASSESSING OFFICER HAS NOT, THE COURT IS INFORMED, BEEN CHALLENGED BY THE ASSES SEE. AS A MATTER OF FACT THE QUESTION OF LAW WHICH IS FORMULATED BY THE REVENUE PROCEEDS ON THE BASIS THAT THE ASSESSED INCOME WAS ENHANCED DUE TO THE DISALLO WANCE OF THE EMPLOYER'S AS WELL AS THE EMPLOYEES' CONTRIBUTION TOWARDS PROVIDE NT FUND /ESIC AND THE ONLY QUESTION WHICH IS CANVASSED ON BEHALF OF THE REVENU E IS WHETHER ON THAT BASIS THE TRIBUNAL WAS JUSTIFIED IN DIRECTING THE ASSESSI NG OFFICER TO GRANT THE EXEMPTION UNDER SECTION 10A. ON THIS POSITION, IN T HE PRESENT CASE IT CANNOT BE DISPUTED THAT THE NET CONSEQUENCE OF THE DISALLOWAN CE OF THE EMPLOYER'S AND THE EMPLOYEE'S CONTRIBUTION IS THAT THE BUSINESS PROFIT S HAVE TO THAT EXTENT BEEN ENHANCED. THERE WAS, AS WE HAVE ALREADY NOTED, AN A DD BACK BY THE ASSESSING OFFICER TO THE INCOME. ALL PROFITS OF THE 4 (2009) 319 ITR 306 UNIT OF THE ASSESSEE HAVE BEEN DERIVED FROM MANUFACTURING ACTIVITY. THE SALARIES PAID BY THE ASSESSEE, IT HAS NOT BEEN DISPUTED, RELATE TO THE M ANUFACTURING ACTIVITY. THE DISALLOWANCE OF THE PROVIDENT FUND/ ESIC PAYMENTS H AS BEEN MADE BECAUSE OF THE STATUTORY PROVISIONS - SECTION 43B IN THE CASE OF THE EMPLOYER'S CONTRIBUTION AND SECTION 36(V) READ WITH SECTION 2(24)(X) IN THE CASE OF THE EMPLOYEE'S CONTRIBUTION WHICH HAS BEEN DEEMED TO BE THE INCOME OF THE ASSESSEE. THE PLAIN CONSEQUENCE OF THE DISALLOWANCE AND THE ADD BACK TH AT HAS BEEN MADE BY THE ASSESSING OFFICER IS AN INCREASE IN THE BUSINESS PR OFITS OF THE ASSESSEE. THE CONTENTION OF THE REVENUE THAT IN COMPUTING THE DED UCTION UNDER SECTION 10A THE ADDITION MADE ON ACCOUNT OF THE DISALLOWANC E OF THE PROVIDENT FUND / ESIC PAYMENTS OUGHT TO BE IGNORED CANNOT BE ACCEPTE D. NO STATUTORY PROVISION TO THAT EFFECT HAVING BEEN MADE, THE PLAIN CONSEQUE NCE OF THE DISALLOWANCE MADE 62 BY THE ASSESSING OFFICER MUST FOLLOW. THE SECOND QU ESTION SHALL ACCORDINGLY STAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 134. SIMILARLY, THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF CIT VS. SHETH DEVELOPERS (P) LTD. VIDE ITA NO.3724/2010 ORDE R DATED 27-07- 2012 HAS HELD AS UNDER : 2. THE APPELLANT HAS FORMULATED THE FOLLOWING QUESTION S OF LAW FOR CONSIDERATION OF THIS COURT. (1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT DEDUCTIONS U /S. 80IB (10) HAS TO BE ALLOWED FROM THE INCOME COMPUTED AS UNDISCLOSED INC OME U/S. 69A OF THE INCOME TAX ACT, 1961? (2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS JUSTIFIED IN ALLOWING THE CLAIM OF DED UCTION U/S. 80IB(10) WHERE NO SUCH CLAIM IS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE BLOCK PERIOD? 3. THE APPEAL IS ADMITTED ON QUESTION (1) AND (2). 4. AT THE INSTANCE OF THE ADVOCATES FOR THE APPELLA NT AND THE RESPONDENT THE APPEAL IS TAKEN UP FOR FINAL DISPOSAL. 5. SO FAR AS QUESTION (2) IS CONCERNED, IT IS AN ADM ITTED POSITION BETWEEN THE PARTIES THAT THE SAME STANDS COVERED IN FAVOUR OF THE RESPONDENT-ASSESSEE AND AGAINST THE APPELLANT REVENUE BY VIRTUE OF THE ORDER OF THIS COURT IN CIT V. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. [2012] 23 TAXMANN.COM 23. IN THE ABOVE CASE IT HAS BEEN HELD THAT A FRESH CLAIM COULD BE URGED BEFORE THE APPELLATE AUTHORITIES EVEN IF THE CLAIM WAS NOT MAD E IN THE RETURN OF INCOME FILED BEFORE THE ASSESSING OFFICER. 6. THE FACTS RELEVANT FOR THE PURPOSE OF QUESTION (1 ) ARE BRIEFLY AS UNDER: ( A ) THE RESPONDENT-ASSESSEE CARRIES ON BUSINESS AS B UILDERS IN MUMBAI AND THANE. ON 21/2/2002, THE INCOME TAX DEPARTMENT CARRIED OUT SEARCH OPERATION UNDER SECTION 132 OF THE SAID ACT COVERING THE RESIDENTIAL AND BUSINESS PREMISES BELONGING TO THE RESPONDENT- ASSESSEES GROUP. DURING THE COURSE OF THE SEARCH P ROCEEDINGS THE RESPONDENTS DIRECTOR DECLARED THE UNDISCLOSED INCO ME OF THE GROUP AT RS. 7.00 CRORES FOR THE BLOCK PERIOD. HOWEVER, IN T HE RETURN FILED FOR THE BLOCK PERIOD 1/4/1995 TO 21/1/2002, THE RESPONDENT SHOWED ITS UNDISCLOSED INCOME AT RS. 3.50 CRORES. THE ASSESSIN G OFFICER WHILE ASSESSING THE RESPONDENT FOR THE BLOCK PERIOD BY OR DER DATED 30/4/2004 COMPUTED THE UNDISCLOSED INCOME FOR THE BLOCK PERIO D AT RS. 7.68 CRORES. ( B ) IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFTER REFERRED TO AS THE CIT(A)) THE RESPO NDENT CONTENDED THAT THE UNDISCLOSED INCOME WAS DECLARED AT RS. 7.00 CRO RES ONLY BECAUSE AT THE TIME OF MAKING THE STATEMENT THE DIRECTOR OF RE SPONDENT WAS UNAWARE THAT DEDUCTION UNDER SECTION 80IB WOULD BE AVAILABLE IN RESPECT OF RESPONDENTS HOUSING PROJECTS. THE CIT(A ) BY ORDER DATED 17/8/2004 FOUND ON FACTS THAT THE RESPONDENT WAS EN TITLED TO BENEFIT OF SECTION 80IB OF THE SAID ACT. FURTHER, CIT(A) HELD THAT IN TERMS OF CLAUSE (A) OF THE EXPLANATION TO SECTION 158(BB) (1) OF THE SAID ACT PROVIDES THAT UNDISCLOSED INCOME FOR THE BLOCK PERI OD IS TO BE COMPUTED AFTER APPLYING THE RELEVANT PROVISIONS OF THE SAID ACT. THIS WOULD INCLUDE THE PROVISIONS OF CHAPTER VIA OF THE SAID ACT. SECT ION 80IB IS A PART OF CHAPTER VIA OF THE SAID ACT. ON EXAMINATION OF THE EVIDENCE THE CIT(A) HELD THAT THE RESPONDENT WAS ENTITLED TO THE BENEFI T OF SECTION 80IB OF THE SAID ACT AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE TAX PAYABLE FOR THE BLOCK PERIOD 1/4/1995 TO 21/2/2002 UNDER SECTION 63 158BB OF THE SAID ACT AFTER GIVING THE BENEFIT OF S ECTION 80IB OF THE SAID ACT. ( C ) ON APPEAL BY THE REVENUE THE TRIBUNAL BY ORDER D ATED 12/10/2009 UPHELD THE ORDER OF THE CIT(A).ON MERITS, THE TRIBU NAL HELD THAT THE BENEFIT OF DEDUCTION UNDER SECTION 80IB OF THE SAID ACT WOULD BE AVAILABLE IN RESPECT OF UNDISCLOSED INCOME WHICH IS BEING OFFERED TO TAX FOR BLOCK PERIOD UNDER CHAPTER XIVB OF THE SAID ACT IN VIEW OF RETROSPECTIVE AMENDMENT TO THE EXPLANATION TO SUB S ECTION (1) OF SECTION 158BB OF THE SAID ACT. THE TRIBUNAL RELIED UPON THE DECISION OF THE MADRAS HIGH COURT IN THE MATTER OF ANBU TEXTILES V. ASSTT . CIT [2003] 262 ITR 684. 7. MR. VIMAL GUPTA, COUNSEL FOR THE APPELLANT SUBMIT S THAT THE ORDER OF THE TRIBUNAL IS UNSUSTAINABLE AS BENEFIT OF THE DEDUCTI ON UNDER CHAPTER VIA OF THE ACT CANNOT BE EXTENDED TO AN ASSESSEE WHO HAS NOT O RIGINALLY DISCLOSED HIS INCOME BUT SEEKS ITS BENEFIT WHILE FILING A BLOCK R ETURN UNDER CHAPTER XIV B OF THE SAID ACT SUBSEQUENT TO THE SEARCH UNDER THE SAI D ACT. IN SUPPORT OF THE ABOVE RELIANCE WAS PLACED UPON THE DECISION OF THE GUJRAT HIGH COURT IN THE MATTER OF FAKIR MOHMED HAJI HASAN V. CIT [2001] 247 ITR 290. IN THE ABOVE CASE UNEXPLAINED GOLD VALUED AT RS. 48.72 LACS FOUND IN POSSESSION OF THE PARTY WAS ADDED TO THE PARTYS INCOME UNDER SECTION 69, 69A, 69B AND 69C OF THE ACT. AS THE UNEXPLAINED GOLD WAS CONFISCATED THE ASSESSEE S OUGHT A DEDUCTION ON ACCOUNT OF CONFISCATION OF GOLD AS A LOSS. THE COUR T HELD THAT SUCH UNDISCLOSED /UNEXPLAINED AMOUNTS DID NOT FALL UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION AND THEREFORE, NO DEDUCTION IS AVAILABLE. ON THE BASIS OF THE ABOVE DECISION, IT IS THE CONTENTION OF MR. GUP TA THAT NO DEDUCTION UNDER SECTION 80IB OF THE SAID ACT CAN BE MADE AVAILABLE TO THE RESPONDENT WHILE COMPUTING THE TAX PAYABLE UNDER CHAPTER XIVB OF THE SAID ACT FOR THE BLOCK PERIOD 1/4/1995 TO 21/2/2002. 8. AS AGAINST THE ABOVE, MR. PARDIWALA, SENIOR COUNS EL FOR THE RESPONDENT STATES THAT THE DECISION OF THE GUJRAT HIGH COURT I N THE MATTER OF FAKIR MOHMED HAJI HASAN ( SUPRA ) IS INAPPLICABLE TO THE PRESENT FACTS. IN THE PRES ENT FACTS NO QUESTION OF APPLICATION OF SECTION 68, 69 AND 69A 6 9B AND 69C OF THE SAID ACT ARISES AS THE SAME HAS NOT BEEN INVOKED BY THE APPE LLANT- REVENUE. FURTHER THE AMOUNT OF UNDISCLOSED INCOME WAS NEITHER IN THE NAT URE OF UNEXPLAINED INVESTMENT NOR UNEXPLAINED MONEY, EXPENSES OR INVES TMENT WHICH WERE NOT FULLY DISCLOSED. IT IS AN ADMITTED POSITION BETWEEN THE PARTIES AS REFLECTED EVEN IN THE ORDER THE ASSESSING OFFICER THAT UNDISCLOSED IN COME WAS IN FACT RECEIVED BY THE RESPONDENT IN THE COURSE OF CARRYING ON ITS BUS INESS ACTIVITIES AS A BUILDER. THE SAME WAS RETURNED BY THE RESPONDENT AS INCOME A RISING FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION AND THE SAME WAS AC CEPTED BY THE DEPARTMENT. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT IN VIEW OF THE RETROSPECTIVE AMENDMENT TO THE EXPLANATION TO S ECTION 158BB(1) OF THE SAID ACT, THE DEDUCTION UNDER SECTION 80IBOF THE SAID AC T (WHICH IS ADMITTEDLY A PART OF CHAPTER VIB OF THE SAID ACT) IS TO BE ALLOWED FO R DETERMINING THE UNDISCLOSED INCOME UNDER CHAPTER XIVB OF THE SAID ACT. 9. BEFORE CONSIDERING THE RIVAL SUBMISSIONS, IT WOULD BE CONVENIENT TO REPRODUCE THE AMENDED EXPLANATION TO SUB SECTION (1 ) OF SECTION 158BB OF THE SAID ACT WHICH READS AS UNDER: EXPLANATION- FOR THE PURPOSES OF DETERMINATION OF UNDISCLOSED INCOME- ( A ) THE TOTAL INCOME OR LOSS OF EACH PREVIOUS YEAR S HALL, FOR THE PURPOSE OF AGGREGATION, BE TAKEN AS THE TOTAL INCOME OR LOS S COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF [THIS ACT] WITHOU T GIVING EFFECT TO SET OFF BROUGHT FORWARD LOSSES UNDER CHAPTER-VI OR UNAB SORBED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32; [PROVIDED THAT IN COMPUTING DEDUCTIONS UNDER CHAPTE R VI-A FOR THE PURPOSES OF THE SAID AGGREGATION, EFFECT SHALL BE G IVEN TO SET OFF OF 64 BROUGHT FORWARD LOSSES UNDER CHAPTER VI OR UNABSORB ED DEPRECIATION UNDER SUB-SECTION (2) OF SECTION 32;] IT WOULD BE PERTINENT TO NOTE THAT THE WORDS THIS ACT IN PARENTHESIS WERE SUBSTITUTED BY THE FINANCE ACT OF 2002 WITH RE TROSPECTIVE EFFECT FROM 1/7/1975. PRIOR TO THE ABOVE AMENDMENT THE WOR DS WERE CHAPTER IV. FURTHER THE PROVISO WAS ALSO ADDED TO THE EXPL ANATION BY THE FINANCE ACT 2002. 10. CHAPTER XIVB OF THE SAID ACT PROVIDES FOR SPECIAL P ROCEDURE FOR ASSESSMENT OF SEARCH CASES AND IS CONTAINED IN SECT ION 158B TO SECTION 158BI OF THE SAID ACT. FURTHER, THIS CHAPTER APPLIES ONLY IN CASES OF SEARCH INITIATED BEFORE 31/5/2003.IN THIS CASE, THE SEARCH TOOK PLACE IN 20 02 AND THEREFORE, THE PRESENT CASE IS GOVERNED BY CHAPTER XIVB OF THE SAID ACT. S ECTION 158BB OF CHAPTER XIVB OF THE ACT DEALS WITH COMPUTATION OF UNDISCLOSED IN COME OF THE BLOCK PERIOD. THE ABOVE EXPLANATION TO SUB SECTION (1) OF SECTION 158 BB OF THE ACT WAS AMENDED BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 1/7/1995. PRIOR TO THE AMENDMENT, ACCORDING TO THE EXPLANATION THE TOTAL I NCOME OR LOSS WAS TO BE COMPUTED IN ACCORDANCE WITH CHAPTER IV OF THE SAID ACT. CONSEQUENT TO THE AMENDMENT BY FINANCE ACT, 2002 WITH RETROSPECTIVE E FFECT FROM 1/7/1995 THE TOTAL INCOME OR LOSS HAS TO BE COMPUTED IN ACCORDAN CE WITH THE PROVISIONS OF THIS ACT I.E. THE SAID ACT. CONSEQUENTLY, WITH EFFE CT FROM 1/7/1995 THE TOTAL INCOME/LOSS FOR THE BLOCK PERIOD HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE SAID ACT AND THE SAME WOULD INCLU DE CHAPTER VI-A OF THE SAID ACT. SECTION 80IB OF THE SAID ACT IS A PART OF CHAP TER VIA OF THE ACT. IN VIEW OF THE ABOVE, WHILE COMPUTING THE UNDISCLOSED INCOME FOR T HE BLOCK PERIOD THE RESPONDENT-ASSESSEE IS ENTITLED TO CLAIM DEDUCTION FROM ITS INCOME UNDER SECTION 80IB OF THE ACT. IN FACT, TO THE SAME EFFEC T IS THE DECISION OF THE MADRAS HIGH COURT IN THE MATTER OF ANBU TEXTILES ( SUPRA ). 11. THE FURTHER CASE OF THE APPELLANT-REVENUE THAT IN VIEW OF SECTION 69A OF THE SAID ACT THE BENEFIT OF DEDUCTION UNDER CHAPTER VIA OF THE SAID ACT WOULD NOT BE AVAILABLE TO THE RESPONDENT-ASSESSEE IS NOT WELL FOUNDED. IN THE PRESENT FACTS IT IS NOT THE CASE OF THE REVENUE THAT THE MONEY FO UND IN POSSESSION OF THE RESPONDENT ASSESSEE COULD NOT BE EXPLAINED AND/OR I TS SOURCE COULD NOT BE EXPLAINED TO THE SATISFACTION OF THE ASSESSING OFFI CER. IN THE PRESENT CASE UNDISCLOSED INCOME FOUND IN THE FORM OF CASH WAS EX PLAINED AS HAVING BEEN ACQUIRED WHILE CARRYING ON BUSINESS AS A BUILDER AN D THIS EXPLANATION WAS ACCEPTED BY THE ASSESSING OFFICER BY HAVING ASSESSE D THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD AS INCOME FROM PROFITS AND GAINS O F BUSINESS OR PROFESSION. THEREFORE, THE RELIANCE BY THE REVENUE UPON THE DEC ISION OF THE GUJRAT HIGH COURT IN THE MATTER OF FAKIR MOHMED HAJI HASAN ( SUPRA ) IS NOT CORRECT AS THE FACTS OF THAT CASE ARE COMPLETELY DISTINGUISHABLE F ROM THE PRESENT FACTS. IN THE PRESENT CASE, NO QUESTION OF APPLICATION OF SECTION 68,69 AND 69A, 69B AND 69C OF THE SAID ACT ARISES AS THE SAME HAS NOT BEEN INV OKED BY THE DEPARTMENT. IT IS AN ADMITTED POSITION BETWEEN THE PARTIES AS REFLECT ED EVEN IN THE ORDER THE ASSESSING OFFICER THAT UNDISCLOSED INCOME WAS IN FA CT RECEIVED BY THE RESPONDENT IN THE COURSE OF CARRYING OUT ITS BUSINE SS ACTIVITIES AS A BUILDER. THE SAME WAS RETURNED BY THE RESPONDENT AS INCOME ARISI NG FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION AND THE SAME WAS ACCEPTED BY THE DEPARTMENT UNLIKE IN THE MATTER OF FAKIR MOHMAD HAJI HASAN ( SUPRA ). 12. IN VIEW OF THE ABOVE THE ORDER DATED 12/10/2009 O F THE TRIBUNAL CANNOT BE FAULTED. THEREFORE, QUESTION (1) ABOVE IS ANSWER ED IN THE AFFIRMATIVE IN FAVOUR OF THE RESPONDENT-ASSESSEE AND AGAINST THE A PPELLANT-REVENUE. QUESTION (2) IS ANSWERED IN THE AFFIRMATIVE IN FAVOUR OF THE RESPONDENT-ASSESSEE AND AGAINST THE APPELLANT-REVENUE. 135. WE FIND THE PUNE BENCH OF THE TRIBUNAL FOLLOWI NG THE ABOVE 2 DECISIONS IN THE CASE OF MALPANI ESTATES (SUPRA) HA S HELD AS UNDER : 65 17. IN-FACT, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SHETH DEVELOPERS (P) LTD. (SUPRA) WAS CONSIDERING THE CLAIM OF DEDUC TION U/S 80IB(10) OF THE ACT IN RELATION TO THE UNDISCLOSED INCOME DECLARED CONS EQUENT TO THE SEARCH ACTION. IN THE CASE BEFORE THE HONBLE HIGH COURT, IT WAS F ACTUALLY EMERGING THAT UNDISCLOSED INCOME WAS EARNED BY THE ASSESSEE IN TH E COURSE OF CARRYING ON HIS BUSINESS ACTIVITY OF A BUILDER AND THE SAME WAS A CCEPTED BY THE DEPARTMENT, BUT THE CLAIM OF THE DEDUCTION U/S 80IB(10) WAS DEN IED IN RELATION TO SUCH INCOME. HOWEVER, THE CLAIM WAS UPHELD BY THE HONBL E BOMBAY HIGH COURT. IN THE PRESENT CASE, FACTUALLY, THERE IS NO MATERIAL T O NEGATE THE ASSERTION OF THE ASSESSEE, WHICH ARE BORNE OUT OF THE MATERIAL ON RE CORD, THAT THE ADDITIONAL INCOME IN QUESTION HAS BEEN RECEIVED IN THE COURSE OF CARRYING ON ITS BUSINESS ACTIVITY OF DEVELOPING THE HOUSING PROJECT, THE CR EST AT PIMPLE SAUDAGAR, PUNE, WHICH IS ELIGIBLE FOR SECTION 80IB(10) BENEFITS. T HEREFORE, IN TERMS OF THE PARITY OF REASONING LAID DOWN BY THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF SHETH DEVELOPERS (P) LTD. (SUPRA), THE CLAIM OF THE ASSES SEE IS JUSTIFIED. 18. IN-FACT, ONCE IT IS FACTUALLY EXPLICIT THAT THE ADDITIONAL INCOME IN QUESTION IS DERIVED FROM THE HOUSING PROJECT, THE CREST AT PIMPLE SAUDAGAR, PUNE, WHICH IS ELIGIBLE FOR SECTION 80IB(10) BENEFITS, SUCH AN INCOME MERELY GOES TO ENHANCE THE BUSINESS INCOME DERIVED FROM THE ELIGIBLE HOU SING PROJECT AND SHALL BE ENTITLED FOR SECTION 80IB(10) BENEFITS, EVEN AS PER THE RATIO OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GEM PL US JEWELLERY INDIA LTD. (SUPRA). 19. IN THE RESULT, ON THE BASIS OF THE AFORESAID LE GAL POSITION AND THE MATERIAL AND EVIDENCE ON RECORD, ASSESSEE IS ELIGIBLE FOR DE DUCTION U/S 80IB(10) OF THE ACT IN RELATION TO IMPUGNED ADDITIONAL INCOME OFFER ED IN A STATEMENT U/S 132(4) OF THE ACT IN THE COURSE OF SEARCH AND SUBSEQUENTLY DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A(1)(A) OF THE ACT. IN T HE RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 IS ALLOWED. 136. IN VIEW OF THE ABOVE DECISIONS CITED (SUPRA) , THE ASSESSEE, IN OUR OPINION IS ALSO ENTITLED TO DEDUCTION U/S.80IA(4) ON T HE ADDITIONAL INCOME. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) ON THIS ISSUE WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE SAME IS UPHELD. HOWEVER, AS PER THE ADDITIONAL GROUND RAISED BY THE ASSESSEE, THERE SEEMS TO BE SOME CALCULATION ERROR WHILE COMPUTING THE DEDUCTION U/S.80IA(4). WE, THEREFORE, DIRECT THE AO TO RECOMPUTE THE CORRECT DEDUCTION AS PER LAW AFTER GIV ING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACC ORDINGLY. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 95. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO TH E FACTS IN THE CASE OF MAHALAKSHMI INFRA PROJECTS LTD. (SUPRA), THEREFO RE, FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MAHALAKSH MI INFRA PROJECTS LTD. (SUPRA), WE UPHOLD THE ORDER OF THE C IT(A) ON THIS ISSUE. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISM ISSED. 96. GROUNDS OF APPEAL NO.7 & 8 BEING GENERAL IN NATURE ARE DISMISSED. 66 ITA NO.229/PN/2013 (A.Y. 2008-09) (BY ASSESSEE) : 97. GROUNDS OF APPEAL NO.1 TO 1.4 BY THE ASSESSEE ARE AS UNDER : 1.0 ON THE FACTS AND IN LAW, LD. CIT(A), KOLHAPUR E ARED IN CONFIRMING THE SHIFTING OF UNDISCLOSED INCOME FOR THE ASST. YEARS FR OM 2007-08 TO 2010-11 BY BRINGING TO TAX RS.14,90,67,500 FOR THE A SST. YEAR UNDER APPEAL, ON THE BASIS OF PAPERS SEIZED FROM TECHNICAL DI RECTOR OF JOINT VENTURE PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED , PUNE DURING THE ACTION U/S 132( 4) HELD ON. 24-09-2009 INSTEAD OF ALLOWING APPELLANT'S APPEAL BY ACCEPTING UNDISCLOSED INCOME OFFERED BY IT FOR THE ASST. YEAR 2009-10 & 2010-11 ON THE BASIS OF PAPERS SEIZED FROM IT 'S OWN PREMISES DURING THE COURSE OF SEARCH CONDUCTED ON 23-10-2009 1.1 LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE JOINT VENTURE/CONSORTIUM AGREEMENT BETWEEN APPELLANT & IT' S PARTNER MIS MAHALAKSHMI INFRA-PROJECTS LIMITED WAS ON WORK SHARING BASIS & NOT ON JOINT EXECUTION BASIS AND AS SUCH THE CONTROL & MANAGE MENT OF THE PARTNERS OVER FINANCE & ADMINISTRATION IS INDEPENDENT. 1.2 LD. CIT(A) ALSO ERRED IN UPHOLDING THE AO'S BASELE SS ASSERTION IN PARA 10.4.2 ' PAGE NO'S 31, 28, 22, & 17 OF BUNDLES NO.1 SEIZED F ROM RESIDENCE OF SHRI. D.A. BHAT ARE INFACT DOCUMENTS OF M/S B.T.PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SENT TO SHRI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION AS P ER PERIODICAL RECONCILIATION IS VERY IMPORTANT IN THESE MATTERS RELA TED TO CASH PAYMENTS.' THE APPELLANT SUBMITS THAT NO OPPORTUNITY O F THE HEARING WAS GIVEN BY THE AO WITH REGARD TO THESE PRESUMPTIONS. 1.3 LD. CIT(A) WAS NOT JUSTIFIED IN CONCURRING WITH T HE FINDING OF THE AO REJECTING THE EVIDENCE IN THE FORM OF LOOSE PAPER S SEIZED AT THE OFFICE PREMISES OF THE APPELLANT HOLDING ON MERE IPSE DIXIT THAT SUCH EVIDENCE IS FABRICATED. 1.4 LD. CIT(A) ERRED IN CONFIRMING THE PRESUMPTION M ADE BY AO IN SHIFTING THE UNDISCLOSED IN COME TO EARLIER YEARS ON TH E BASIS OF EVIDENCE SEIZED FROM A THIRD PARTY. 98. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROU NDS BY THE ASSESSEE ARE IDENTICAL TO GROUNDS OF APPEAL NO. 1 TO 1.4 IN ITA NO.228/PN/2013 FOR A.Y. 2007-08 FILED BY THE ASSESSEE. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOWING THE SAME REASONINGS THE AB OVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 99. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GRO UND OF APPEAL NO.2 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 67 100. GROUND OF APPEAL NO.3 BY THE ASSESSEE READS AS UNDER : HAVING ALLOWED THE DEDUCTION U/S.80IA(4) IN RESPECT OF PROFIT EARNED BY THE ASSESSEE FORM DEVELOPMENT OF INFRASTRUCTURE FACILITI ES, CIT(A) WAS NOT JUSTIFIED IN REJECTING SUCH DEDUCTION IN RESPECT OF IN TEREST INCOME OF RS.25,90,058/- RECEIVED FROM BANK GUARANTEE DEPOSITS G IVEN TO THE PROJECT AUTHORITIES, IN RESPECT OF SUCH PROJECTS. 101. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL NO.3 IN ITA NO.228/PN/2013. W E HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN PARTLY ALLOWED FOR STATISTICAL PURPOSES. FOLLOWING SIMILAR REASONINGS, THIS GROUND BY THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. 102. GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS UNDER : LD.CIT(A) NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.8,17,500/- MADE BY AO ON THE BASIS OF EVIDENCE SEIZED FROM PREMISES OF T ECHNICAL DIRECTOR OF MAHALAKSHMI INFRA-PROJECTS DURING THE COURSE OF ASSESS MENT PROCEEDINGS STATING THAT THOSE WERE NOT CONSIDERED DURI NG THE COURSE OF SEARCH. 103. FACTS IN BRIEF, ARE THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAD FAILED T O CONSIDER VARIOUS EXPENSES INCURRED AS APPEARING ON PAGES NO. 1 T O 5 AND 7 AGGREGATING TO RS. 94,17,652/-. ON BEING CONFRONTED BY TH E AO, THE ASSESSEE DENIED OF HAVING ANY CONNECTION WITH THE ABOVE PAPERS S INCE THESE WERE FOUND IN THE POSSESSION OF SHRI D A BHATT. NOT BEING CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER ADDED BACK 50% OF SUCH EXPENSES BEING THE ASSESS EE'S SHARE AGGREGATING TO RS. 21.2425 LAKHS UNDER SECTION 69C IN ASS ESSMENT YEARS 2008-09 RS. 8.175 LAKHS AND IN 2009-10 RS.13.0675 LAKHS. IN RESPECT OF THE BALANCE OF RS. 49,89,652/-, THE ASSESSING OF FICER WAS NOT SATISFIED WITH THE ASSESSEE'S CONTENTION THAT THESE PAPERS DID NOT BEAR DATES AND HENCE DID NOT PERTAIN TO THE PERIOD UN DER 68 CONSIDERATION. HE THEREFORE HELD 50% OF THE ABOVE SUM I.E. RS.24,94,826/- TO BE INCURRED IN ASSESSMENT YEAR 2010-1 1 AND ACCORDINGLY TAXED THE SAME. 104. BEFORE CIT(A) IT WAS SUBMITTED THAT SHRI D.A. BHAT HAD NOTHING TO DO WITH ASSESSEES ADMINISTRATIVE AND FINANCIAL MATTER A ND THEREFORE THE DOCUMENTS FOUND IN HIS POSSESSION WERE NOT CONNECTED WITH ASSESSEE. IT WAS SUBMITTED THAT THE ADDITIONS WERE MADE IN THE ABSENCE OF CORROBORATIVE EVIDENCE AND WERE ARBITRARY AN D HENCE SHOULD BE DELETED. 105. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLANA TION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO BY OBS ERVING AS UNDER : 97. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. AS NOTED EARLIER, THESE EXPENSES ARE RECORDED IN PAGES 1 T O 5 AND 7 OF THE BHAT DOCUMENTS. THE TOTAL AMOUNT OF UNACCOUNTED EXPE NSES AS PER THE ASSESSING OFFICER IS RS. 94,17,652/- OUT OF WHICH 50% I .E. RS.46,19,076/- HAS BEEN ADDED IN VARIOUS ASSESSMENT YEARS AS MENTIONED ABO VE. THE ISSUE OF EVIDENTIARY VALUE OF PAPERS SEIZED FROM SHRI D A BHAT'S RESIDENCE AND ITS RELIABILITY IN COMPUTING THE UNEXPLAINED INC OME OF THE APPELLANT HAS BEEN DEALT WITH IN PARAGRAPHS 29 AND 33 (SUPRA). DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE POINTED OUT : (I) IN THE ABSENCE OF DATES AGAINST THE ENTRIES SHOWN IN THE SE PAPERS IT WAS NOT POSSIBLE FOR THEM TO VERIFY THE ENTRI ES WITH THE ENTRIES IN THE BOOKS OF ACCOUNT. HENCE, IT WAS PUT THA T THEORETICAL ENTRIES COULD PERTAIN TO A PERIOD EVEN PRIOR TO 01/0 4/2002. II. EXPENSES ON PAGES 4 AND 5 ON PROJECTS WERE NOT ACTU ALLY INCURRED. III. THE APPELLANT DOES NOT CONCUR WITH THE NOTINGS O N LOOSE PAPERS AND DIARIES FROM SHRI D.A. BHATS RESIDENCE. IV. PAGE NO. 7 IS AN ESTIMATION OF COST WHICH DO NOT H AVE ANY FINAL IMPLICATION. 98. I HAVE GONE THROUGH THE CONTENTS OF PAGES NO. 1 TO 5 AND 7 OF THE SEIZED MATERIAL. PAGE NO. 1 IS A SUMMARY OF PAYMENTS MA DE TO VARIOUS PERSONS, THE TOTAL OF WHICH IS RS. 3.35 LAKHS. PAGE NO. 2 IS AGAIN A SUMMARY OF PAYMENTS MADE TO VARIOUS PERSONS AGGREGATING TO RS. 2 .95 LAKHS. PAGE NO. 3 SHOWS VARIOUS EXPENSES INCURRED ON HOTEL, GOLD PUR CHASES, PLYWOOD PURCHASE, MOBILE BILLS OF NAVEEN, DYNAPAC LIST ETC., W HICH AGGREGATE TO RS. 12,94,772/-. PAGE NO. 4 CONTAINS DETAILS OF EXPENSES IN CURRED BY BOTH MAHALAXMI CONSTRUCTION CORPORATION LTD. AND B T PATI L AND SONS AND THE RECEIVABLE POSITION AS ON 11/07/2007. THE CONTENTS ON PAGE NO. 5 ARC 69 DETAILS OF VARIOUS EXPENSES INCLUDING THOSE WHICH ARE WR ITTEN AS 'K' EXPENSES. THE TOTAL OF 'K' EXPENSES IS RS. 26,13,500/- WH ICH IS INCURRED ON VARIOUS DATES BETWEEN 26/12/2008 TO 24/01/2009. PAGE NO. 7 CONTAINS WORKING OF INTEREST PAYMENT ON PURCHASE OF TENDER DOC UMENTS, BANK GUARANTEES FOR EMDS, FDS TO BE KEPT FOR EMDS AND EMDS RE QUIRED FOR PROCURING MOBILIZATION ADVANCES. IT APPEARS THAT THIS IS A WORKING OR ESTIMATE OF MONEY REQUIRED BY MAHALAXMI CONSTRUCTION CORPORATION LTD. AND B T PATIL AND SONS FOR GIVING VARIOUS BANK GUARA NTEES AND MEETING EMD REQUIREMENTS. IN FACT, THE WORD 'OFFICIAL' IS ALSO MENTIONED AGAINST THESE WORKINGS. IN MY OPINION, THE CONTENTS OF PAGE 7 DO NOT REFLECT THE UNACCOUNTED EXPENSES OF THE APPELLANT AND THE ASSESSING OFFICER IS DIRECTED TO REDUCE THIS SUM FROM THE TOTAL FOR ASSESSMENT YEAR 2010-11 AND THEREAFTER WORK OUT THE EXPENSES INCURRED ON THE BASIS OF THESE PAPERS AS ADDITIONAL INCOME OF THE ASSESSEE. 106. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APP EAL BEFORE US. 107. AFTER HEARING BOTH THE SIDES, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT GIVE ANY CONVINCING REPLY AGAINST THE FACTUAL FINDINGS GIVEN BY THE CIT(A). IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO O UR NOTICE AGAINST THE FINDINGS GIVEN BY THE CIT(A) WHICH IS BASED AFTER ANALYZING THE VARIOUS SEIZED DOCUMENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. GROUND RAISED BY THE A SSESSEE IS ACCORDINGLY DISMISSED. 108. GROUND OF APPEAL NO.5 BEING GENERAL IN NATURE IS DISMISSED. ITA NO.453/PN/2013 (A.Y. 2008-09) (BY REVENUE) : 109. GROUND OF APPEAL NO.1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSES OF RS.10,33,466/- 110. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.2 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE 70 ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 111. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON INVESTMENT IN NON BUSINESS ACTIVITIES OF RS.8, 125/-. 112. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.3 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THE ABOVE GROUND BY THE RE VENUE IS DISMISSED. 113. GROUND OF APPEAL NO.3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF PROPORTIONATE INTEREST ON ADVANCES FOR NON BUSINESS PURPOSES OF RS.10,67,853/-. 114. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.4 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENE IS DISMISSED. 115. GROUND OF APPEAL NO.4 BY THE REVENUE READS AS UNDER : 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF POOJA EXPENSES OF RS.74,062/-. 116. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.5 IN ITA 71 NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN A LLOWED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS ALLOWED. 117. GROUND OF APPEAL NO.5 BY THE REVENUE READS AS UNDER : 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT O F ADDITIONAL CLAIM U/S.80IA(4) OF RS.14,96,66,670/- WHICH IS THE ADDITION AL INCOME DECLARED DURING THE COURSE OF SEARCH PROCEEDINGS ON ACCOUNT OF EXPENSES FROM UNEXPLAINED SOURCES WHICH ATTRACT PROVISION OF S. 69C OF THE I.T. ACT WHICH IS NOT AN INCOME FROM THE BUSINESS OF UNDERTAKING REFE RRED TO IN SEC.80IA(4). 118. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUN D IS IDENTICAL TO GROUND OF APPEAL NO. 6(B) IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. FOLLOWING THE S AME REASONINGS THE ABOVE GROUND BY THE REVENUE IS DISMISSED. 119. GROUNDS OF APPEAL NO.6 AND 7 BY THE REVENUE BEING G ENERAL IN NATURE ARE DISMISSED. ITA NO.230/PN/2013 (A.Y. 2009-10) (BY ASSESSEE) : 120. GROUNDS OF APPEAL NO.1 TO 1.4 BY THE ASSESSEE ARE AS UNDER : 1.0 ON THE FACTS AND IN LAW, LD. CIT(A), KOLHAPUR E ARED IN CONFIRMING THE SHIFTING OF UNDISCLOSED INCOME FOR THE ASST. YEARS FR OM 2007-08 TO 2010-11 BY BRINGING TO TAX RS.4,25,97,000 FOR THE ASST . YEAR UNDER APPEAL, ON THE BASIS OF PAPERS SEIZED FROM TECHNICAL DIRECTOR OF JOINT VENTURE PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED, PUNE DURING THE ACTION U/S 132( 4) HELD ON. 24-09-2009 INSTEAD OF ALLOWING A PPELLANT'S APPEAL BY ACCEPTING UNDISCLOSED INCOME OFFERED BY IT FOR THE ASST . YEAR 2009-10 & 2010-11 ON THE BASIS OF PAPERS SEIZED FROM IT'S OWN PREM ISES DURING THE COURSE OF SEARCH CONDUCTED ON 23-10-2009 1.1 LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE JOINT VENTURE/CONSORTIUM AGREEMENT BETWEEN APPELLANT & IT' S PARTNER MIS MAHALAKSHMI INFRA-PROJECTS LIMITED WAS ON WORK SHARING BASIS & NOT ON JOINT EXECUTION BASIS AND AS SUCH THE CONTROL & MANAGE MENT OF THE PARTNERS OVER FINANCE & ADMINISTRATION IS INDEPENDENT. 1.2 LD. CIT(A) ALSO ERRED IN UPHOLDING THE AO'S BASELE SS ASSERTION IN PARA 10.4.2 ' PAGE NO'S 31, 28, 22, & 17 OF BUNDLES NO.1 SEIZED F ROM RESIDENCE OF SHRI. D.A. BHAT ARE INFACT DOCUMENTS OF M/S B.T.PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SENT TO 72 SHRI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION AS P ER PERIODICAL RECONCILIATION IS VERY IMPORTANT IN THESE MATTERS RELA TED TO CASH PAYMENTS.' THE APPELLANT SUBMITS THAT NO OPPORTUNITY O F THE HEARING WAS GIVEN BY THE AO WITH REGARD TO THESE PRESUMPTIONS. 1.3 LD. CIT(A) WAS NOT JUSTIFIED IN CONCURRING WITH T HE FINDING OF THE AO REJECTING THE EVIDENCE IN THE FORM OF LOOSE PAPER S SEIZED AT THE OFFICE PREMISES OF THE APPELLANT HOLDING ON MERE IPSE DIXIT THAT SUCH EVIDENCE IS FABRICATED. 1.4 LD. CIT(A) ERRED IN CONFIRMING THE PRESUMPTION M ADE BY AO IN SHIFTING THE UNDISCLOSED IN COME TO EARLIER YEARS ON TH E BASIS OF EVIDENCE SEIZED FROM A THIRD PARTY. 121. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROU NDS ARE IDENTICAL TO GROUNDS OF APPEAL NO. 1 TO 1.4 IN ITA NO.228/PN /2013 FOR A.Y. 2007-08. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOWING THE SIMILAR REASONINGS THE ABOVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 122. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GR OUND OF APPEAL NO.2 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 123. GROUND OF APPEAL NO.3 BY THE ASSESSEE READS AS UNDER : HAVING ALLOWED THE DEDUCTION U/S.80IA(4) IN RESPECT OF PROFIT EARNED BY THE ASSESSEE FORM DEVELOPMENT OF INFRASTRUCTURE FACILITI ES, CIT(A) WAS NOT JUSTIFIED IN REJECTING SUCH DEDUCTION IN RESPECT OF IN TEREST INCOME OF RS.6,54,143/- RECEIVED FROM BANK GUARANTEE DEPOSITS GI VEN TO THE PROJECT AUTHORITIES, IN RESPECT OF SUCH PROJECTS. 124. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL NO.3 IN ITA NO.228/PN/2013. W E HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED. FOLLOWING SIMILAR REASONINGS, THIS GROUND BY THE ASSESSEE IS ALLOWED. 125. GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS UNDER : LD.CIT(A) NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.13,06,750/- MADE BY AO ON THE BASIS OF EVIDENCE SEIZED FROM PREMISES OF T ECHNICAL DIRECTOR OF MAHALAKSHMI INFRA-PROJECTS DURING THE COURSE OF ASSESS MENT 73 PROCEEDINGS STATING THAT THOSE WERE NOT CONSIDERED DURI NG THE COURSE OF SEARCH. 126. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL NO.4 IN ITA NO.229/PN/2013 FOR A.Y.2008-09. WE HAVE ALREADY DECIDED THE ISSUE AND THE G ROUND RAISED BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWING SIMILAR REASONINGS, THIS GROUND BY THE ASSESSEE IS DISMISSED. 127. GROUND OF APPEAL NO.5 BY THE ASSESSEE READS AS UNDER : LD.CIT(A) ERRED IN CONFIRMING INTEREST U/S.234A LEVI ED BY THE ASSESSING OFFICER WITHOUT REALIZING THAT AFTER SEARCH ACTION U /S.132, PROVISIONS OF SECTION 139 GETS MERGED WITH SECTION 153A AND THE APPE LLANT IS REQUIRED TO FILE THE RETURN OF INCOME WITHIN THE TIME LIMIT ALLOWED IN THE NOTICE U/S.153A AND NOT WITHIN THE TIME LIMIT SPECIFIED IN P ROVISIONS OF SECTION 139(1) OF THE ACT. 128. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE COURSE OF HEARING BEFORE CIT(A) CHALLENGED LEVY OF INTEREST U /S.234A. IT WAS SUBMITTED THAT THE SEARCH ACTION WAS CONDUCTED ON 23-1 0-2009 AND ITS CASE WAS COVERED UNDER THE PROVISIONS OF SECTION 153A(1). IT WAS SUBMITTED THAT SINCE THE RETURN OF INCOME WAS FILED WIT HIN THE TIME LIMIT SPECIFIED IN THE NOTICE ISSUED U/S.153A(1)(A), THEREFORE , THE SAME IS DEEMED TO HAVE BEEN FILED U/S.139(1) OF THE ACT AND THEREFORE THE ASSESSEE IS NOT LIABLE TO PAY INTEREST U/S.234A OF THE I.T. ACT. 129. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLAN ATION GIVEN BY THE ASSESSEE AND HELD THAT THE ASSESSEE IS LIABLE TO PAY INTEREST U/S.234A BY OBSERVING AS UNDER : 102. THE CONTENTION OF THE APPELLANT CANNOT BE ENT ERTAINED. THERE IS NOTHING IN SECTION 153A OR SECTION 139 WHICH ALLOWS TH E ASSESSING OFFICER TO EXTEND THE TIME LIMIT FOR FILING OF INCOME-TAX R ETURNS DURING THE REGULAR COURSE. IF THE CONTENTION OF THE APPELLANT IS ACCEPTE D THEN, EVEN IF THE APPELLANT HAD NOT FILED A RETURN OF INCOME FOR ANY OF THE SIX YEARS CONTEMPLATED UNDER SECTIONS L53A OR 153C, THE TIME LI MIT FOR FILING OF RETURN OF INCOME FOR ALL THOSE YEARS WOULD BE AUTOMAT ICALLY EXTENDED AND THE SAME WOULD HAVE TO BE CONSIDERED AS RETURN FILED UNDER SECTION 139 AND THEREFORE, ALL NATURAL CONSEQUENCE UNDER THE ACT , INCLUDING THE PROVISIONS OF CARRY FORWARD AND SET OFF OF VARIOUS TYPE S OF LOSSES WOULD BECOME APPLICABLE. IT WOULD LEAVE NO DISTINCTION BET WEEN THE NON-FILER 74 AND A REGULAR FILER OF RETURN AND WOULD RESULT IN AL LOWING UNPRESCRIBED BENEFITS TO A DELINQUENT ASSESSEE. THEREFORE, IT IS HELD THAT IN RESPECT OF THE ASSESSMENT YEAR 2009-10, THE APPELLANT SHOULD HAVE F ILED THE RETURN OF INCOME ON OR BEFORE 31/10/2010. SINCE THIS WAS NOT DONE, THE APPELLANT WAS LIABLE TO PAY INTEREST UNDER SECTION 234 A AND THE SAME HAS BEEN RIGHTLY CHARGED. THIS GROUND OF APPEAL IS THEREF ORE, DISMISSED. 130. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APP EAL BEFORE US. 131. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE SEARCH IN THE INSTANT CASE TOOK PLACE ON 23-10-2009 AND THE ASS ESSEE HAS FILED THE RETURN OF INCOME WITHIN THE TIME LIMIT SPECIFIED IN THE NOT ICE ISSUED U/S.153A(1)(A) OF THE I.T. ACT. REFERRING TO THE DECISIO N OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI V.N. DEVADOSS AND THE ACIT VS. SHRI V.N. DEVADOSS (HUF) ORDER DATED 04- 02-2015 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECIS ION HAS HELD THAT INTEREST U/S.234A IS CHARGEABLE FROM THE DATE OF EXP IRY OF THE NOTICE PERIOD GIVEN U/S.153A TO THE DATE OF COMPLETION OF T HE ASSESSMENT U/S.143(3). HE ACCORDINGLY SUBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL. 132. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 133. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE HAS NOT FILED THE ORIGINAL RET URN OF INCOME AND THE ASSESSEE IN RESPONSE TO NOTICE U/S.153A HAS FILED ITS RETURN OF INCOME ON 05-08-2010 DECLARING LOSS OF RS.11,20, 68,340/-. THE AO COMPLETED THE ASSESSMENT U/S.143(3) R.W.S. 153A ON A TOTAL 75 INCOME OF RS.14,68,23,916/-. THE AO LEVIED INTEREST U/S.234A FROM 01-11-2010 TILL THE DATE OF ORDER, I.E. 27-12-2011 WHICH HA S BEEN UPHELD BY THE CIT(A). IT IS THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE THAT INTEREST U/S.234A IS CHARGEABLE FROM THE D ATE OF EXPIRY OF THE NOTICE PERIOD GIVEN U/S.153A TO THE DATE OF COMPLET ION OF THE ASSESSMENT U/S.143(3) AND THE AO CANNOT CHARGE INTEREST FROM THE EXPIRY OF DUE DATE PRESCRIBED U/S.139(1). WE FIND THE ABOV E ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CHENN AI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. V.N. DEVADOSS (SUPRA). WE FIND THE TRIBUNAL HAS OBSERVED AS UNDER : 45. THE SECOND COMMON ISSUE RAISED IN ALL THESE APPEA LS IS REGARDING LEVY OF INTEREST UNDER SECTION 234A. THE CASE OF THE R EVENUE IS THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DIRECT ING THE ASSESSING OFFICER TO CHARGE INTEREST UNDER SECTION 234A F ROM THE DATE OF EXPIRY OF THE NOTICE PERIOD GIVEN IN THE NOTICES UND ER SECTION 153A WITHOUT NOTING THAT CHARGING OF INTEREST UNDER SECTIO N 234A IS COMPENSATORY AND THAT AS PER THE PROVISIONS OF SECTION 8 0AC, THE ASSESSEES OUGHT TO HAVE FILED RETURNS OF INCOME WITHIN TH E DUE DATE UNDER SECTION 139(1) AND HENCE THE PROVISIONS OF SECTIO N 234A(1) IS APPLICABLE. IT IS ALSO THE CASE OF THE REVENUE THAT TH E COMMISSIONER OF INCOME-TAX(APPEALS) HAS FAILED TO NOTE THAT THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL, B-BENCH, CHENNAI IN THE CASE OF DR. V.JAYAKUMAR VS. ACIT, CIRCLE I, MADURAI, IN ITA NOS.520 TO 529(MDS)/2 010 IS NOT APPLICABLE TO THESE CASES SINCE THE FACTS ARE DISTINGUISH ABLE. IN THE CASE OF DR. V.JAYAKUMAR, THE ASSESSEE HAD PAID TAXES MUCH BEFORE FILING THE RETURN, WHEREAS IN THE PRESENT CASES THE ASSESSEES HAVE PA ID TAXES UNDER SECTION 140A. THE RETURNS OF INCOME FILED BY THE ASSESSEE S ON 23-9-2011 CANNOT BE EQUATED WITH THE RETURNS OF INCOME REQUIRE D TO BE FILED UNDER SECTION 139(1). IT IS THE CASE OF THE REVENUE THAT THE ASSESSEES HAVE COMMITTED DEFAULT BOTH UNDER SECTIONS 234A(1) AND 234 A(3). IT IS TRUE THAT THE JURISDICTIONAL TRIBUNAL AT CHENNAI IN ITS OR DER RENDERED IN THE CASE OF DR.V.JAYAKUMAR VS ACIT HAS HELD THAT INTEREST I S CHARGEABLE UNDER SECTION 234A FROM THE DATE OF EXPIRY OF THE NOTICE P ERIOD GIVEN TO THE ASSESSEE UNDER SECTION 153A. IT IS BECAUSE THE RETURN FILE D UNDER SECTION 153A WOULD BE DEEMED TO BE A RETURN OF INCOME UNDER SECTION 139 AS PER THE EXPRESS LANGUAGE OF THE PROVISIONS OF SECTION 15 3A(1)(A) AND THEREFORE THE RETURN OF INCOME FILED UNDER SECTION 153A ALSO IS TO BE PROCESSED UNDER SECTION 143(1) AND THE INCOME DETERMIN ED THEREOF. THESE ARE ALL CONSEQUENCES OF SEARCH CONDUCTED UNDER SEC TION 132 AND THE ISSUANCE OF NOTICE UNDER SECTION 153A. ONCE A RECO MPUTATION IN THE ASSESSMENT ORDER UNDER SECTION 153A IS DONE, THE INTEREST CHARGEABLE UNDER SECTION 234A WOULD HAVE TO BE RECKONED FROM TH E DATE OF DETERMINATION OF INCOME UNDER SECTION 143(1), READ W ITH SECTION 153A TO THE DATE OF THE RECOMPUTATION OF INCOME UNDER SECTIO N 153A, READ WITH SECTION 143(3). THIS POSITION IS IN TUNE WITH THE LAW ST ATED IN SECTION 234A(3). THEREFORE WE FIND THAT THE COMMISSIONER OF I NCOME TAX(APPEALS) IS JUSTIFIED IN HOLDING THAT THE INTEREST UNDER SECTION 234A IS 76 CHARGEABLE FROM THE DATE OF EXPIRY OF THE NOTICE PE RIOD GIVEN UNDER SECTION 153A TO THE DATE OF COMPLETING THE ASSESSMENT UN DER SECTION 143(3). THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEES. 134. RESPECTFULLY FOLLOWING THE DECISION CITED (SUPRA) WE HOLD THAT THE CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO LEVY INTEREST U/S.234 A OF THE I.T. ACT IN THE INSTANT CASE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO CANCEL THE INTEREST CH ARGED U/S.234A OF THE I.T. ACT. 135. GROUND OF APPEAL NO.6 BY THE ASSESSEE BEING GENERA L IN NATURE IS DISMISSED. ITA NO.454/PN/2013 (A.Y. 2009-10) (BY REVENUE) : 136. GROUND OF APPEAL NO. 1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSES OF RS.10,33,466/- 137. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.2 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 138. GROUND OF APPEAL NO. 2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF PROPORTIONATE INTEREST ON ADVANCES FOR NON BUSINESS PURPOSES OF RS.7,83,462/-. 139. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.4 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE 77 ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 140. GROUND OF APPEAL NO. 3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF POOJA EXPENSES OF RS.78,457/-. 141. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.5 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN A LLOWED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS ALLOWED. 142. GROUND OF APPEAL NO. 4(A) AND 4(B) BY THE REVENUE READ S AS UNDER : 4(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF U/S.80IA(4) OF RS.3,15,15,768/- WHICH WAS EARLIER CONFIRMED BY THE L D.CIT(A) FOR A.Y. 2000-01 AND A.Y. 2001-02 AS THE ASSESSEE IS ONLY WORK CON TRACTOR AND NOT A DEVELOPER AS PER THE EXPLANATION BELOW 80IA(13). B. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL CLAIM OF DED UCTION U/S.80IA(4) ALLOWED ON UNDISCLOSED INCOME OF RS.4,39,41,503/- WHI CH IS THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARC H PROCEEDINGS, ON ACCOUNT OF EXPENSES FROM UNEXPLAINED SOURCES WHICH ATT RACT PROVISION OF S.69C OF THE I.T. ACT WHICH IS NOT AN INCOME FROM T HE BUSINESS OF UNDERTAKING PREFERRED TO IN SEC.80IA(4). 143. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.6(A) AND 6( B) IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME REASONING THESE GROUNDS BY THE REVEN UE ARE DISMISSED. 78 144. GROUNDS OF APPEAL NO.5 AND 6 BY THE REVENUE BEING GENERAL IN NATURE ARE DISMISSED. ITA NO.231/PN/2013 (A.Y. 2010-11) (BY ASSESSEE) : 145. GROUNDS OF APPEAL NO.1 TO 1.4 BY THE ASSESSEE ARE AS UNDER : 1.0 ON THE FACTS AND IN LAW, LD. CIT(A), KOLHAPUR E ARED IN CONFIRMING THE SHIFTING OF UNDISCLOSED INCOME FOR THE ASST. YEARS F ROM 2007-08 TO 2010-11 BY BRINGING TO TAX RS.69,60,650 FOR THE ASST. YEAR UNDER APPEAL, ON THE BASIS OF PAPERS SEIZED FROM TECHNICAL DIRECTOR OF JOINT VENTURE PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED, PUNE DURING THE ACTION U/S 132( 4) HELD ON. 24-09-2009 INSTEAD OF ALLOWING A PPELLANT'S APPEAL BY ACCEPTING UNDISCLOSED INCOME OFFERED BY IT FOR THE ASST . YEAR 2009-10 & 2010-11 ON THE BASIS OF PAPERS SEIZED FROM IT'S OWN PREM ISES DURING THE COURSE OF SEARCH CONDUCTED ON 23-10-2009 1.1 LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE JOINT VENTURE/CONSORTIUM AGREEMENT BETWEEN APPELLANT & IT' S PARTNER M/S MAHALAKSHMI INFRA-PROJECTS LIMITED WAS ON WORK SHARING BASIS & NOT ON JOINT EXECUTION BASIS AND AS SUCH THE CONTROL & MANAGE MENT OF THE PARTNERS OVER FINANCE & ADMINISTRATION IS INDEPENDENT. 1.2 LD. CIT(A) ALSO ERRED IN UPHOLDING THE AO'S BASELE SS ASSERTION IN PARA 10.4.2 ' PAGE NO'S 31, 28, 22, & 17 OF BUNDLES NO.1 SEIZED F ROM RESIDENCE OF SHRI. D.A. BHAT ARE INFACT DOCUMENTS OF M/S B.T.PATIL & SONS BELGAUM CONSTRUCTION PVT. LTD. THESE DOCUMENTS WERE SENT TO SHRI D.A. BHAT FOR THE PURPOSE OF RECONCILIATION AS P ER PERIODICAL RECONCILIATION IS VERY IMPORTANT IN THESE MATTERS RELA TED TO CASH PAYMENTS.' THE APPELLANT SUBMITS THAT NO OPPORTUNITY O F THE HEARING WAS GIVEN BY THE AO WITH REGARD TO THESE PRESUMPTIONS. 1.3 LD. CIT(A) WAS NOT JUSTIFIED IN CONCURRING WITH T HE FINDING OF THE AO REJECTING THE EVIDENCE IN THE FORM OF LOOSE PAPER S SEIZED AT THE OFFICE PREMISES OF THE APPELLANT HOLDING ON MERE IPSE DIXIT THAT SUCH EVIDENCE IS FABRICATED. 1.4 LD. CIT(A) ERRED IN CONFIRMING THE PRESUMPTION M ADE BY AO IN SHIFTING THE UNDISCLOSED IN COME TO EARLIER YEARS ON TH E BASIS OF EVIDENCE SEIZED FROM A THIRD PARTY. 146. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN DS ARE IDENTICAL TO GROUNDS OF APPEAL NO. 1 TO 1.4 IN ITA NO.228/PN /2013 FOR A.Y. 2007-08. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOWING THE SIMILAR REASONINGS THE ABOVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 147. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUNDS OF APPEAL NO.2 AND 3 FOR WHICH THE LD. DEPARTMENTAL REPRES ENTATIVE HAS 79 NO OBJECTION. ACCORDINGLY, THE ABOVE GROUNDS ARE DISM ISSED AS NOT PRESSED. 148. GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS UNDER : HAVING ALLOWED THE DEDUCTION U/S.80IA(4) IN RESPECT OF PROFIT EARNED BY THE ASSESSEE FORM DEVELOPMENT OF INFRASTRUCTURE FACILITI ES, CIT(A) WAS NOT JUSTIFIED IN REJECTING SUCH DEDUCTION IN RESPECT OF IN TEREST INCOME OF RS.6,54,143/- RECEIVED FROM BANK GUARANTEE DEPOSITS GI VEN TO THE PROJECT AUTHORITIES, IN RESPECT OF SUCH PROJECTS. 149. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL NO.3 IN ITA NO.228/PN/2013 FOR A.Y.2007-08. WE HAVE ALREADY DECIDED THE ISSUE AND THE G ROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED. FOLLOWING SIMILAR REASONINGS, THIS GROUND BY THE ASSESSEE IS ALLOWED. 150. GROUND OF APPEAL NO.5 BY THE ASSESSEE READS AS UNDER : LD.CIT(A) NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.24,94,826/- MADE BY AO ON THE BASIS OF EVIDENCE SEIZED FROM PREMISES OF T ECHNICAL DIRECTOR OF MAHALAKSHMI INFRA-PROJECTS DURING THE COURSE OF ASSESS MENT PROCEEDINGS STATING THAT THOSE WERE NOT CONSIDERED DURI NG THE COURSE OF SEARCH. 151. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROU ND IS IDENTICAL TO GROUND OF APPEAL NO.5 IN ITA NO. ITA NO.228/PN /2013 FOR A.Y.2007-08 FILED BY THE ASSESSEE. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED . FOLLOWING THE SAME REASONINGS THIS GROUND BY THE ASSESSEE IS DISMISSED. 152. GROUND OF APPEAL NO.6 BY THE ASSESSEE BEING GENERAL IN NATURE IS DISMISSED. ITA NO.455/PN/2013 (A.Y. 2010-11) (BY REVENUE) : 153. GROUND OF APPEAL NO. 1 BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.69 B ON ACCOUNT OF DIFFERENCE IN VALUATION TO THE TUNE OF RS.26,02,596/ -. 80 154. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.1 IN ITA NO.451/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 155. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSES OF RS.10,33,466/-. 156. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.2 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 157. GROUND OF APPEAL NO.3 BY THE REVENUE READS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF PROPORTIONATE INTEREST ON ADVANCES FOR NON BUSINESS PURPOSES OF RS.6,21,0 63/-. 158. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.4 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN D ISMISSED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS DISMISSED. 81 159. GROUND OF APPEAL NO. 4 BY THE REVENUE READS AS UNDER : 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF POOJA EXPENSES OF RS.74,062/-. 160. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN D RAISED BY THE REVENUE IS IDENTICAL TO GROUND OF APPEAL NO.5 IN ITA NO.452/PN/2013 FILED BY THE REVENUE. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN A LLOWED. FOLLOWING THE SAME REASONING THIS GROUND BY THE REVENUE IS ALLOWED. 161. GROUND OF APPEAL NO.5 BY THE REVENUE READS AS UNDER : 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THS LD.CIT(A) ERRED IN ALLOWING ADDITION ON ACCOUNT OF UNEXPLAINED MONEY U/S.69A OF RS.4,95,00,000/-. 162. FACTS IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO EXPLAIN THE CASH FOUN D AT THE ASSESSEES PREMISES OF RS.2.95 CRORES AND UNACCOUNTED C ASH OF RS.2 CRORES FOUND IN ITS LOCKER MAINTAINED AT MAHAVIR COOPERAT IVE BANK. IN RESPONSE TO THE SAME THE ASSESSEE EXPLAINED THE SO URCE OF CASH AMOUNTING TO RS.4.95 CRORES AS PROJECTED UNEXPLAINED EXP ENSES RELATING TO GHODZARI PROJECT OF RS.21,91,82,000/- ALREADY ADMITTED AS ADDITIONAL INCOME. THE AO REJECTED THE ABOVE CONTENTION STATING THAT THE SPEED MONEY PAYMENTS WERE ALREADY MADE AS REFLECT ED IN THE DOCUMENTS SEIZED AT SHRI BHAT'S RESIDENCE. FURTHER, HE HAD ALREADY HELD THAT THE DOCUMENT SEIZED AT THE ASSESSEE'S PREMIS ES WAS FABRICATED. THEREFORE, HE HELD THAT SINCE THE UNACCOUNTED FUNDS WERE ALREADY UTILIZED, THESE COULD NOT BE THE SOURCE OF CASH FOU ND DURING SEARCH. BASED ON THE ABOVE OBSERVATION THE AO BROUGHT TO TAX THE AMOUNT OF RS.4,95,00,000/- IN THE ASSESSMENT YEAR 2010-11. 163. BEFORE CIT(A) IT WAS SUBMITTED THAT THE CASH FOUND AT ITS PREMISES AS WELL AS IN BANK STOOD EXPLAINED AS THE SAME WAS REFLECTED 82 IN THE SOURCE AND APPLICATION STATEMENT WHILE WORKING UNDIS CLOSED INCOME OF RS.21,91,82,000/- IN ITS HANDS. IT WAS POINTED OUT THAT THE AO HAD ALREADY TAXED THE ENTIRE GHODZARI PROJECT EXPEN SES AND TAXING CASH FOUND HAD RESULTED IN DOUBLE ADDITION OF THE SAID AMOUNT. 164. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) RESTORED THE ISSUE TO THE FILE OF THE AO WITH CER TAIN DIRECTIONS WHICH READ AS UNDER : 38. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT . THE ASSESSING OFFICER HAS MADE THIS ADDITION ON THE GROUND THAT SINC E THE SPEED MONEY PAYMENTS WERE ALREADY MADE AND THE ASSESSEE HAS NOT MADE ANY DECLARATION OF AN AMOUNT OVER AND ABOVE THE MONEY A LREADY EXPENSED OUT, THE SOURCE OF RS.4,95,00,000/- FOUND IN THE COUR SE OF SEARCH AND SEIZURE WAS UNEXPLAINED. IN APPELLATE PROCEEDINGS, THE ASSESSEE HAS GIVEN A CHART SHOWING THE SOURCE AND APPLICATION OF MONEY W HILE WORKING OUT THE DISCLOSURE OF UNDISCLOSED INCOME OF RS. 21.91 CRORES. THE ASSESSEE HAS TRIED TO IMPLY THAT SUFFICIENT AMOUNT OF CASH WAS AVAI LABLE ON THE WORKING GIVEN BY HIM WHICH WAS SUFFICIENT TO EXPLAIN THE EXIST ENCE OF RS.4.95 CRORES FOUND AT ITS PREMISES AS WELL AS IN THE BANK. 39. I HAVE GONE THROUGH THE CONTENTS OF THE CHART W HICH SHOWS THE SOURCE AND APPLICATION OF FUNDS. WHILE IT IS CORRECT T HAT THE SOURCE AND APPLICATION METHOD WILL BRING OUT WHETHER A CERTAIN AMOUNT OF UNEXPLAINED EXPENSE OUT OF DECLARATION IS AVAILABLE T O EXPLAIN THE CASH FOUND, THE SAME WILL HAVE TO BE REWORKED UPON GIVING EFFECT TO THIS ORDER. THE OBSERVATION / REMARK OF THE ASSESSING OFFICER IS NOT INCORRECT WHEN HE STATES THAT THE ENTIRE UNEXPLAINED EXPENSES WERE SPENT IN MAKING VARIOUS PAYMENTS. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO PREPARE THE SOURCE AND APPLICATION STATEMENT IN RESPECT OF THE UN DISCLOSED INCOME IN THE FORM OF INFLATION OF CONSTRUCTION EXPENSES AND ADD ITIONS MADE. THEREAFTER, THE SAME SHALL BE APPLIED AS PER THE DET AILS FOUND DURING THE COURSE OF SEARCH AT VARIOUS PLACES (SHRI BHAT'S PLACE ET C.). THE ASSESSING OFFICER SHALL ALSO TAKE INTO ACCOUNT THE APPLICATION AS PER ADDITIONS MADE IN ASSESSMENT AND CONFIRMED VIDE THIS ORDER. IF THERE IS ANY SURPLUS REMAINING AFTER COMPARING THE SOURCE AND APPLICATION OF INCOME THEN, THE SAME SHALL BE APPROPRIATED TOWARDS EXCESS CASH FOUND DURI NG THE COURSE OF SEARCH. IN CASE THERE IS NO SURPLUS AVAILABLE THEN, T HE ENTIRE AMOUNT WILL BE TAXED AS UNEXPLAINED CASH FOUND. FOR STATISTIC AL PURPOSES, THIS GROUND OF APPEAL IS ALLOWED. 165. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 166. AFTER CONSIDERING THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ADMITTE DLY, THE AO MADE ADDITION OF RS.4,95,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE 83 ON THE GROUND THAT SINCE THE SPEED MONEY PAYMENTS WE RE ALREADY MADE AND THE ASSESSEE HAS NOT MADE ANY DECLARATION OF AMOUNT OVER AND ABOVE THE MONEY ALREADY EXPENDED OUT, THEREFORE, TH E SOURCE OF THIS MONEY REMAINS UNEXPLAINED. WE FIND BEFORE CIT(A) THE AS SESSEE GAVE A CHART SHOWING THE SOURCE AND APPLICATION OF MONE Y WHILE WORKING OUT THE DISCLOSURE OF UNDISCLOSED INCOME OF RS.21.95 CRORES. IT WAS EXPLAINED BY THE ASESSEE BEFORE CIT(A) THAT SUFFICIEN T AMOUNT OF CASH WAS AVAILABLE WHICH WAS SUFFICIENT TO EXPLAIN THE SOURC E OF RS.4.95 CROREES FOUND AT ITS PREMISES AND LOCKER. BASED O N THESE SUBMISSIONS AND THE CASH FLOW STATEMENT THE CIT(A) DIRECTE D THE AO TO PREPARE THE SOURCE AND APPLICATION STATEMENT IN RESP ECT OF THE UNDISCLOSED INCOME IN THE FORM OF INFLATION OF CONSTRUCTION EXP ENSES AND ADDITIONS MADE AND IF ANY SURPLUS REMAINS AFTER COMPAR ING THE SOURCE AND APPLICATION OF INCOME, THEN TO APPORTION THE SA ME TOWARDS EXCESS CASH FOUND DURING THE COURSE OF SEARCH. HE HAS DIRECTED THE AO TO TAX THE UNEXPLAINED CASH FOUND IF ANY SURPLUS IS NOT AVAILABLE. THE ABOVE REASONED FINDING OF THE CIT(A) IN OUR OPINION DOE S NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, WE UPHOLD THE ORDER O F THE CIT(A) AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 167. GROUND OF APPEAL NO.6(A) AND 6(B) BY THE REVENUE READS AS UNDER : 6.(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT U/ S.80IA(4) OF RS.18,37,01,176/-, WHICH WAS EARLIER CONFIRMED BY THE LD.CIT(A) FOR A.Y. 2000-01 AND A.Y. 2001-02 AS THE ASSESSEE IS ONLY WORK CON TRACTOR AND NOT A DEVELOPER AS PER THE EXPLANATION BELOW 80IA(13). (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING ADDITIONAL CLAIM OF DED UCTION U/S.80IA(4) OF RS.95,77,422/, WHICH IS THE ADDITIONAL INCOME DECLAR ED DURING THE COURSE OF SEARCH PROCEEDINGS, ON ACCOUNT OF EXPENSES FROM UNE XPLAINED SOURCES WHICH ATTRACT PROVISION OF S.69C OF THE I.T. ACT WHI CH IS NOT AN INCOME FROM THE BUSINESS OF UNDERTAKING REFERRED TO IN SE.80IA (4). 84 168. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN DS ARE IDENTICAL TO GROUNDS OF APPEAL NO.6(A) AND (B) IN ITA NO.452/PN /2013 FILED BY THE REVENUE FOR A.Y. 2007-08. WE HAVE ALREADY DEC IDED THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME REASONINGS THE ABOVE GROUNDS RAISED B Y THE REVENUE ARE DISMISSED. 169. GROUNDS OF APPEAL NO.7 AND 8 BY THE REVENUE BEING G ENERAL IN NATURE ARE DISMISSED. 170. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-03-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 09 TH MARCH, 2016 LRH'K ' (!* + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) , / THE CIT(A), KOLHAPUR 4. $ , / THE CIT, KOLHAPUR 5. ' **+ , + , IQ.KS / DR, ITAT, A PUNE 6. / / GUARD FILE. / BY ORDER , ' //TRUE COPY // 12 * + / SR. PRIVATE SECRETARY +, IQ.KS / ITAT, PUNE