Vijay Infrastructure Limited, Lucknow V. Astt. Commissioner of Income Tax, Lucknow

ITA 254/LKW/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2025 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: H P SINGH SHRI P K TANDON
• Keywords: Rejection of books of accounts; Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Gift; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Retrospective amendment; Question of law; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report; Block assessment; Onus to prove; Revised return; Documents seized; Reassessment proceedings
• Section: 69C; 40A(3); 50C; 56(2); 133A; 153A; 14A; 69; 145; 132; 15; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.254/LKW/2015 ASSESSMENT YEAR:2005-06 M/S VIJAY INFRASTRUCTURE LIMITED, B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN;AABCV2697Q VS. A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. (APPELLANT) (RESPONDENT) ITA NOS.452, 35 TO 37/LKW/2015 ASSTT.YEARS:2005-06 TO 2008- 09 A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. VS. M/S VIJAY INFRASTRUCTURE LIMITED, B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN;AABCV2697Q (APPELLANT) (RESPONDENT) C.O. NOS. 12 & 13/LKW/2015 (IN I.T.A. NOS. 36 & 37/LKW/2015) ASSESSMENT YEARS:2007-08 & 2008-09 M/S VIJAY INFRASTRUCTURE LIMITED, B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN;AABCV2697Q VS. A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. (OBJECTOR) (RESPONDENT) ASSESSEE BY SHRI H. P. SINGH, ADVOCATE SHRI P. K. TANDON, C. A. REVENUE BY SHRI A. K. SINGH, CIT, D. R. SHRI VIVEK MISHRA, CIT, D. R. DATE OF HEARING 19/08/2015 DATE OF PRONOUNCEMENT 30 /10/2015 2 ITA NOS.38 TO 39/LKW/2015 ASSTT.YEARS:2009-10 TO 2010-11 A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. VS. M/S VIJAY INFRASTRUCTURE LIMITED, B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN;AABCV2697Q (APPELLANT) (RESPONDENT) ITA NO.696/LKW/2014 ASSESSMENT YEAR:2011-12 A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. VS. M/S VIJAY INFRASTRUCTURE LIMITED, B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW. PAN;AABCV2697Q (APPELLANT) (RESPONDENT) O R D E R PER BENCH: OUT OF THIS BUNCH OF 10 APPEALS AND CROSS OBJECTIO NS, ONE APPEAL AND TWO CROSS OBJECTIONS ARE FILED BY THE ASSESSEE AND REMAINING SEVEN APPEALS ARE FILED BY THE REVENUE FOR VARIOUS ASSESSMENT YEA RS. OUT OF THESE APPEALS AND CROSS OBJECTIONS, SEVEN WERE HEARD ON 19/08/201 5 AND BALANCE THREE ON 10/09/2015 AND ALL ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIND THAT IN THESE TOTAL 10 APPEALS AND CROSS OBJECTIONS, ONLY EIGHT ISSUES ARE INVOLVED. HENCE, WE DECIDE THESE A PPEALS AND CROSS OBJECTIONS ON ISSUE BASIS. ASSESSEE BY SHRI P. K. TANDON, C. A. REVENUE BY SHRI A. K. SINGH, CIT, D. R. DATE OF HEARING 10 /0 9 /2015 DATE OF PRONOUNCEMENT 30/10/2015 3 3. THE FIRST ISSUE IS REGARDING ADDITION MADE BY TH E ASSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A) ON THE BASIS OF SEIZED MATERIAL. THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSES SMENT YEAR 2005-06 IN I.T.A. NO.254/LKW/2014 AS PER GROUND NO. 1, WHICH I S REPRODUCED BELOW: 1. THE LEARNED CIT(A) HAS ERRED IN THE LAW AND FAC TS OF THE CASE IN CONFIRMING ADDITION OF RS.1,16,50,863/-. 4. LEARNED A. R. OF THE ASSESSEE REITERATED THE SA ME CONTENTIONS WHICH WERE RAISED BEFORE LEARNED CIT(A) WHEREAS LEARNED D . R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE CONTENTIONS RAISED BY THE ASSESSEE ON THIS ISSUE BE FORE CIT(A) ARE NOTED BY CIT(A) IN PARA 6 TO 6.6 OF HIS ORDER, WHICH ARE REP RODUCED BELOW FOR THE SAKE OF READY REFERENCE: 6. GROUND NO. 1 - ADDITION OF RS.1,16,50,863/- YOUR KIND ATTENTION IS INVITED TOWARDS THE SEIZED P APER, ON THE BASIS OF WHICH THE ABOVE MENTIONED ADDITION HAS BEE N MADE. THE PAGE NO 95 OF THE SEIZED MATERIAL CONTAIN TWO S ET OF ENTRIES, ONE IS TOTAL AMOUNT RECEIVED RS.74,00,000/ -, IN WHICH DATES FOR FIRST TWO AMOUNTS VIZ RS.10,00,000/- ON 5 .3.2005 AND RS.19,00,000/- ON 9.3.2005 HAS BEEN MENTIONED. WHER EAS AGAINST THE AMOUNT OF RS.45,00,000/-, NO DATE IS ME NTIONED. IN THE SECOND SET OF ENTRIES, DRAFTS PREPARED FOR C ASH FROM VARIOUS PLACES AND COMMISSION PAID THERE ON ARE MEN TIONED. THE TOTAL AMOUNT OF DEMAND DRAFTS PREPARED ARE FOR RS.79,87,900/- ON DIFFERENT DATES AND THE AMOUNT OF BANK COMMISSION IS RS.24,963/-. THE TOTAL OF THESE TWO F IGURES COMES TO RS.80,12,863/- IN THIS REGARDS IT WAS SUBM ITTED THAT THE SAID PAPER WAS PREPARED BY THE ACCOUNTANT FOR T HE RECONCILIATION PURPOSES. CASH IS BEING REMITTED FRO M HEAD OFFICE TO MEET THE DAY TO DAY EXPENSES AT THE SITE, AS THE ASSESSEE IS NOT HAVING SIGNING AUTHORITIES AT ALL T HE SITES. IN ORDER TO MAKE THE PAYMENTS TO VARIOUS PERSONS, DRAF TS WERE GOT PREPARED BY THE CASHIER IN THE NAME OF THE SUPP LIERS ON 4 DIFFERENT OCCASION AND THE SOURCE OF SUCH DRAFTS WA S OUT OF CASH RECEIVED FROM THE HEAD OFFICE AS MENTIONED THE RE IN. 6.2 AS FAR AS THE SOURCE OF CASH IS CONCERNED THE S AME WAS GIVEN OUT OF CASH WITHDRAWALS FROM THE BANK ACCOUNT S. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE PR OVIDED THE DETAILS OF CASH GIVEN ON 5.3.2005 AND 9.3.2005 AS THE DATES WERE MENTIONED AGAINST THE TRANSACTION. AS IN CASE RS.45,00,000/- RECEIVED BY THE CASHIER THE DATE IS NOT MENTIONED SO IT COULD NOT BE VERIFIED FROM THE BOOK S. THE LD AO HAS NOT DISPUTED THESE FACTS. 6.3 AGAIN ON PAGE NO. 97 OF THE SEIZED PAPER WE FIN D THAT THE CASHIER HAD STATED DETAILS OF DD AND CHEQUES OF DIFFERENT AMOUNTS, WHICH REPRESENT THE PAYMENTS BEING MADE TO VARIOUS PARTIES AND CASH BEING RECEIVED. THESE ARE ROUGH RE CONCILIATION WORKING DONE BY THE CASHIER AND DO NOT REPRESENT AN Y UNACCOUNTED ENTRIES. THESE TYPES OF PAPERS ARE WORK ING PAPERS FOR RECONCILIATION PURPOSES AND NO ADDITION ON THE BASIS OF THESE PAPERS CAN BE MADE. 6.4 FURTHER AS PER THE SEIZED PAPER THERE IS CASH R ECEIPT OF RS. 74 LACS AND AGAINST THIS DRAFTS WERE GOT PREPARED FROM DIFFERENT PLACES FOR PAYMENTS FOR RS .80,12,863/- INCLUDING BANK COMMISSION AND AGAIN ON PAGE 97 THER E ARE DEMAND DRAFT AND CHEQUES AMOUNT WRITTEN WHICH HAVE BEEN TAKEN AS UNEXPLAINED INCOME IN THE HANDS OF THE ASSESSEE. THE LD AO HAS STATED THAT THE ASSESSE E COMPANY ROUTED THOUGH DEMAND DRAFT/CHEQUES MENTIONE D IN THE SAID DOCUMENT. THE TRANSACTIONS MENTIONED ON TH IS PAGE ARE RELATED TO THE ASSESSEE COMPANY AS THE DOCUMENT WAS FOUND FROM A PREMISES BELONGING TO THE BROTHER OF S HRI NAUSAD AHMAD. HE FURTHER STATES THAT FROM THE ENTRIES RECO RDED ON THESE PAGES IT CAN EASILY BE INFERRED THAT THE DEMA ND DRAFTS WERE BOUGHT BY THE ASSESSEE BY PAYING CASH OF EQUAL AMOUNT. 6.5 IT IS TRUE THAT THE DRAFTS WERE GOT PREPARED BY THE ASSESSEE OUT OF CASH BUT WERE USED TO PAY THE SUPPL IERS AND AS FAR AS THE SOURCE OF SUCH CASH IS CONCERNED THE SAM E IS OUT OF CASH AVAILABLE IN THE BOOKS. 6.6 THE ASSESSEE RELIES UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CONTENTION: 5 CHANDER MOHAN MEHTA V. ASSISTANT COMMISSIONER OF IN COME- TAX [1999] 71 ITD 245 (PUNE) SECTION 158BB OF THE INCOME-TAX ACT, 1961 - BLOCK A SSESSMENT -COMPUTATION OF UNDISCLOSED INCOME - ASSESSMENT YEA RS 1986- 87 TO 1996-97 - BASED ON LOOSE PAPERS FOUND DURING SURVEY AFTER SEARCH AS WELL AS SUBSEQUENT STATEMENT OF ASS ESSEE RECORDED UNDER SECTION 131, GIVING NATURE AND DETAI LS OF TRANSACTIONS INDICATED THEREIN IN REGARD TO MONEY-L ENDING BUSINESS, ASSESSING OFFICER MADE ADDITION OF ENTIRE BORROWINGS RECEIVED FROM CERTAIN PERSONS EVEN THOUGH CONFIRMAT ION LETTERS WERE PRODUCED BY THEM - WHETHER SINCE SAID LOOSE PA PERS DID NOT INDICATE NAME OF ASSESSEE, FROM LIST OF PERSONS GIVEN IN LOOSE PAPERS IT COULD NOT BE INFERRED THAT EITHER A NY LOAN OR ANY ADVANCE WAS GIVEN TO OR RECEIVED FROM THOSE PER SONS, AND SINCE TOTAL AMOUNT ON THOSE LOOSE SHEETS INDICATED A VERY SMALL AMOUNT, THOSE LOOSE PAPERS ALONE WOULD HAVE TO BE C ONSIDERED AS DUMB PAPERS HAVING NO EVIDENTIARY VALUE AND NO A DDITION COULD BE SUSTAINED - HELD, YES ASSISTANT COMMISSIONER OF INCOME-TAX V. DR. KAMLA P RASAD SINGH [2010] 3 ITR (TRIB.) 533 (PAT.) I. SECTION 158B OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOSED INCOME - B LOCK PERIOD 1991-92 TO 2000-01 WHERE DOCUMENTS FOUND AND SEIZED AND RELIED UPON FO R MAKING ADDITION UNDER APPEAL BY REVENUE HAD NEITHER DATE NOR NAME OF ASSESSEE, IT COULD NOT BE ASSUMED OR PRESUMED AS TO WHEN AND BY WHOM NOTING WERE RECORDED: NO ADDITION COULD BE MADE ON BASIS OF SUC H DUMB DOCUMENTS [IN FAVOUR OF ASSESSEE] NEITHER ANY ENQUIRY REPORT NOR ANY DOCUMENT PROCURE D EITHER BEFORE OR AFTER THE SEARCH CAN BE CONSIDERED WHILE COMPUTING THE UNDISCLOSED INCOME. SIMILARLY, IT IS ALSO SETTLED LAW THAT ANY DOCUMENT FOUND DURING THE COUR SE OF SEARCH HAS TO BE INTERPRETED LITERALLY AND NOTHI NG CAN BE ADDED OR SUBTRACTED. WHERE THE DOCUMENTS FOUND AND SEIZED AND RELIED UPO N FOR MAKING THE ADDITION UNDER APPEAL BY THE REVENUE HAD NEITHER DATE NOR THE NAME OF THE ASSESSEE IT CO ULD 6 NOT BE ASSUMED OR PRESUMED AS TO WHEN AND BY WHOM THE NOTINGS WERE RECORDED. IT WAS ALSO NOT KNOWN AS TO IN WHAT CONNECTION THE NOTINGS EVEN IF CONSIDERED A S GIVING AND TAKING OF MONEY WERE MADE, MEANING THEREBY THAT THESE DOCUMENTS BEING DUMB DOCUMENTS, NO ADDITION COULD BE MADE ON THE BASIS OF ASSUMING OR PRESUMING THE NOTINGS IN THOSE DOCUMENTS RELATING T O ANY OTHER TRANSACTION NOT RECORDED IN THE DOCUMENTS CIT V GIRISH CHAUDHARY [2007] 163 TAXMAN 608 (DELHI) SECTION 158B OF THE INCOME-TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOSED INCOME - B LOCK PERIOD 1990-91 TO 1999-2000 - DURING SEARCH AT PREMISES OF COMPANY IN WHICH ASSESSEE WAS A DIRECTO R, DOCUMENT CONTAINING, ENTRY '48' WAS SEIZED - AS ASS ESSEE FAILED TO EXPLAIN SAID ENTRY, ASSESSING OFFICER TRE ATED RS. 48 LAKHS AS ASSESSEE'S UNDISCLOSED INCOME AND MADE ADDITION - WHETHER SINCE THERE WAS NO MATERIAL ON RECORD TO SHOW AS TO ON WHAT BASIS ASSESSING OFFICE R HAD REACHED AT THE CONCLUSION THAT FIGURE '48' WAS TO B E READ AS RS. 48 LAKHS AND DOCUMENT RECOVERED WAS A DUMB DOCUMENT, ADDITION OF RS. 48 LAKHS WAS UNJUSTIFIED - HELD, YES IN VIEW OF ABOVE JUDICIAL PRONOUNCEMENTS THE ADDITI ON OF RS.1,16,50,863/- BE DELETED. 5.1 THEREAFTER, WE FIND THAT THIS ISSUE HAS BEEN DE CIDED BY LEARNED CIT(A) AGAINST THE ASSESSEE ON THE BASIS OF FOLLOWING OBSE RVATIONS ON PAGES 9 TO 11 OF HIS ORDER, WHICH ARE ALSO REPRODUCED BELOW FOR T HE SAKE OF READY REFERENCE: I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER AS WELL AS FACTS STATED IN THE ASSESSEE'S SUBMISSION. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.1,16,50,863/- B Y OBSERVING THAT :DURING THE COURSE OF SEARCH U/S 132 A REGISTE R INVENTORIED CM ANNEXURE B-10 WAS FOUND FROM THE RESIDENCE OF SH RI ABUSAD AHMAD AT 4.202, VISHAL KHAND, GOMTI NAGAR, LUCKNOW AND SEIZED. THE SEIZED DOCUMENTS IS A REGISTER BELONGIN G TO THE ASSESSEE (M/S VIJAY EXPRESS WAY ENGINEERS PVT. LTD. ) AND WHICH HAS ENTRIES OF HUGE AMOUNTS RECEIVED/PAID FROM/TO V ARIOUS PERSONS ESPECIALLY ON PAGES 95 AND 97. AT SOME PLAC ES NAME OF ONE SHRI VIKAS SINGH IS MENTIONED. AT OTHER PLACE ENTRY LIKE 7 ' DD RECEIVED FROM ALIGARH ' IS MENTIONED. ON PAGE 95 ENTRY OF CASH PAYMENT TOTALING RS.74,00,000/- AND RS.6,12 ,863/- TO 'JHAJI' IS MADE. ON THE SAME PAGE ENTRY OF RS.1,61, 043/- AGAINST 'S. S. SINGH IS MENTIONED. .......... 4.1 FROM THE ABOVE ENTRIES, IT IS CLEAR THAT THESE ARE ENTRIES RELATING TO RECEIPTS THROUGH DDS AGAINST CASH PAYME NTS. ON PAGE 95, FIRST ENTRY DATED 7/3/2005 REVEALS THAT DE MAND DRAFT OF RS.7,85,000/- WAS ARRANGED FROM SULTANPUR THROUG H ONE 'JHAJI ' FOR WHICH 'JHAJI' WAS PAID RS.7,87,639/ - WHICH INCLUDED COMMISSION OF RS.2639/- (PROBABLY CHARGED BY THE BA NK). SIMILAR FACTS ALSO EMERGE FROM OTHER ENTRIES ALSO. VIDE QUESTIONNAIRE DATED 08-02-2013 AND SUBSEQUENT QUER IES, THAT ASSESSEE WAS REQUIRED TO EXPLAIN NATURE AND DETAIL OF SUCH ENTRIES AND HOW THE SAME ARE RECORDED IN THE BOOKS OF ACCOUNTS. IN EXPLANATION, THE ASSESSEE STATED THAT, 'THIS IS WORKING PAPER MADE BY THE CASHIER OF SULTANPUR TO RECONCILE THE CASH RECEIVED BY HIM ON PAYMENTS MADE. THE AMO UNT OF RS. 74,00,000/- WAS RECEIVED OVER A PERIOD OF TIME FROM HEAD OFFICE AT LUCKNOW WHICH IS BEING SOURCED OUT OF THE CASH AVAILABLE IN THE BOOKS OF THE ASSESSEE. SINCE NO D ATES ARE MENTIONED AGAINST THE AMOUNT OF RS.45 LACS SO IT IS NOT POSSIBLE TO GET IT RECONCILED WITH THE BOOKS. HOWEVER, THE OTHER TWO ENTRIES ARE DULY RECORDED IN BOOKS. IT IS A GENERAL PRACTICE THAT CASH WAS BEING TRANSFERRED FROM HO TO BRANCHES TO MEET THE EXPENSES AND THE SAID PAGE IS A ROUGH RECONCILI ATION OF THE SAME.' 4.2 THE REPLY FURNISHED BY THE ASSESSEE IS NOT SATI SFACTORY INASMUCH AS IT LACKS EVIDENCE AND TRIES TO DISOWN T HE FACTS OF THE IMPUGNED DOCUMENT. THE NATURE AND DETAIL OF ENT RIES SHOW THAT THE PURPOSE OF TRANSACTIONS MENTIONED ON THESE PAGES IS TO BUY DEMAND DRAFTS/CHEQUES AGAINST CASH PAYMENTS. FR OM THE ENTRIES LIKE 'S.S. SINGH' (MAJOR SHARE HOLDER, DIRE CTOR AND PROMOTER OF THE ASSESSEE COMPANY), 'SRI ABUSAAD JI ' (SHARE HOLDER, BROTHER OF SHRI NAUSHAD AHMAD, ANOTHER MAJO R SHARE HOLDER, DIRECTOR AND PROMOTER OF THE ASSESSEE COMPA NY), 'JHA JI' AND 'VIKAS SINGH', BOTH WORKING FOR THE ASSESSE E, IT IS ESTABLISHED THAT THESE PERSONS, WHO ARE INVOLVED IN THE ACTIVITIES OF THE ASSESSEE COMPANY, HELPED THE UN DISCLOSED INCOME OF THE ASSESSEE COMPANY ROUTED THOUGH DEMAND DRAFTS/CHEQUES MENTIONED IN THE SAID DOCUMENT. THE TRANSACTIONS MENTIONED ON THIS PAGE ARE RELATED TO THE ASSESSEE COMPANY AS THE DOCUMENT WAS FOUND FROM A PREMISES BELONGING TO THE BROTHER OF SHRI NAUSHAD AHMAD, A PROMOTER 8 AND CHIEF MANAGING DIRECTOR OF THE COMPANY AND THE IMPUGNED PAGE ITSELF MENTIONS NAME OF SHRI S.S. SINGH, ANOTH ER PROMOTER AND DIRECTOR OF THE COMPANY. THE RELATIONSHIP OF TH E DOCUMENT WITH (THE ASSESSEE COMPANY IS FURTHER ESTABLISHED F ROM THE FACT THAT NAME OF THE COMPANY ITSELF IS MENTIONED ON THE COVER PAGE OF THE IMPUGNED REGISTER. IN VIEW OF OVERALL FACTS OF THE CASE IT IS ESTABLISHED THAT THE ASSESSEE FAILED TO OFFER SA TISFACTORY EXPLANATION ON THIS ISSUE. HENCE, THE VALUE OF TR ANSACTION EFFECTED THROUGH THIS DOCUMENT IS TREATED AS ASSESS EE'S UNDISCLOSED INCOME. FROM THE ENTRIES RECORDED ON THESE PAGES IT CAN EAS ILY BE INFERRED THAT THE DEMAND DRAFTS WERE BOUGHT BY THE ASSESS BY PAYING CASH OF EQUAL AMOUNTS. ON PAGE, 95, TOTAL EX PENSES ON DEMAND DRAFTS ARE WORKED OUT AT RS.80,12,863/- AND AT THE LOWER PORTION OF THE SAME PAGE EQUAL AMOUNT IS PAID IN CASH TO 'JHAJI' APPARENTLY FOR THIS PURPOSE. SIMILAR IS THE POSITIONS FOR ENTRIES ON PAGE 97 ALSO. THE TOTAL OF RE CEIPTS THROUGH DEMAND DRAFTS/CHEQUES, AS MENTIONED ON PAGES 95 & 9 7 IS AT RS.1,16,50,863/- (RS.80,12,863/- BEING TOTAL OF PAG E 95+RS. 36,38,000/-, BEING TOTAL OF PAGE 97), WHICH IS ADD ED TO THE ASSESSEES TOTAL INCOME IN VIEW OF THE ABOVE DISCUS SION. AS THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME ON THIS ACCOUNT AND FURNISHED INACCURATE PARTICULARS THEREOF, PENAL TY PROCEEDINGS U/S 271(1)(C) IS ALSO BEING INITIATED S EPARATELY. ADDED: RS. 1,16,50,863/- ACCORDING TO THE ASSESSEE THESE SEIZED PAPER PAGES 95 AND 97 ARE ANNEXURE B-10 IS A WORKING PAPER MADE BY THE CA SHIER OF SULTANPUR TO RECONCILE THE CASH RECEIVED BY HIM AND PAYMENTS MADE. THE AMOUNT OF RS.74,00,000/- WAS RECEIVED OVE R A PERIOD OF TIME FROM HEAD OFFICE AT LUCKNOW WHICH IS BEING SOURCED OUT OF CASH AVAILABLE IN THE BOOKS OF THE A SSESSEE BUT IT IS SEEN THAT THE ASSESSEE HAS NOT BEEN ABLE TO DEMO NSTRATE FROM HIS BOOKS OF ACCOUNT AS FROM WHERE THE CASH HA S BEEN WITHDRAWN I.E. FROM WHICH BANK A/CS AND TO WHOM DRA FT WAS GIVEN I.E. WHICH PARTIES AND FOR WHICH WORK SITE, T HE ASSESSEE HAS NOT ESTABLISH ANY LINK OF THESE PAPERS. THESE D OCUMENTS FOUND DURING SEARCH ARE NOT DUMB PAPER THESE ARE SP EAKING PAPERS AND REFLECT ALL THE DETAILS ABOUT THE TRANSA CTIONS OF THE ASSESSEE, THESE DOCUMENTS DOES BEAR THE NAMES LIKE 'SRI ABUSAAD JI( MAJOR SHAREHOLDER AND DIRECTOR AND PRO MOTER OF 9 THE ASSESSEE COMPANY), JHA JI AND VIKAS SINGH BOTH ARE WORKING FOR THE ASSESSEE. HENCE, AFTER CONSIDERING THE ABOVE STATED FACTS WHE N THE ASSESSEE GIVES AN EVASIVE REPLY TO THE ASSESSING OF FICER, THE ASSESSING OFFICER HAS NO CHOICE BUT TO MAKE AN ESTI MATION OF THE INCOME WHICH HAS TO BE REASONABLE AND ON THE BA SIS OF MATERIAL AVAILABLE ON RECORD, THEREFORE, I AGREE WI TH THE FINDINGS OF ASSESSING OFFICER. THE TOTAL RECEIPTS THROUGH DE MAND DRAFTS/CHEQUES, AS MENTIONED ON PAGES 95 & 97, IS A T RS. 1,16,50,863/- (RS. 80,12,863/-, BEING TOTAL OF PAGE 95 + RS. 36,38,000/- BEING TOTAL OF PAGE 97), WHICH IS TREAT ED AS UNDISCLOSED/UNACCOUNTED INCOME OF THE ASSESSEE, THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION, HENCE, THE A DDITION OF RS.1,16,50,863/- IS HEREBY UPHELD AND THIS GROUND O F APPEAL IS BEING CONFIRMED/DISMISSED. 5.2 FROM THE OBSERVATIONS IN THE ORDER OF LEARNED C IT(A) AS REPRODUCED ABOVE, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) ON THE BASIS THAT FROM THE ENTRIES IN THE SEIZED MATERIALS , IT IS CLEAR THAT THESE ARE ENTRIES RELATING TO RECEIPTS OF DEMAND DRAFT AGAINS T CASH PAYMENTS. IT IS ALSO NOTED BY LEARNED CIT(A) THAT ON PAGE NO. 95, F IRST ENTRY DATED 7/3/2005 REVEALS THAT DEMAND DRAFT OF RS.7,85,000/- WAS ARRANGED FROM SULTANPUR THROUGH ONE 'JHAJI ' FOR WHICH 'JHAJI' W AS PAID RS.7,87,639/- WHICH INCLUDED COMMISSION OF RS.2639/- (PROBABLY CHARGED BY THE BANK). THEREAFTER, IT IS FURTHER NOTED BY LEARNED CIT(A) T HAT SIMILAR FACTS EMERGED FROM OTHER ENTRIES ALSO AND VIDE QUESTIONNAIRE DAT ED 08/02/2013 AND SUBSEQUENT QUERIES, THE ASSESSEE WAS REQUIRED TO EX PLAIN NATURE AND DETAIL OF SUCH ENTRIES AND HOW THE SAME ARE RECORDED IN TH E BOOKS OF ACCOUNTS. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT, THIS IS WORKING PAPER MADE BY THE CASHIER OF SULTANPUR TO RECONCILE THE CASH RE CEIVED BY HIM AND PAYMENTS MADE. THEREAFTER, IT IS OBSERVED BY CIT(A ) THAT THE REPLY FURNISHED BY THE ASSESSEE IS NOT SATISFACTORY INA SMUCH AS IT LACKS EVIDENCE AND TRIES TO DISOWN THE FACTS OF THE IMPUGNED DOCUM ENT. THIS CATEGORICAL FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY LEAR NED A. R. OF THE ASSESSEE 10 BEFORE US AND THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. WHEN THE ASSESSEE COULD N OT BRING EVIDENCE TO ESTABLISH THAT THE CASH TRANSACTIONS SHOWN IN SEIZE D MATERIAL IS DULY RECORDED IN BOOKS OF THE ASSESSEE, IT HAS TO BE ACC EPTED THAT UNACCOUNTED CASH WAS CHANNELIZED IN BOOKS BY SHOWING BANK DRAFT RECEIPTS. HENCE, THERE IS NO INFIRMITY IN THE ORDER OF CIT (A) ON THIS ISS UE. ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. GROUND NO. 1 FOR ASS ESSMENT YEAR 2005-06 IS REJECTED. 6. THE SECOND ISSUE IS REGARDING DISALLOWANCE MADE BY THE ASSESSING OFFICER ON AD HOC BASIS TO THE EXTENT OF 1% OF TOTA L EXPENSES DEBITED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT. THIS DISALLOWAN CE WAS MADE BY THE ASSESSING OFFICER IN ALL THE SEVEN ASSESSMENT YEARS WHICH ARE BEFORE US I.E. ASSESSMENT YEAR 2005-06 TO 2011-12 AND IN ALL THESE YEARS, THIS DISALLOWANCE HAS BEEN DELETED BY CIT(A) AND REVENUE HAS RAISED THIS ISSUE IN ALL ITS SEVEN APPEALS FOR THESE ASSESSMENT YEARS . IN ASSESSMENT YEAR 2005-06 TO 2008-09, THIS ISSUE WAS RAISED AS PER GR OUND NO. 1 WHEREAS IN ASSESSMENT YEAR 2009-10, THIS ISSUE HAS BEEN RAISED AS PER GROUND NO. 6, IN ASSESSMENT YEAR 2010-11 THIS ISSUE HAS BEEN RAISED AS PER GROUND NO. 7 AND IN ASSESSMENT YEAR 2011-12 AS PER GROUND NO. 5. 7. ON THIS ISSUE, LEARNED D. R. OF THE REVENUE SUPP ORTED THE ORDER OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSE SSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN PARA 6 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06, I T IS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DEBITED VAR IOUS EXPENSES UNDER CONSTRUCTION EXPENSES AND ADMINISTRATIVE EXPENSES. HE HAS FURTHER NOTED THAT IN EXPLANATION TO GENUINENESS OF THESE EXPENSE S, BOOKS OF ACCOUNTS 11 AND SOME VOUCHERS WERE PRODUCED BUT THE VOUCHERS PR ODUCED ARE NEITHER FULL NOR VERIFIABLE INASMUCH AS COMPLETE IDENTITY O F THE PAYEES IS NOT MENTIONED THEREIN. HE HAS ALSO NOTED THAT MANY VOU CHERS ARE SELF-MADE DEBIT VOUCHERS WITHOUT VERIFIABLE DETAIL OF PAYEES. ON THE BASIS OF THESE OBSERVATIONS, HE MADE DISALLOWANCE ON AD HOC BASIS TO THE EXTENT OF 1% OF TOTAL EXPENSES OF RS.5945.48 LAC AND IN THIS MANNER , HE MADE DISALLOWANCE OF RS.59,45,488/-. WHEN THE ASSESSEE CARRIED THE M ATTER IN APPEAL BEFORE CIT(A), HE DELETED THE DISALLOWANCE ON THE BASIS TH AT THE ASSESSING OFFICER DID NOT GIVE ANY FINDING THAT THE EXPENDITURE INCUR RED AND CLAIMED BY THE ASSESSEE IS EITHER CAPITAL IN NATURE OR PERSONAL IN NATURE OR WHOLLY AND EXCLUSIVELY NOT INCURRED FOR THE PURPOSE OF BUSINES S AND THIS DISALLOWANCE IS MADE ON THE BASIS THAT THE VOUCHERS PRODUCED ARE NE ITHER FULL NOR VERIFIABLE INASMUCH AS COMPLETE IDENTITY OF THE PAYEES IS NOT MENTIONED THEREIN. HE HAS ALSO NOTED THAT AS PER THE A.O. MANY VOUCHERS A RE SELF-MADE DEBIT VOUCHERS WITHOUT VERIFIABLE DETAIL OF PAYEES. THERE AFTER, HE HAS ALSO OBSERVED THAT THE ASSESSING OFFICER COULD NOT POINT OUT ANY DEFECT IN ANY SPECIFIC VOUCHER NOR DID ASSESSING OFFICER INVOKE P ROVISIONS OF SECTION 145(2) OF THE ACT AND THE A.O. DID NOT REJECT THE B OOKS OF ACCOUNTS. THEREAFTER, HE HAS HELD THAT IN ABSENCE OF SPECIFIC DEFECT, NO AD HOC DISALLOWANCE CAN BE MADE. HE HAS ALSO HELD THAT TH E GENERAL OBSERVATION OF THE A.O. THAT THE VOUCHERS ARE SELF-MADE CANNOT BE A BASIS FOR ADDITION. AT BEST, IT CAN BE A STARTING POINT FOR ENQUIRY BUT IF THE VOUCHERS WERE DEFECTIVE, THE ASSESSING OFFICER SHOULD HAVE POINTE D OUT THE DEFECTS AND SHOULD HAVE ASKED THE ASSESSEE FOR A REASONABLE EXP LANATION. 9. SO IS THE CASE IN ASSESSMENT YEAR 2006-07. IN T HIS YEAR ALSO, THE ASSESSING OFFICER MADE SIMILAR DISALLOWANCE OF RS.7 1,44,748/- TO THE EXTENT OF 1% OF TOTAL EXPENSES OF RS.7144.74 LAC WITH THE SAME OBSERVATION THAT THE VOUCHERS PRODUCED ARE NEITHER FULL NOR VERIFIA BLE INASMUCH AS COMPLETE 12 IDENTITY OF THE PAYEES IS NOT MENTIONED THEREON AND IN THIS YEAR ALSO, THE DISALLOWANCE WAS DELETED BY CIT(A) ON THE SAME BASI S. 10. SO IS THE CASE FOR ASSESSMENT YEAR 2007-08 BECA USE IN THIS YEAR ALSO, THE ASSESSING OFFICER MADE SIMILAR DISALLOWANCE OF RS.88,05,015/- BEING 1% OF TOTAL EXPENSES OF RS.8805.01 LAC WITH SAME OBSER VATIONS AND IN THIS YEAR ALSO, THIS DISALLOWANCE WAS DELETED BY CIT(A) ON TH E SAME BASIS. 11. IN THE REMAINING YEARS ALSO, THE FACTS ARE IDEN TICAL. AFTER CONSIDERING THE FACTS OF THE PRESENT CASE ON THIS ISSUE AND THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE, WE FIND NO INFIRMITY IN THE OR DER OF CIT(A) BECAUSE ON THE BASIS OF GENERAL OBSERVATIONS, WITHOUT POINTING OUT EVEN A SINGLE SPECIFIC DEFECT IN THE VOUCHERS OR BOOKS OF ACCOUNTS, AD HOC DISALLOWANCE MADE BY ASSESSING OFFICER IS NOT JUSTIFIABLE AND THE SAME W AS RIGHTLY DELETED BY CIT(A). HENCE, ON THIS ISSUE, WE DECLINE TO INTERF ERE IN THE ORDER OF LEARNED CIT(A). ACCORDINGLY, ISSUE NO. 2 IS DECIDED IN FAV OUR OF THE ASSESSEE. 12. THE ISSUE NO. 3 & 4 ARE IN RESPECT OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA(4). THIS CLAIM WAS NOT ALLOWED B Y THE ASSESSING OFFICER FOR TWO REASONS. THE FIRST REASON IS THAT THE ASSE SSEES CASE IS OF A CIVIL CONTRACTOR AND THEREFORE, AS PER EXPLANATION BELOW 80IA(13) INSERTED BY FINANCE (NO. 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01/04/2000, THE DEDUCTION U/S 80IA(4) IS NOT ALLOWABLE IN CASE OF A CONTRACTOR AND THE ASSESSEE IS A CONTRACTOR AND THEREFORE, THIS DEDUCT ION CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE TO THE ASSESSEE. THIS IS ISSUE NO. 3 AND IT IS RAISED BY THE REVENUE IN ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 AS PER GROUND NO. 1 & 2 IN ALL THESE YEARS. THE SECOND AS PECT OF THIS MATTER IS NON ALLOWABILITY OF CLAIM OF THE ASSESSEE U/S 80IA(4) B ECAUSE THIS CLAIM IS MADE BY THE ASSESSEE FOR THE FIRST TIME IN THE RETURN F ILED BY THE ASSESSEE U/S 153A AND NO SUCH CLAIM WAS MADE IN ANY RETURN FILED BY THE ASSESSEE U/S 13 139(1) OF THE ACT. ON THIS ASPECT I.E. ISSUE NO. 4 , THE GROUNDS RAISED BY THE REVENUE ARE GROUND NO. 3 TO 5 IN ASSESSMENT YEAR 20 09-10 AND GROUND NO. 3 TO 6 IN ASSESSMENT YEAR 2010-11 AND THIS ISSUE HA S BEEN RAISED BY THE ASSESSEE AS PER GROUND NO. 1 & 2 OF CROSS OBJECTION IN ASSESSMENT YEAR 2007-08 AND 2008-09 BECAUSE IN THESE TWO YEARS, THE DECISION OF CIT(A) IS AGAINST THE ASSESSEE. 13. ON ISSUE NO. 3, LEARNED DR OF THE REVENUE SUPPO RTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). RELIANCE WAS PLACED ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF KOYA AND CO. CONSTRUCTION (P) LTD. VS. ACIT AS REPORTED IN 3 2 CCH 43 (HYDERABAD). ON ISSUE NO. 4, LEARNED D. R. OF THE REVENUE SUPPOR TED THE ORDER OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSE SSEE SUPPORTED THE ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2009-10 AND 2010-11. REGARDING ASSESSMENT YEAR 2007-08 AND 2008-09, HE S UBMITTED THAT IN THESE TWO YEARS ALSO, THE ISSUE SHOULD BE DECIDED I N FAVOUR OF THE ASSESSEE BECAUSE THE CLAIM WAS MADE IN THE RETURN OF INCOME FILED U/S 153A AND AS PER THE PROVISIONS OF CLAUSE (A) OF SUB SECTION (1) OF SECTION 153A, THE RETURN FURNISHED U/S 153A SHOULD BE CONSIDERED AS I F SUCH RETURN WAS A RETURN FURNISHED U/S 139 OF THE ACT. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGA RDING ISSUE NO. 3, WE FIND THAT THE DECISION OF CIT(A) IN ASSESSMENT YEAR 2009-10 IS CONTAINED ON PAGE NOS. 36 TO 44 OF HIS ORDER, WHICH ARE REPRODUC ED BELOW FOR THE SAKE OF READY REFERENCE: FOR THIS YEAR ALSO THE APPELLANT HAD ENTERED INTO CONTRACTS AGREEMENTS WITH THE NHA1 AND UPPWD, AND THE FACTS A RE SAME THEREFORE, I FOLLOW MY ORDER FOR A.Y. 2010-11 AND A.Y. 2011-12 IN WHICH I HAD ALLOWED THE ASSESSEE'S CLAIM BECAUSE THE ASSESSING OFFICER FAILED TO CONSIDER THE AMENDM ENT MADE BY THE LEGISLATURE TO THE SECTION 80IA(4) OF THE L. T.ACT, FROM A 14 CLOSE READING OF THE TWO CONTRACTS AGREEMENT ENTERE D BY THE APPELLANT WITH NHAL AND UP PWD, IT IS SEEN THAT THE APPELLANT WAS ENGAGED IN DEVELOPMENT OF ROAD AND IS NOT A MER E CONTRACTOR AS HE HAD DEPLOYED HIS OWN CAPITAL USED HIS OWN MANAGEMENT AND EXPERTISE IN MAINTENANCE AND HAD TO BEAR THE RISK AND DEFECT CORRECTION. THAT AS PER THE PRO VISIONS CONTAINED IN THE AGREEMENT, THE ASSESSEE HAD GIVEN GUARANTY FOR THE ROAD AND BRIDGES AND OTHER CONSTRUCTION WOR K, DONE BY THE ASSESSEE, FOR ONE YEAR REFERRED TO AS 'DEFECT L IABILITY PERIOD', DURING WHICH PERIOD ANY DEFECT WAS TO BE R EMOVED BY THE ASSESSEE AS PER THE NEED. MY ATTENTION WAS DRAWN TO THE MARCH 2012 CASE OF HO N'BLE ITAT HYDERABAD BENCH CASE OF KOYA & CO. CONSTRUCTIO N (P)LTD. VS. ASSTT, COMMISSIONER OF INCOME TAX WHEREIN THEY HAVE DISCUSSED IN DETAIL ABOUT THE 801A DEDUCTION WHICH IS AS BELOW: '... SECTION 80-LA OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS - PROFITS AND / GAINS FROM INFRASTRUCTUR E UNDERTAKINGS - ASSESSMENT YEARS 2003-04 TO 2006-07 - WHETHER WORD 'OWNED' IN SUB-CLAUSE (A) OF CLAUSE (1 ) OF SECTION 80-IA(4) REFERS TO ENTERPRISE CARRYING ON B USINESS WHICH WOULD MEAN THAT ONLY COMPANIES ARE ELIGIBLE F OR DEDUCTION UNDER SECTION 80-IA(4) AND NOT ANY OTHER PERSON LIKE INDIVIDUAL, HUF, FIRM, ETC. - HELD, YES - WHETHER FOR PURPOSE OF ALLOWING DEDUCTION UNDER SEC TION 80-IA, IT IS NECESSARY THAT ASSESSEE SHOULD HAVE BE EN OWNER OF INFRASTRUCTURE FACILITY - HELD, NO -WHETHE R WHERE FROM AN UNDEVELOPED AREA, INFRASTRUCTURE IS DEVELOPED AND HANDED OVER TO GOVERNMENT, SUCH ACTIV ITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA(4) - HELD, YES - WHETHER IF CONTRACT ENTERED INTO BY ASSESSEE WITH GOVERNMENT INVOLVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT, DEFECT CORRECTI ON AND LIABILITY PERIOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT TO DENY DEDUCTION UNDER SECTION 80-IA - HELD, YES - ASSESSEE CLAIMED DEDUCT ION UNDER SECTION 80-IA FOR DEVELOPING INFRASTRUCTURE PROJECTS UNDER DIFFERENT GOVERNMENT AUTHORITIES - REVENUE AUTHORITIES HELD THAT ASSESSEE WAS ONLY A CONTRACTOR CARRYING ON CONSTRUCTION OF INFRASTRUCTU RE AND, THEREFORE, WAS NOT ELIGIBLE FOR DEDUCTION UNDER SEC TION 15 80-IA(4) - FACTS REVEALED THAT AGREEMENT WAS NOT FO R A SPECIFIC WORK, BUT FOR DEVELOPMENT OF FACILITY AS A WHOLE ; THAT MATERIAL REQUIRED WAS TO BE BROUGHT IN BY ASSESSEE BY STICKING TO QUALITY AND QUANTITY IRRESP ECTIVE OF COST OF SUCH MATERIAL; THAT ASSESSEE UTILIZED IT S FUNDS, ITS EXPERTISE, ITS EMPLOYEES AND TOOK RESPONSIBILIT Y OF DEVELOPING INFRASTRUCTURE FACILITY; AND THAT ASSESS EE HANDED OVER DEVELOPED INFRASTRUCTURE FACILITY TO GOVERNMENT ON COMPLETION OF DEVELOPMENT - WHETHER, ON FACTS, ASSESSEE WAS A DEVELOPER AND NOT A WORKS CONTRACTOR AND, THEREFORE, WAS ENTITLED TO DEDUCTIO N UNDER SECTION 80-IA - HELD, YES [IN FAVOUR OF ASSES SEE] WORDS & PHRASES : 'OWNED' AS OCCURRING IN CLAUSE (1 )(A) OF SECTION 80-1A(4) OF THE INCOME-TAX ACT, 1961. FACTS THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IA( 4) FOR THE YEARS UNDER CONSIDERATION FOR DEVELOPING INFRASTRUCTURE PROJECTS UNDER DIFFERENT AUTHORITIES , LIKE, HUDA, ICICI PARK, HMWSSB, TNWSDB, TWAD, ETC. THE CLAIM OF THE ASSESSEE WAS THAT THE COMPANY HAD BEEN ALLOTTED THE WORK OF DEVELOPMENT OF INFRASTRUCTURE AND HANDED IT OVER TO THE GOVERNMENT AS AN INFRASTRUCTU RE AFTER COMPLETION AND, HENCE, IT WAS TO BE ALLOWED A S DEDUCTION UNDER SECTION 80-IA(4). THE LOWER AUTHORI TIES WERE OF THE OPINION THAT THE ASSESSEE HAD NOT UNDERTAKEN THE INFRASTRUCTURE ACTIVITIES AND IT DID NOT OWN THE INFRASTRUCTURE ITSELF. ACCORDING TO THEM TH E ASSESSEE WAS ONLY A CONTRACTOR CARRYING ON CONSTRUC TION OF THE INFRASTRUCTURE AND, THEREFORE, WAS NOT ELIGI BLE FOR DEDUCTION UNDER SECTION 80-IA(4). ACCORDINGLY, DEDU CTION UNDER SECTION 80-1A(4) WAS DENIED BY THE LOWER AUTHORITIES TO THE ASSESSEE. ON SECOND APPEAL: HELD THE PROVISIONS OF SECTION 80-IA(4), WHEN INTRODUCED AFRESH BY THE FINANCE ACT, 1999, THE PROVISIONS UND ER SECTION 80-IA(4A) WERE DELETED FROM THE ACT, THE DEDUCTION AVAILABLE FOR ANY ENTERPRISE EARLIER UNDE R SECTION 80-IA(4A) ARE ALSO MADE AVAILABLE UNDER SEC TION 16 80-IA(4) ITSELF. FURTHER, THE VERY FACT THAT THE LE GISLATURE MENTIONED THE WORDS (I) 'DEVELOPING' OR (II) 'OPERA TING AND MAINTAINING 1 OR (III) 'DEVELOPING, OPERATING AND MAINTAINING' CLEARLY INDICATES THAT ANY ENTERPRISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECO ME ELIGIBLE FOR DEDUCTION. THEREFORE, THERE IS NO AMBI GUITY IN THE INCOME-TAX ACT. WHERE AN ASSESSEE INCURRED EXPENDITURE FOR PURCHASE OF MATERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK, I.E., CARRIES OUT TH E CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENE FIT UNDER SECTION 80-IA. IN CONTRAST TO THIS, AN ASSESS EE, WHO ENTERS INTO A CONTRACT WITH ANOTHER PERSON INCL UDING THE GOVERNMENT OR AN UNDERTAKING OR ENTERPRISE REFE RRED TO IN SECTION 80-IA FOR EXECUTING WORKS CONTRACT, W ILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80-IA . THE WORD 'OWNED' IN SUB-CLAUSE (A) OF CLAUSE (1) OF SUB - SECTION (4) OF SECTION 80-IA REFERS TO THE ENTERPRI SE. BY READING THE SECTION, IT IS CLEAR THAT THE ENTERPRIS ES CARRYING ON DEVELOPMENT OF INFRASTRUCTURE DEVELOPME NT SHOULD BE OWNED BY THE COMPANY AND NOT THAT THE INFRASTRUCTURE FACILITY SHOULD BE OWNED BY A COMPAN Y. THE PROVISIONS ARE MADE APPLICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO. THEREFORE, THE WOR D 'OWNERSHIP' IS ATTRIBUTABLE ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEAN THAT ONLY COMPANIE S ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA(4) A ND NOT ANY OTHER PERSON LIKE INDIVIDUAL, HUF, FIRM, ETC. [ PARA 21] ACCORDING TO SUB-CLAUSE (A), CLAUSE (I) OF SUB-SECT ION (4) OF SECTION 80-IA THE WORD 'IT' DENOTES THE ENTERPRI SE CARRYING ON THE BUSINESS. THE WORD 'IT' CANNOT BE R ELATED TO THE INFRASTRUCTURE FACILITY, PARTICULARLY IN VIE W OF THE FACT THAT INFRASTRUCTURE FACILITY INCLUDES RAIL SYS TEM, HIGHWAY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, A PORT, AN AIRPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANYONE. EVEN OTHERWISE, THE WORD 'IT' I S USED TO DENOTE AN ENTERPRISE. THEREFORE, THERE IS N O REQUIREMENT THAT THE ASSESSEE SHOULD HAVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. [PARA 22] THE NEXT QUESTION TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. I T 17 PURELY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. EACH OF THE WORK UNDERTAKEN HAS TO BE ANALYZED AND A CONCLUSION HAS TO BE DRAWN ABOUT THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE GOVERNMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FRO M THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE GOVERNMENT. IN THE INSTANT CASE, THE GOVERNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJE CTS TO THE ASSESSEE FOR THE DEVELOPMENT OF INFRASTRUCTU RE FACILITY. IT IS THE ASSESSEE'S RESPONSIBILITY TO DO ALL ACTS TILL THE POSSESSION OF PROPERTY IS HANDED OVER TO THE GOVERNMENT. THE FIRST PHASE IS TO TAKE OVER THE EXI STING PREMISES OF THE PROJECTS AND, THEREAFTER, DEVELOPI NG THE SAME INTO INFRASTRUCTURE FACILITY. SECONDLY, THE AS SESSEE SHALL FACILITATE THE PEOPLE TO USE THE AVAILABLE EX ISTING FACILITY EVEN WHILE THE PROCESS OF DEVELOPMENT IS I N PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROC ESS WOULD BE THE RESPONSIBILITY OF THE ASSESSES. THE ASSESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY . IN THE PROCESS, ALL THE WORKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MA Y BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOCK CARTS IN THE VILLAGE; PROVISION FOR TRA FFIC WITHOUT ANY HINDRANCE, THE ASSESSEE'S DUTY IS TO DE VELOP INFRASTRUCTURE WHETHER IT INVOLVES CONSTRUCTION OF A PARTICULAR ITEM AS AGREED TO IN THE AGREEMENT OR NO T. THE AGREEMENT IS NOT FOR A SPECIFIC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATERIAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALITY AND QUANTIT Y IRRESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES NOT PROVIDE ANY MATERIAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESSEE UTILIZES ITS FUNDS, IT S EXPERTISE, ITS EMPLOYEES AND TAKES THE RESPONSIBILI TY OF DEVELOPING THE INFRASTRUCTURE FACILITY. THE LOSSES SUFFERED EITHER BY THE GOVERNMENT OR THE PEOPLE IN THE PROCE SS OF SUCH DEVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER THE DEVELOPED INFRASTRUCTURE FA CILITY TO THE GOVERNMENT ON COMPLETION OF THE DEVELOPMENT. 18 THEREAFTER, THE ASSESSEE HAS TO UNDERTAKE MAINTENAN CE OF THE SAID INFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD, IF ANY DAMAGES ARE OCCURRED, IT SHALL BE THE RESPONSIBILITY OF THE ASS ESSEE. FURTHER, DURING (HIS PERIOD, THE ENTIRE INFRASTRUCT URE SHALL HAVE TO BE MAINTAINED BY THE ASSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FROM AN UNDEVELOPED AREA, INFRASTRUCTURE IS DEVELOP ED AND HANDED OVER TO THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CIRCULAR, DATED 18-5-2010, SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 -IA(4). THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT HAS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUC TURE FACILITY. THEREFORE, THE ASSESSEE IS A DEVELOPER AN D NOT A WORK CONTRACTOR AS PRESUMED BY THE REVENUE. THE CIRCULAR ISSUED BY THE BOARD, RELIED ON BY THE ASSE SSEE, CLEARLY INDICATES THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA(4). THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS A MERE CONT RACTOR OF THE WORK AND NOT A DEVELOPER. [PARA 23] AS PER THE PROVISION OF THE SECTION 80-IA, A PERSON BEING A COMPANY HAS TO ENTER INTO AN AGREEMENT WITH THE GOVERNMENT OR GOVERNMENT UNDERTAKINGS. SUCH AN AGREEMENT IS A CONTRACT AND FOR THE PURPOSE OF THE AGREEMENT A PERSON MAY BE CALLED AS A CONTRACTOR AS HE ENTERED INTO A CONTRACT. BUT THE WORD 'CONTRACTOR' IS USED TO DENOTE A PERSON ENTERING INTO AN AGREEMENT FOR UNDERTAKING THE DEVELOPMENT OF INFRASTRUCTURE FACIL ITY. EVERY AGREEMENT ENTERED INTO IS A CONTRACT. THE WOR D 'CONTRACTOR' IS USED TO DENOTE THE PERSON WHO ENTER S INTO SUCH CONTRACT. EVEN A PERSON WHO ENTERS INTO A CONT RACT FOR DEVELOPMENT OF INFRASTRUCTURE FACILITY IS A CON TRACTOR. THEREFORE, THE CONTRACTOR AND THE DEVELOPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTOR MAY NOT BE A DEVELOPER BUT EVERY DEVELOPER DEVELOPING INFRASTRUC TURE FACILITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTO R. [PARA 24] THE DECISION IN THE CASE OF LAXMI CIVIL ENGINEERING (P.) LTD. V. ADDL. CIT [IT APPEAL NO. 766 (PN) OF 2009, DATED 8-6-2011] SQUARELY APPLICABLE TO THE ISSUE UNDER DI SPUTE WHICH IS IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS H ELD 19 THAT MERE DEVELOPMENT OF A INFRASTRUCTURE FACILITY IS AN ELIGIBLE ACTIVITY FOR CLAIMING DEDUCTION UNDER SECT ION 80- IA. SECTION 80-IA INTENDED TO COVER THE ENTITIES CA RRYING OUT DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY KEEPING IN MIND THE PRESENT BUSINESS MODELS AND INTEND TO GRANT THE INCENTIVES TO SUCH ENTITIES. THE CBDT, ON SEVERAL OCCASIONS, CLAR IFIED THAT PURE DEVELOPER SHOULD ALSO BE ELIGIBLE TO CLAI M DEDUCTION UNDER SECTION 80-IA, WHICH ULTIMATELY CULMINATED INTO AMENDMENT UNDER SECTION 80-FA, IN T HE FINANCE ACT 2001, TO GIVE EFFECT TO THE AFORESAID C IRCULARS ISSUED BY THE CBDT. TO AVOID MISUSE OF THE AFORESAI D AMENDMENT, AN EXPLANATION WAS INSERTED IN SECTION 8 0- IA, IN THE FINANCE ACT 2007 AND 2009, TO CLARIFY TH AT MERE WORKS CONTRACT WOULD NOT BE ELIGIBLE FOR DEDUC TION UNDER SECTION 80-IA. BUT, CERTAINLY, THE EXPLANATIO N CANNOT BE READ TO DO AWAY WITH THE ELIGIBILITY OF T HE DEVELOPER; OTHERWISE, THE PARLIAMENT WOULD HAVE SIM PLY REVERSED THE AMENDMENT MADE IN THE FINANCE ACT, 200 1. THUS, THE AFORESAID EXPLANATION WAS INSERTED, CERTA INLY, TO DENY THE TAX HOLIDAY TO THE ENTITIES WHO DOES ON LY WORKS CONTRACT OR SUB-CONTRACT AS DISTINCT FROM THE DEVELOPER. THIS IS CLEAR FROM THE EXPRESS INTENTION OF THE PARLIAMENT WHILE INTRODUCING THE EXPLANATION. THE EXPLANATORY MEMORANDUM TO THE FINANCE ACT, 2007 STATES THAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE INVESTMENT IN DEVELOPMENT OF INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO M ERELY EXECUTE THE CIVIL CONSTRUCTION WORK. IT CATEGORICAL LY STATES THAT THE DEDUCTION UNDER SECTION 80-IA IS AV AILABLE TO DEVELOPERS WHO UNDERTAKE ENTREPRENEURIAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WHO UNDERTAKE ONLY BUSINESS RISK. WITHOUT ANY DOUBT, TH E ASSESSEE CLEARLY DEMONSTRATED THAT THE ASSESSEE HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TECHNICAL PERSONNEL, PLANT AND MACHINERY, TECHNICAL KNOW-HOW, EXPERTISE AND FINANCIAL RESOURCES. THEREF ORE, IF THE CONTRACTS INVOLVE DESIGN, DEVELOPMENT, OPERA TION & MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD, THEN SUCH CONTRACT S CANNOT BE CALLED AS SIMPLE WORKS CONTRACT, TO DENY THE DEDUCTION UNDER SECTION 80-IA. THE CONTRACTS WHICH CONTAIN ABOVE FEATURES TO BE SEGREGATED, HAVE TO BE 20 GRANTED DEDUCTION UNDER SECTION 80-IA, AND THE OTHE R AGREEMENTS, WHICH ARE PURE WORKS CONTRACTS HIT BY T HE EXPLANATION TO SECTION 80-IA(13), ARE NOT ENTITLED FOR DEDUCTION UNDER SECTION 80-IA. THE PROFIT FROM THE CONTRACTS WHICH INVOLVE DESIGN, DEVELOPMENT, OPERAT ING & MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD IS TO BE COMPUTED B Y THE ASSESSING OFFICER ON PRO-RATA BASIS OF TURNOVER. TH E ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RECORD S, ACCORDINGLY, AND GRANT DEDUCTION ON ELIGIBLE TURNOV ER, [PARA 25] I ALSO PLACE RELIANCE ON HON'BLE ITAT PUNE BENCH 'A ' CASE OF ROHAN & RAJDEEP INFRASTRUCTURE. THE REVERIE, 1 ST FLOOR, 805, BHANDARKAR INSTITUTE ROAD, PUNE-411004 VS. ASSISTAN T COMMISSIONER OF INCOME TAX, CIR.-3, PUNE, ITA NO.1214/PN/2010 A.Y. 2006-07 AND ORDER DATED 05.04. 2013. WHICH IS ON SIMILAR FACTS AND THEY HAVE HELD THAT W IDENING AND STRENGTHENING OF ROAD IS BRINGING INTO EXISTENCE A NEW INFRASTRUCTURE FACILITY WHICH IS IN THE NATURE OF R OAD DETAILS ARE BELOW.... '...8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE P ARTIES AND PERUSED THE RECORD. THE ASSESSEE COMPANY IS IN THE BUSINESS OF DEVELOPING AND EXECUTION OF INFRASTRUCT URE CONTRACTS. IT IS NECESSARY TO EXAMINE THE TERMS OF THE CONTRACT WITH THE GOVT. OF RAJASTHAN. THE ASSESSEE HAS FILED THE PAPER BOOK AND A COPY OF AGREEMENT/CONTRA CT WITH THE GOV. OF RAJASTHAN DATED 15.12.2000 WHICH I S PLACED AT PAGE NO. 70 TO 79. AS PER THE TITLE TO T HE AGREEMENT, IT IS MENTIONED THAT IMPROVEMENT AND STREGTHENING OF HANUMANGARH-SURATGARH ROAD VIA PILIGANGA KM. 0/0 TO 26/0 ON BOT BASIS'. THE SAID AGREEMENT IS IN THE FORM OF LEASE OF LAND AS MENTIONED IN THE RECIT AL. IT IS ASSERTED THAT LESSOR 'GOVT. OF RAJASTHAN' IS DESIRO US TO ENTRUST IMPROVEMENT AND STRENGTHENING OF HANUMANGARH-SURATGARH ROAD VIA PILIBANGAN ON BOT BASIS. THE BID DOCUMENT AS WELL AS PROJECT REPORT A RE MADE A PART OF THE AGREEMENT/CONTRACT. AS PER THE DOCUMENT ON RECORD, THE LENGTH OF THE ROAD IS SHOWN AS 21 26 KM AND THE PROJECT COST IS SHOWN AT RS. 643.02 L ACS. THE NECESSITY FOR CARRYING OUT THE IMPROVEMENT AND STRENGTHENING OF THE SAID ROAD IS STATED THAT SAID ROAD HAS GOT CRUST THICKNESS OF 25 CM ONLY, WHILE THE PR ESENT DAY TRAFFIC IS 1526 NO. COMMERCIAL VEHICLE PER DAY WHICH REQUIRES MINIMUM CRUST THICKNESS OF 37 CM. THE EXIT ING WIDTH OF CARRIAGE WAY WAS 7.00M (PAGE NO. 84 OF THE P/B). AFTER CONSIDERING THE PROJECT REPORT WHICH IS THE PART OF THE AGREEMENT/ CONTRACT IS APPEARS THAT GOVERNMENT HAS MADE THE ESTIMATION OF COST AS WELL AS THE REVENUE COLLECTION BY AUTHORIZING THE TOLL COLL ECTION TO THE PRIVATE PARTIES. AS PER THE TERMS OF AGREEMENT, THE HEIGHT OF THE ROAD HAS BEEN INCREASED BY 12 CM. IT IS MENTIONED IN THE SPECIFICATION THAT THE ROAD IS TO BE WIDENED BY 1 MTR. VIDE SHOULDERS BY USING DALMERA KANKAR IN 50CM THICKNESS. IN SUM AND SUBSTANCE, WID TH OF THE EXITING ROAD IS ALSO ENHANCED BY 1 MTR. EACH SIDE TO COUP UP TRAFFIC/VEHICLE MOVEMENTS. '...9. NOW IN THE BACKGROUND OF THE ABOVE FACTS, WE HAVE TO EXAMINE WHETHER THE DEDUCTION/CLAIMED BY TH E ASSESSEE IN RESPECT OF THE PROJECT IMPROVEMENT AND STRENGTHENING OF HANUMANGARH-SURATGARH ROAD VIA PILIBANGAN WHICH IS FOR 26 KM QUALIFY FOR DEDUCTION U/S 801A(4) AS A NEW INFRASTRUCTURE FACILITIES. WE ARE NOT GOING INTO THE COST WORKING BUT THE DRAWING SPECIFICATIONS ARE NECESSARY TO UNDERSTAND WHAT EXA CT WORK IS DONE BY THE ASSESSEE ON SAID ROAD. ASSESSEE HAS GIVEN A DRAWING IN THIS PAGE.......... .... THE ABOVE DRAWINGS (PART OF BID DOCUMENT) SHOWS EXISTING ROAD (A) AND NEW ROAD (B) WHICH SUPPORT TH E CONTENTION OF THE ASSESSEE THAT THE THICKNESS AS WE LL AS THE WIDTH OF THE ROAD HAVE BEEN INCREASED. NOW THE QUESTION IS WHETHER IT CAN BE SAID THAT IT IS MEREL Y REPAIR AND MAINTENANCE WORK ? AND OUR ANSWER SHOULD BE IN FAVOUR OF THE ASSESSEE THAT IT IS NOT MERELY A REPA IR AND MAINTENANCE WORK BUT DOING ENTIRE RESTRUCTURING OF EXISTING ROAD THE LEARNED COUNSEL HAS PLACED IS REL IANCE ON THE CBDT CIRCULAR NO. 4/2010 DATED 10.05.2010... ' 22 '...10 THE CBDT HAS CLARIFIED THE EXPRESSION 'NEW INFRASTRUCTURE FACILITY'. IN FACT THE SAID CIRCULAR SUPPORTS THE CLAIM OF THE ASSESSEE THAT THE WIDENING OF EXIS TING ROAD BY CONSTRUCTING ADDITIONAL LANE AS A PART OF T HE HIGHWAY PROJECT IS A NEW INFRASTRUCTURE FACI LITY. SO FAR AS THE HANUMANGARH -SURATGARH ROAD IS CONCERNED, THE WIDTH IS ALSO INCREASED AS ONE ADDI TIONAL LANE IS DEVELOPED. IN ADDITION TO INCREASING THE THICKNESS OF THE ROAD, IT IS PERTINENT TO NOTE HERE THAT THE PROJECT REPORT WHICH IS THE PART OF THE AGREEMENT C LEARLY SUGGEST THAT THE EXISTING ROAD WAS NOT CAPABLE OF T AKING THE INCREASED LOAD OF THE VEHICLES AND HENCE, THERE WAS NECESSITY FOR STRENGTHENING AS WELL AS WIDENING THE SAID ROAD. IT IS NOT THE CASE THAT MERELY SOME MINOR WOR K LIKE CARPETING HAS BEEN DONE TO BE DONE BUT THE ADDITION AL LANE OF 1 MTR. WIDENING WITH 12 CM INCREASED THICKN ESS HAS BEEN DONE. '...11. IN THE CASE OF TATA HYDRO ELECTRIC POWER SU PPLY CO. (SUPRA) THE OLD IRRIGATION DAM WAS STRENGTHENED BY USING MODERN TECHNIQUE. ON THE EXPENDITURE INCURRED FOR STRENGTHENING OF THE DAM, THE ASSESSEE CLAIMED THE DEVELOPMENT REBATE WITH THE PLEA THAT IT WAS A NEW PLANT. AS PER THE PROVISIONS OF LAW DEVELOPMENT REB ATE WAS ALLOWABLE ON A NEW PLANT. WHEN THE MATTER REACH ED BEFORE HON'BLE HIGH COURT, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND HON'BLE HIGH COURT HELD THAT THE ASSESSEE INCURRED A HUGE EXPENDITURE WHICH RESU LTED INTO INCREASING THE LIFE OF THE EXISTING DAM AND IT WAS THE WORK OF THE CREATION OF NEW PLANT AND THE ASSESSEE WAS ENTITLED FOR THE DEVELOPMENT REBATE. IT IS TRUE THA T THE PARAMETERS FOR THE DEVELOPMENT REBATE ARE DIFFERENT THAN THE DEDUCTION TO BE CLAIMED FOR DEVELOPING INFRASTRUCTURE FACILITIES BUT THE PRINCIPLES UNDERL INE THE CONCEPT WHETHER THE 'NEW INFRASTRUCTURE' MEANS WHIC H IS NEVER IN EXISTENCE AT ALL AND THE SAID PRINCIPLE S CAN BE APPLIED TO THE ASSESSEE'S CASE. WE FIND THAT IN THE CASE OF SHRISTI INFRASTRUCTURE DEVELOPMENT CORPORATION L TD. (SUPRA) ON THE IDENTICAL FACTS I.E. FOR STRENGTHENI NG AND IMPROVING OF THE EXISTING ROAD THE TRIBUNAL HELD TH AT THE WORK IS TO BE CONSIDERED AS NEW INFRASTRUCTURE FACILITIES...' 23 '....12. IT IS TRUE THAT EACH CASE IS TO BE EXAMINE D ON IT'S OWN FACTS. SO FAR AS THE PRESENT CASE IS CONCERNED, WE DO NOT AGREE WITH THE AUTHORITIES BELOW THAT IT IS MERELY WORK OF THE MAINTENANCE AND REPAIRS BUT IN FACT IT IS A WORK OF BRINGING INTO EXISTENCE NEW INFRASTRUCTURE FACILITY WHICH IS IN THE NATURE OF ROAD. WE, THEREFORE, ALLO W THE GROUND TAKEN BY THE ASSESSEE AND HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA(4) OF T HE ACT AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION TO THE ASSESSEE...' FURTHER CLARIFICATION ON TYPE OF WORKS COVERED U/S 80IA HAS BEEN GIVEN BY THE CBDT'S CIRCULAR NO.4/2010 [F.NO. 178/14/2010-IT(A-I)], DATED 18-5-2010 WHICH ARE AS UNDER: SECTION 80-IA(4)(\) OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS - IN RESPECT OF PROFITS AND GAINS FROM INFRASTRUCTURE FACILITY - CLARIFICATION REGARDING W IDENING OF EXISTING ROAD - DEFINITION OF A NEW INFRASTRUCTURE FACILITY CIRCULAR NO. 4/2010 [F.NO.178/14/2010-IT(A-I)], DATED 18/05/2010 REFERENCES HAVE BEEN RECEIVED BY THE BOARD AS TO WHETHER WIDENING OF EXISTING ROADS CONSTITUTES CREA TION OF NEW INFRASTRUCTURE FACILITY FOR THE PURPOSE OF S ECTION 80-LA(4)(I) OF THE INCOME-TAX ACT, 1961. SECTION 80-IA(4)(I) PROVIDES FOR A DEDUCTION TO AN UNDERTAKING ENGAGED IN DEVELOPING, OR OPERATING AND MAINTAINING, OR DEVELOPING, OPERATING AND MAINTAINI NG ANY INFRASTRUCTURE FACILITY SUBJECT TO SATISFACTION OF THE CONDITIONS LAID DOWN IN THE SECTION. THE EXPLANATIO N TO SECTION 80-IA(4)(I) STATES THAT FOR THE PURPOSE OF THIS CLAUSE, INFRASTRUCTURE FACILITY MEANS INTER ALIA :- (A)A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL S YSTEM; (B)A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER ACT IVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT;' THE ISSUE HAS BEEN EXAMINED BY THE BOARD. IT HAS BE EN DECIDED THAT WIDENING OF AN EXISTING ROAD BY CONSTRUCTING ADDITIONAL LANES AS A PART OF A HIGHWA Y PROJECT BY AN UNDERTAKING WOULD BE REGARDED AS A NE W 24 INFRASTRUCTURE FACILITY FOR THE PURPOSE OF SECTION 80- IA(4)(I). HOWEVER, SIMPLY RELAYING OF AN EXISTING R OAD WOULD NOT BE CLASSIFIABLE AS A NEW INFRASTRUCTURE F ACILITY FOR THIS PURPOSE. THIS CIRCULAR HAS BEEN ISSUED AFTER THE FINANCE ACT 2009 AND HAS CLARIFIED THAT THE WIDENING OF AN EXISTING ROAD IN AN INFRASTRUCTURE FACILITY BY AN ENTERPRISE ENTITLES T HE ENTERPRISE FOR DEDUCTION U/S 80IA(4)(I). IT IS A SETTLED POSITION IN LAW THAT THE CBDT CIRCU LARS ARE BINDING ON THE ASSESSING OFFICER REFERENCE IS INVIT ED TO THE CASE OF [AZADI BACCHAO ANDOLAN (SUPREME COURT)] AS CBDT CIRCULARS ARE CONTEMPARANEA EXPOSITIO. THIS DEDUCTION U/S 80IA(4)(I) IS AVAILABLE TO ANY C OMPANY WHICH HAS ENTERED INTO AN AGREEMENT WITH THE GOVERN MENT OR OTHER GOVERNMENT BODIES/CORPORATION, THE APPELLANT COMPANY FALLS UNDER THIS. AFTER CONSIDERING THE CBDT CIRCULAR 4/2010 CASE LAW S OF KOYA & COMPANY AND ROHAN AND RAJDEEP INFRASTRUCTURE AND AS WELL AS THE FACTS AT PAGES 40 TO 42 OF THIS ORDER. THE A PPELLANT COMPANY HAS WIDENED THE ROAD FROM 2 LANE TO 4 LANE IN CASE OF AGREEMENT WITH NHAI AND AT THE SAME TIME CONSTRUCTE D BRIDGES, CULVERTS, DRAINAGE, JUNCTIONS, FOOTPATHS, TRAFFIC SIGNALS ETC WHICH SHOWS THAT ASSESSEE COMPANY IS A DEVELOPE R AND NOT A MERE CONTRACTOR. SIMILARLY, AGREEMENT WITH UP PWD ASSESSEE HAD INCREASED THE ROAD LENGTH AND WIDENED IT, THE W ORKS CONSISTED OF THE UP GRADATION OF THE EXISTING ROAD, INCLUDING THE PROVISION OF AN ASPHALTIC OVERLAY, GSB AND WMM WITH DBM AND BC AND THE WIDENING OF CARRIAGEWAY AS SHOULDERS (HARD AND SOFT). THE WORK ALSO INCLUDES THE WIDENING OF E XISTING CULVERTS AND MINOR BRIDGES ALONG WITH THE NEW CONST RUCTION OF CULVERTS AND BRIDGES. THUS FROM THE ABOVE IT IS QUITE CLEAR THAT THE APPE LLANT COMPANY IS NOT A MERE WORK CONTRACTOR BUT HAS DEVEL OPED THE ROAD FROM EXISTING 2 LANE TO 4 LANE AND WHILE DOING SO THE APPELLANT COMPANY HAS ALSO MADE SUBSTANTIAL INVESTM ENT BY HIMSELF AND ALSO EXECUTED THE DEVELOPMENT WORKS AND CARRIED OUT CIVIL-WORKS ON ITS OWN BY USING HIS OWN MATERIA L AND EXPERTISE. NO MATERIAL CONSUMED IN THE OF ROADS AND BRIDGES 25 WAS PROVIDED BY THE NHAI AND UP PWD. THIS FACT IS D ULY REFERRED TO IN THE COPIES OF AGREEMENT AS WELL AS I N THE PAYMENT ADVICES, WHERE IN NO AMOUNT WAS DEDUCTED BY THE AGENCIES ON ACCOUNT OF MATERIAL. THE MAINTENANCE OF THE EXISTING FACILITY DURING THE PERIOD OF DEVELOPMENT ALSO WAS OF THE APPELLANT COMPANY AND SO ALSO WAS THE RISK DURI NG THE PERIOD TO MAINTAIN THE INFRASTRUCTURE AND AFTER THE COMPLETION OF DEVELOPMENT OF ROAD AND ITS HANDING OVER TO THE GOVERNMENT, THE RISK PERIOD OF THE APPELLANT COMPAN Y WAS OF 12 MONTHS FOR MAINTENANCE OF THE ROAD. FURTHER THE APPELLANT COMPANY HAS NOT SUBCONTRACTED HIS WORK. IN THIS CAS E STATUTORY REPORT IN FORM 10CCB UNDER RULE 18BBB AS PRESCRIBED BY THE CBDT WAS ALSO FILED ALONG WITH TH E RETURN. WHEREIN THE AUDITORS HAVE DULY CERTIFIED THAT THE A SSESSEE WAS A DEVELOPER OF ROAD AND HAS MAINTAINED SEPARATE BOO KS OF ACCOUNTS WHEREIN ALL DETAILS HAVE BEEN RECORDED AND NOTHING ADVERSE WAS NOTED BY THE ASSESSING OFFICER RELATING TO THIS. THEREFORE, AFTER CONSIDERING ALL THE FACTS THE APPE LLANT COMPANY FULFILLS ALL THE CRITERIA OF A DEVELOPER AS PER SECTION 80IA(4)(I) AND BY HIS WORKS A NEW INFRASTRUCTURE FA CILITY IN THE NATURE OF ROAD HAS COME INTO EXISTENCE AND IS ELIGI BLE FOR TAX BENEFIT UNDER SECTION 80IA(4)(I) OF THE ACT. AFTER CONSIDERING THE ABOVE STATED FACTS, THE ASSES SEE IS ENTITLED FOR THE DEDUCTION U/S 80IA(4), THEREFORE T HE ADDITION OF RS.10,34,06,532/ IS HEREBY DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 14.1 FROM THE ABOVE PARAS, REPRODUCED FROM THE ORDE R OF CIT(A), WE FIND THAT A CATEGORICAL FINDING HAS BEEN GIVEN BY CIT (A ) THAT THE ASSESSEE COMPANY IS NOT A MERE WORK CONTRACTOR BUT HAS DEVEL OPED THE ROAD FROM EXISTING 2 LANE TO 4 LANE AND WHILE DOING SO, THE A SSESSEE COMPANY HAS ALSO MADE SUBSTANTIAL INVESTMENT BY ITSELF AND ALSO EXEC UTED THE DEVELOPMENT WORKS AND CARRIED OUT CIVIL-WORKS ON ITS OWN BY USI NG ITS OWN MATERIAL AND EXPERTISE AND NO MATERIAL CONSUMED IN THE ROADS AND BRIDGES WERE PROVIDED BY THE NHAI AND UP PWD. THIS IS ALSO NOTED BY CIT( A) THAT THE MAINTENANCE OF THE EXISTING FACILITY DURING THE PER IOD OF DEVELOPMENT ALSO WAS OF THE ASSESSEE COMPANY AND SO ALSO WAS THE RIS K DURING THIS PERIOD TO 26 MAINTAIN THE INFRASTRUCTURE AND AFTER THE COMPLETIO N OF DEVELOPMENT OF ROAD AND ITS HANDING OVER TO THE GOVERNMENT, THE RISK PE RIOD OF THE ASSESSEE COMPANY WAS OF 12 MONTHS FOR MAINTENANCE OF THE ROA D. AS PER EXPLANATION BELOW SUB SECTION (4) OF SECTION 80IA, INFRASTRUCTURE FACILITY INCLUDES A ROAD INCLUDING TOLL ROAD, BRIDGE OR A RA IL SYSTEM. THIS IS NOT IN DISPUTE THAT THE ASSESSEE HAS WIDENED THE ROAD AND THEREFORE, ACTIVITY OF THE ASSESSEE FALLS WITHIN THE DEFINITION OF INFRAST RUCTURE. THE CIT(A) HAS ALSO REFERRED TO SEVERAL JUDICIAL PRONOUNCEMENTS AS PER WHICH IT WAS HELD THAT THERE IS NO REQUIREMENT THAT THE ASSESSEE SHOULD HA VE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. THE FACTS IN THE CASE OF KOYA & CO. (SUPRA) ARE IDENTICAL. IN THAT CASE, THE RELEVANT PARAS OF THE TRIBUNAL ORDER ARE PARA NO. 21 TO 28 AND THE SAME ARE REPRODUCED BELOW FOR READ Y REFERENCE:- 21. WE HAVE CONSIDERED THE ELABORATE SUBMISSIONS MA DE BY BOTH THE PARTIES AND ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH ALL THE CASE LAWS CITED BY BOTH THE PARTIES . WE FIND THAT THE PROVISIONS OF SECTION 80IA (4) OF THE ACT WHEN INTR ODUCED AFRESH BY THE FINANCE ACT, 1999, THE PROVISIONS UNDER SECTION 80I A (4A) OF THE ACT WERE DELETED FROM THE ACT. THE DEDUCTION AVAILABLE FOR A NY ENTERPRISE EARLIER UNDER SECTION 80IA (4A) ARE ALSO MADE AVAILABLE UNDER SEC TION 80IA (4) ITSELF. FURTHER, THE VERY FACT THAT THE LEGISLATURE MENTION ED THE WORDS (I) 'DEVELOPING' OR (II) 'OPERATING AND MAINTAINING' OR (III) 'DEVELOPING, OPERATING AND MAINTAINING' CLEARLY INDICATES THAT A NY ENTERPRISE WHICH CARRIED ON ANY OF THESE THREE ACTIVITIES WOULD BECOME ELIGI BLE FOR DEDUCTION. THEREFORE, THERE IS NO AMBIGUITY IN THE INCOME-TAX ACT. WE FIND THAT WHERE AN ASSESSEE INCURRED EXPENDITURE FOR PURCHASE OF MA TERIALS HIMSELF AND EXECUTES THE DEVELOPMENT WORK I.E., CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TAX BENEFIT UNDER SECTION 8 0 IA OF THE ACT. IN CONTRAST TO THIS, A ASSESSEE, WHO ENTERS INTO A CONTRACT WITH A NOTHER PERSON INCLUDING GOVERNMENT OR AN UNDERTAKING OR ENTERPRISE REFERRED TO IN SECTION 80 IA OF THE ACT, FOR EXECUTING WORKS CONTRACT, WILL NOT BE ELIGIBLE FOR THE TAX BENEFIT UNDER SECTION 80 IA OF THE ACT. WE FIND THAT THE WO RD 'OWNED' IN SUB-CLAUSE (A) OF CLAUSE (1) OF SUB SECTION (4) OF SECTION 80I A OF THE ACT REFER TO THE ENTERPRISE. BY READING OF THE SECTION, IT IS CLEARS THAT THE ENTERPRISES CARRYING ON DEVELOPMENT OF INFRASTRUCTURE DEVELOPMENT SHOULD BE OWNED BY THE COMPANY AND NOT THAT THE INFRASTRUCTURE FACILITY SH OULD BE OWNED BY A COMPANY. THE PROVISIONS ARE MADE APPLICABLE TO THE PERSON TO WHOM SUCH ENTERPRISE BELONGS TO IS EXPLAINED IN SUB-CLAUSE (A ). THEREFORE, THE WORD 'OWNERSHIP' IS ATTRIBUTABLE ONLY TO THE ENTERPRISE CARRYING ON THE BUSINESS WHICH WOULD MEAN THAT ONLY COMPANIES ARE ELIGIBLE F OR DEDUCTION UNDER SECTION 80IA (4) AND NOT ANY OTHER PERSON LIKE INDI VIDUAL, HUF, FIRM ETC. 27 22. WE ALSO FIND THAT ACCORDING TO SUB-CLAUSE (A), CLAUSE (I) OF SUB SECTION (4) OF SECTION 80-IA THE WORD 'IT' DENOTES THE ENTERPRI SE CARRYING ON THE BUSINESS. THE WORD 'IT' CANNOT BE RELATED TO THE IN FRASTRUCTURE FACILITY, PARTICULARLY IN VIEW OF THE FACT THAT INFRASTRUCTUR E FACILITY INCLUDES RAIL SYSTEM, HIGHWAY PROJECT, WATER TREATMENT SYSTEM, IRRIGATION PROJECT, A PORT, AN AIRPORT OR AN INLAND PORT WHICH CANNOT BE OWNED BY ANY ONE. EVEN OTHERWISE, THE WORD 'IT' IS USED TO DENOTE AN ENTERPRISE. THER EFORE, THERE IS NO REQUIREMENT THAT THE ASSESSEE SHOULD HAVE BEEN THE OWNER OF THE INFRASTRUCTURE FACILITY. 23. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER THE ASSESSEE IS A DEVELOPER OR MERE WORKS CONTRACTOR. THE REVENUE REL IED ON THE AMENDMENTS BROUGHT IN BY THE FINANCE ACT 2007 AND 2009 TO MENT ION THAT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE IS AKIN TO WORKS CONTRAC T AND HE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA (4) OF THE ACT. WHETHE R THE ASSESSEE IS A DEVELOPER OR WORKS CONTRACTOR IS PURELY DEPENDS ON THE NATURE OF THE WORK UNDERTAKEN BY THE ASSESSEE. EACH OF THE WORK UNDERT AKEN HAS TO BE ANALYZED AND A CONCLUSION HAS TO BE DRAWN ABOUT THE NATURE O F THE WORK UNDERTAKEN BY THE ASSESSEE. THE AGREEMENT ENTERED INTO WITH THE G OVERNMENT OR THE GOVERNMENT BODY MAY BE A MERE WORKS CONTRACT OR FOR DEVELOPMENT OF INFRASTRUCTURE. IT IS TO BE SEEN FROM THE AGREEMENT S ENTERED INTO BY THE ASSESSEE WITH THE GOVERNMENT. WE FIND THAT THE GOVE RNMENT HANDED OVER THE POSSESSION OF THE PREMISES OF PROJECTS TO THE ASSES SEE FOR THE DEVELOPMENT OF INFRASTRUCTURE FACILITY. IT IS THE ASSESSEE'S RESPO NSIBILITY TO DO ALL ACTS TILL THE POSSESSION OF PROPERTY IS HANDED OVER TO THE GOVERN MENT. THE FIRST PHASE IS TO TAKE OVER THE EXISTING PREMISES OF THE PROJECTS AND THEREAFTER DEVELOPING THE SAME INTO INFRASTRUCTURE FACILITY. SECONDLY, TH E ASSESSEE SHALL FACILITATE THE PEOPLE TO USE THE AVAILABLE EXISTING FACILITY E VEN WHILE THE PROCESS OF DEVELOPMENT IS IN PROGRESS. ANY LOSS TO THE PUBLIC CAUSED IN THE PROCESS WOULD BE THE RESPONSIBILITY OF THE ASSESSEE. THE AS SESSEE HAS TO DEVELOP THE INFRASTRUCTURE FACILITY. IN THE PROCESS, ALL THE WO RKS ARE TO BE EXECUTED BY THE ASSESSEE. IT MAY BE LAYING OF A DRAINAGE SYSTEM; MA Y BE CONSTRUCTION OF A PROJECT; PROVISION OF WAY FOR THE CATTLE AND BULLOC K CARTS IN THE VILLAGE; PROVISION FOR TRAFFIC WITHOUT ANY HINDRANCE, THE AS SESSEE'S DUTY IS TO DEVELOP INFRASTRUCTURE WHETHER IT INVOLVES CONSTRUCTION OF A PARTICULAR ITEM AS AGREED TO IN THE AGREEMENT OR NOT. THE AGREEMENT IS NOT FO R A SPECIFIC WORK, IT IS FOR DEVELOPMENT OF FACILITY AS A WHOLE. THE ASSESSEE IS NOT ENTRUSTED WITH ANY SPECIFIC WORK TO BE DONE BY THE ASSESSEE. THE MATER IAL REQUIRED IS TO BE BROUGHT IN BY THE ASSESSEE BY STICKING TO THE QUALI TY AND QUANTITY IRRESPECTIVE OF THE COST OF SUCH MATERIAL. THE GOVERNMENT DOES N OT PROVIDE ANY MATERIAL TO THE ASSESSEE. IT PROVIDES THE WORKS IN PACKAGES AND NOT AS A WORKS CONTRACT. THE ASSESSEE UTILIZES ITS FUNDS, ITS EXPERTISE, ITS EMPLOYEES AND TAKES THE RESPONSIBILITY OF DEVELOPING THE INFRASTRUCTURE FAC ILITY. THE LOSSES SUFFERED EITHER BY THE GOVT. OR THE PEOPLE IN THE PROCESS OF SUCH DEVELOPMENT WOULD BE THAT OF THE ASSESSEE. THE ASSESSEE HANDS OVER THE D EVELOPED INFRASTRUCTURE FACILITY TO THE GOVERNMENT ON COMPLETION OF THE DEV ELOPMENT. THEREAFTER, THE ASSESSEE HAS TO UNDERTAKE MAINTENANCE OF THE SAID I NFRASTRUCTURE FOR A PERIOD OF 12 TO 24 MONTHS. DURING THIS PERIOD, IF ANY DAMA GES ARE OCCURRED IT SHALL BE THE RESPONSIBILITY OF THE ASSESSEE. FURTHER, DURING THIS PERIOD, THE ENTIRE INFRASTRUCTURE SHALL HAVE TO BE MAINTAINED BY THE A SSESSEE ALONE WITHOUT HINDRANCE TO THE REGULAR TRAFFIC. THEREFORE, IT IS CLEAR THAT FROM AN UN- DEVELOPED AREA, INFRASTRUCTURE IS DEVELOPED AND HAN DED OVER TO THE GOVERNMENT AND AS EXPLAINED BY THE CBDT VIDE ITS CI RCULAR DATED 18-05-2010, SUCH ACTIVITY IS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IA (4) OF THE ACT. THIS CANNOT BE CONSIDERED AS A MERE WORKS CONTRACT BUT H AS TO BE CONSIDERED AS A DEVELOPMENT OF INFRASTRUCTURE FACILITY. THEREFORE, THE ASSESSEE IS A DEVELOPER 28 AND NOT A WORKS CONTRACTOR AS PRESUMED BY THE REVEN UE. THE CIRCULAR ISSUED BY THE BOARD, RELIED ON BY LEARNED COUNSEL FOR THE ASSESSEE, CLEARLY INDICATE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IA (4) OF THE ACT. THE DEPARTMENT IS NOT CORRECT IN HOLDING THAT THE A SSESSEE IS A MERE CONTRACTOR OF THE WORK AND NOT A DEVELOPER. 24. WE ALSO FIND THAT AS PER THE PROVISIONS OF THE SECTION 80IA OF THE ACT, A PERSON BEING A COMPANY HAS TO ENTER INTO AN AGREEME NT WITH THE GOVERNMENT OR GOVERNMENT UNDERTAKINGS. SUCH AN AGREEMENT IS A CONTRACT AND FOR THE PURPOSE OF THE AGREEMENT A PERSON MAY BE CALLED AS A CONTRACTOR AS HE ENTERED INTO A CONTRACT. BUT THE WORD 'CONTRACTOR' IS USED TO DENOTE A PERSON ENTERING INTO AN AGREEMENT FOR UNDERTAKING THE DEVE LOPMENT OF INFRASTRUCTURE FACILITY. EVERY AGREEMENT ENTERED INTO IS A CONTRAC T. THE WORD 'CONTRACTOR' IS USED TO DENOTE THE PERSON WHO ENTERS INTO SUCH CONT RACT. EVEN A PERSON WHO ENTERS INTO A CONTRACT FOR DEVELOPMENT OF INFRASTRU CTURE FACILITY IS A CONTRACTOR. THEREFORE, THE CONTRACTOR AND THE DEVEL OPER CANNOT BE VIEWED DIFFERENTLY. EVERY CONTRACTOR MAY NOT BE A DEVELOPE R BUT EVERY DEVELOPER DEVELOPING INFRASTRUCTURE FACILITY ON BEHALF OF THE GOVERNMENT IS A CONTRACTOR. 25. WE FIND THAT THE DECISION RELIED ON BY THE LEAR NED COUNSEL FOR THE ASSESSEE IN THE CASE OF CIT VS. LAXMI CIVIL ENGINEERING WORK S [SUPRA] SQUARELY APPLICABLE TO THE ISSUE UNDER DISPUTE WHICH IS IN F AVOUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT MERE DEVELOPMENT OF A INFR ASTRUCTURE FACILITY IS AN ELIGIBLE ACTIVITY FOR CLAIMING DEDUCTION UNDER SECT ION 80IA OF THE ACT AFTER CONSIDERING THE JUDGMENT OF THE MUMBAI HIGH COURT I N THE CASE OF ABG HEAVY ENGINEERING [SUPRA]. THE CASE OF ABG IS NOT THE PUR E DEVELOPER WHEREAS, IN THE PRESENT CASE, THE ASSESSEE IS THE PURE DEVELOPE R. WE ALSO FIND THAT SECTION 80IA OF THE ACT, INTENDED TO COVER THE ENTI TIES CARRYING OUT DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRU CTURE FACILITY KEEPING IN MIND THE PRESENT BUSINESS MODELS AND INTEND TO GRAN T THE INCENTIVES TO SUCH ENTITIES. THE CBDT, ON SEVERAL OCCASIONS, CLARIFIED THAT PURE DEVELOPER SHOULD ALSO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 8 0IA OF THE ACT, WHICH ULTIMATELY CULMINATED INTO AMENDMENT UNDER SECTION 80IA OF THE ACT, IN THE FINANCE ACT 2001, TO GIVE EFFECT TO THE AFORESAID C IRCULARS ISSUED BY THE CBDT. WE ALSO FIND THAT, TO AVOID MISUSE OF THE AFORESAID AMENDMENT, AN EXPLANATION WAS INSERTED IN SECTION 80IA OF THE ACT , IN THE FINANCE ACT-2007 AND 2009, TO CLARIFY THAT MERE WORKS CONTRACT WOULD NOT BE ELIGIBLE FOR DEDUCTIONS UNDER SECTION 80IA OF THE ACT. BUT, CERT AINLY, THE EXPLANATION CANNOT BE READ TO DO AWAY WITH THE ELIGIBILITY OF T HE DEVELOPER; OTHERWISE, THE PARLIAMENT WOULD HAVE SIMPLY REVERSED THE AMENDMENT MADE IN THE FINANCE ACT, 2001. THUS, THE AFORESAID EXPLANATION WAS INSE RTED, CERTAINLY, TO DENY THE TAX HOLIDAY TO THE ENTITIES WHO DOES ONLY MERE WORKS CONTACT OR SUB- CONTRACT AS DISTINCT FROM THE DEVELOPER. THIS IS CL EAR FROM THE EXPRESS INTENSION OF THE PARLIAMENT WHILE INTRODUCING THE E XPLANATION. THE EXPLANATORY MEMORANDUM TO FINANCE ACT 2007 STATES T HAT THE PURPOSE OF THE TAX BENEFIT HAS ALL ALONG BEEN TO ENCOURAGE INVESTM ENT IN DEVELOPMENT OF INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO M ERELY EXECUTE THE CIVIL CONSTRUCTION WORK. IT CATEGORICALLY STATES THAT THE DEDUCTION UNDER SECTION 80IA OF THE ACT IS AVAILABLE TO DEVELOPERS WHO UNDE RTAKES ENTREPRENEURIAL AND INVESTMENT RISK AND NOT FOR THE CONTRACTORS, WH O UNDERTAKES ONLY BUSINESS RISK. WITHOUT ANY DOUBT, THE LEARNED COUNS EL FOR THE ASSESSEE CLEARLY DEMONSTRATED BEFORE US THAT THE ASSESSEE AT PRESENT HAS UNDERTAKEN HUGE RISKS IN TERMS OF DEPLOYMENT OF TECHNICAL PERSONNEL , PLANT AND MACHINERY, TECHNICAL KNOWHOW, EXPERTISE AND FINANCIAL RESOURCE S. FURTHER, THE ORDER OF TRIBUNAL IN THE CASE OF B.T.PATIL CITED SUPRA IS PR IOR TO AMENDMENT TO SEC 80IA(4), AFTER THE AMENDMENT THE SECTION 80IA(4) RE AD AS (I) DEVELOPING OR 29 (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY, PRIOR TO AMENDMENT THE 'OR' BETWEEN THREE ACTIVITIES WAS NOT THERE, AFTER THE AMENDMENT 'OR' HAS BEEN INSERTED W.E.F. 1- 4-2002 BY FINANCE ACT 2001. THEREFORE, IN OUR CONSI DERED VIEW, THE ASSESSEE SHOULD NOT BE DENIED THE DEDUCTION UNDER SECTION 80 IA OF THE ACT IF THE CONTRACTS INVOLVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PE RIOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT TO DENY T HE DEDUCTION U/S 80IA OF ACT. IN OUR OPINION THE CONTRACTS WHICH CONTAIN ABO VE FEATURES TO BE SEGREGATED ON THIS DEDUCTION U/S. 80-IA HAS TO BE G RANTED AND THE OTHER AGREEMENTS WHICH ARE PURE WORKS CONTRACTS HIT BY TH E EXPLANATION SECTION 80IA(13), THOSE WORK ARE NOT ENTITLE FOR DEDUCTION U/S 80IA OF THE ACT. THE PROFIT FROM THE CONTRACTS WHICH INVOLVES DESIGN, DE VELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORR ECTION AND LIABILITY PERIOD IS TO BE COMPUTED BY ASSESSING OFFICER ON PRO-RATA BASIS OF TURNOVER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE RECORD S ACCORDINGLY AND GRANT DEDUCTION ON ELIGIBLE TURNOVER AS DIRECTED ABOVE. I T IS NEEDLESS TO SAY THAT SIMILAR VIEW HAS BEEN TAKEN BY THE CHENNAI BENCH OF THE TRIBUNAL AND DEDUCTION U/S. 80IA WAS GRANTED IN THE CASE OF M/S. CHETTINAD LIGNITE TRANSPORT SERVICES (P) LTD., IN ITA NO. 2287/MDS/06 ORDER DATED 27 TH JULY, 2007 FOR THE ASSESSMENT YEAR 2004-05. LATER IN ITA NO. 1179/MDS/08 VIDE ORDER DATED 26 TH FEBRUARY, 2010 THE TRIBUNAL HAS TAKEN THE SAME VIE W BY INTER-ALIA HOLDING AS FOLLOWS: '7. MOREOVER, THE REASONS FOR INTRODUCING THE EXPLA NATION WERE CLARIFIED AS PROVIDING A TAX BENEFIT BECAUSE MODERNISATION REQUI RES A MASSIVE EXPANSION AND QUALITATIVE IMPROVEMENT IN INFRASTRUCTURES LIKE EXPRESSWAYS, HIGHWAYS, AIRPORTS, PORTS AND RAPID URBAN RAIL TRANSPORT SYST EMS. FOR THAT PURPOSE, PRIVATE SECTOR PARTICIPATION BY WAY OF INVESTMENT I N DEVELOPMENT OF THE INFRASTRUCTURE SECTOR AND NOT FOR THE PERSONS WHO M ERELY EXECUTE THE CIVIL CONSTRUCTION WORK OR ANY OTHER WORK CONTRACT HAS BE EN ENCOURAGED BY GIVING TAX BENEFITS. THUS THE PROVISIONS OF SECTION 80IA S HALL NOT APPLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO WITH THE UNDERTAKING OR ENTERPRISE REFERRED TO IN THE SECTION BUT WHERE A P ERSON MAKES THE INVESTMENT AND HIMSELF EXECUTES THE DEVELOPMENT WOR K, HE CARRIES OUT THE CIVIL CONSTRUCTION WORK, HE WILL BE ELIGIBLE FOR TH E TAX BENEFIT UNDER SECTION 80IA.' 26. THE ABOVE ORDER WAS FOLLOWED IN SUBSEQUENT ASSE SSMENT YEARS 2007- 2008 & 2008-09 IN ITA NOS. 1312 & 1313/MDS/2011 VID E ORDER DATED 18.11.2011 IN THE CASE OF THE SAME ASSESSEE. 27. FURTHER IN THE CASE OF R.R. CONSTRUCTIONS, THE CHENNAI BENCH OF TRIBUNAL IN I.T.A. NO. 2061/MDS/2010 FOR ASSESSMENT YEAR 2007-0 8 VIDE ORDER DATED 3.10.2011 HELD AS FOLLOWS: 28. BEING SO, WE ARE INCLINED TO PARTLY ALLOW THE G ROUND RELATING TO CLAIMING OF DEDUCTION U/S. 80IA. 30 14.2 FROM THE ABOVE PARA OF THIS TRIBUNAL ORDER, IT COMES OUT THAT IF THE CONTRACTS INVOLVES DESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT AND DEFECT CORRECTION AND LIABILITY PER IOD, THEN SUCH CONTRACTS CANNOT BE CALLED AS SIMPLE WORKS CONTRACT TO DENY T HE DEDUCTION UNDER S. 80IA AND PROFIT FROM THE CONTRACTS WHICH INVOLVES D ESIGN, DEVELOPMENT, OPERATING & MAINTENANCE, FINANCIAL INVOLVEMENT, AND DEFECT CORRECTION AND LIABILITY PERIOD IS TO BE ACCEPTED AS DEVELOPMENT A ND CANNOT BE SAID TO BE CONTRACT SIMPLICITOR TO APPLY THE EXPLANATION. IN T HE PRESENT CASE, CATEGORICAL FINDING HAS BEEN GIVEN BY CIT (A) THAT THE ASSESSEE WAS ENGAGED IN DEVELOPMENT OF ROAD AND IS NOT A MERE CONTRACTOR AS HE HAD DEPLOYED HIS OWN CAPITAL, USED HIS OWN MANAGEMENT AND EXPERTISE IN MAINTENANCE AND HAD TO BEAR THE RISK AND DEFECT CORRECTION . THESE FINDINGS OF CIT (A) COULD NOT BE CONTROVERTED BY LEARNED DR OF THE REVENUE AN D THEREFORE, THIS TRIBUNAL ORDER RENDERED IN THE CASE OF KOYA & CO. ( SUPRA) IS SQUARELY APPLICABLE BECAUSE THE FACTS ARE SIMILAR. IN THE ORDER OF CIT (A), HE HAS FOLLOWED THIS TRIBUNAL ORDER AND VARIOUS OTHER JUDI CIAL PRONOUNCEMENTS AS NOTED BY HIM IN HIS ORDER, AS REPRODUCED ABOVE. CON SIDERING THIS FACTUAL AND LEGAL POSITION, WE FIND NO INFIRMITY THAT THE ORDER OF CIT (A) ON THIS ASPECT THAT IN THE FACTS OF THE PRESENT CASE, IT CANNOT BE SAID THAT THE ASSESSEE COMPANY WAS MERE A CONTRACTOR AND NOT A DEVELOPER. THEREFORE, ON ISSUE NO. 3, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 15. NOW WE TAKE UP ISSUE NO. 4. ISSUE NO. 4 IS THA T THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 80IA(4) IN THE RETURN FIL ED BY IT U/S 153A AND NOT IN RETURN OF INCOME FILED BY IT U/S 139(1). IN THI S REGARD, IT WAS THE SUBMISSION OF LEARNED D. R. OF THE REVENUE THAT THE PROVISIONS OF SECTION 80AC ARE RELEVANT AND THEREFORE, WE REPRODUCE THE P ROVISIONS OF SECTION 80AC HEREIN BELOW: WHERE IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 2006 OR ANY SUBSEQUENT ASSESSMENT YEAR, ANY DEDUCTION IS ADMISSIBLE U/S 80IA OR S. 80 IAB OR S.80IB OR S. 80IC OR S.80ID OR S.80IE, NO SUCH DEDUCTION SHALL BE ALLOWED TO HIM U NLESS HE FURNISHES A RETURN OF HIS INCOME FOR SUCH ASSESSMENT YEAR ON OR BEFORE THE DU E DATE SPECIFIED UNDER SUB-SECTION (1) OF SECTION 139. 31 16. WE FIND THAT THIS ASPECT WAS DECIDED BY CIT(A) BY MAKING FOLLOWING OBSERVATIONS ON PAGE NO. 36 OF HIS ORDER IN ASSESSM ENT YEAR 2009-10, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE : I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER AS WELL AS ASSESSEE'S SUBMISSION. FOR THIS ASSESSMENT YEAR 2009- 10 DUE DATE FOR FILING OF INCOME TAX RETURN WAS 30- 09-2009 AND THE APPELLANT HAD FILED THE INCOME TAX RETURN O N 25-09- 2009 VIDE ACKNOWLEDGEMENT NUMBER 91215411250909 WIT HOUT CLAIMING DEDUCTION U/S 801A. LATER ON IN RESPONSE TO NOTICE U/S 153A DT 07-02-2012,WHICH WAS RECEIVED BY THE AP PELLANT ON 03-03-2012 THE APPELLANT HAD FILED RETURN OF RS.3,79,90,641/- AND THE APPELLANT HAD ALSO CLAIMED 80IA DEDUCTION FOR RS.103406532/-, THE TIME LIMIT TO REV ISE THE RETURN WAS TILL 31/03/20U I.E. AFTER THE DATE OF SE ARCH BUT BECAUSE OF SEARCH THE ASSESSEE COULD NOT FILE REVIS E RETURN HE COULD FILE RETURN IN RESPONSE TO NOTICE U/S 153A ON 31-03-2012, THEREFORE THE CLAIM FOR 80IA IS WITHIN TIME LIMIT. 16.1 IN ASSESSMENT YEAR 2010-11 ALSO, THIS ISSUE HA S BEEN DECIDED BY CIT (A) IN FAVOUR OF THE ASSESSEE ON THE BASIS OF SIMIL AR OBSERVATIONS BUT IN ASSESSMENT YEAR 2007-08 AND 2008-09, THIS ISSUE HAS BEEN DECIDED BY CIT (A) AGAINST THE ASSESSEE BY MAKING FOLLOWING OBSERV ATIONS: 'I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER AS WELL AS ASSESSEE'S SUBMISSION. FOR THIS ASSESSMENT YEAR 2007- 08 DUE DATE FOR FILING OF INCOME TAX RETURN WAS 15. 11.2007 BUT THE APPELLANT HAD FILED THE INCOME TAX RETURN B EFORE I.E. ON 27.10.2007 VIDE ACKNOWLEDGE NO. 3583111271007 AN D NO CLAIM OF 80IA WAS MADE. LATER ON IN RESPONSE TO NOT ICE U/S 153A (DATED 17.02.2012 WHICH WAS RECEIVED BY THE AP PELLANT ON 03.03.2012), THE APPELLANT HAD FILED RETURN OF RS.3,54,95,203/- ON 31.03.2012 BY CLAIMING 80IA FOR RS.2,31,33,322/-. THIS CLAIM OF APPELLANT IS NOT TE NABLE AS THE TIME LIMIT TO REVISE THE RETURN HAD EXPIRED ON 31.0 3.2009 EVEN BEFORE THE DATE OF SEARCH. HENCE THIS GROUND OF APP EAL IS DISMISSED. 32 16.2 FROM THE ABOVE FINDING OF CIT(A) IN ASSESSMEN T YEAR 2007-08 AND 2008-09 ON ISSUE NUMBER 4, WE FIND THAT IT IS NOTED BY CIT(A) THAT IN ASSESSMENT YEAR 2007-08, THE TIME LIMIT TO REVISE T HE RETURN HAS EXPIRED ON 31/03/2009 I.E. MUCH BEFORE THE DATE OF SEARCH I.E. 14/09/2010 AND SIMILARLY IN ASSESSMENT YEAR 2008-09 ALSO, THE TIME LIMIT TO REVISE THE RETURN HAS EXPIRED ON 31/03/2010 I.E. MUCH BEFORE THE DATE OF SEARCH I.E. 14/09/2010 AND THEREFORE, THE CLAIM MADE BY THE ASS ESSEE FOR THE FIRST TIME IN THESE TWO YEARS IN THE RETURN OF INCOME FILED U/ S 153A CANNOT BE CONSIDERED AS CLAIM MADE IN A RETURN FILED U/S 139( 1) AS REQUIRED BY SECTION 80AC. MOREOVER AS PER THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF SUN ENGG. AS REPORTED IN 198 ITR 297 (SC), IT WAS HELD THAT REASSESSMENT PROCEEDINGS ARE FOR THE BENEFIT OF REV ENUE AND NOT FOR THE BENEFIT OF THE ASSESSEE AND THEREFORE, NO NEW CLAIM CAN BE MADE BY THE ASSESSEE IN REASSESSMENT PROCEEDINGS. ON THE SAME A NALOGY, SEARCH AND SUBSEQUENT ASSESSMENT PROCEEDINGS U/S 153A ARE ALSO FOR THE BENEFIT OF REVENUE AND NOT FOR THE BENEFIT OF THE ASSESSEE AND THEREFORE, NO NEW CLAIM CAN BE MADE BY THE ASSESSEE IN PROCEEDINGS U/S 153A . BUT THE DECISION OF CIT (A) IS ON THIS BASIS THAT IN ASSESSMENT YEAR 20 09-10, THE TIME AVAILABLE FOR FILING REVISED RETURN OF INCOME TO REVISE THE R ETURN FILED U/S 139 (1) HAD NOT EXPIRED ON THE DATE OF SEARCH ON 14.09.2010 AS IT WAS AVAILABLE UP TO 31/03/2011 AND FOR ASSESSMENT YEAR 2010-11, THE DUE DATE FOR FILING RETURN U/S 139 (1) WAS UP TO 31.10.2010 AND FOR REVISING T HE RETURN UP TO 31/03/2012 AND THE SEARCH HAS TAKEN PLACE BEFORE TH IS I.E. ON 14/09/2010. HE HAS ALSO NOTED THAT IN BOTH THESE YEARS I.E. ASS ESSMENT YEAR 2009-10 AND 2010-11, THE ORIGINAL RETURN OF INCOME WAS FILE D BY THE ASSESSEE WITHOUT CLAIMING DEDUCTION U/S 80IA BUT WITHIN THE TIME AVA ILABLE U/S 139(1) BECAUSE IN ASSESSMENT YEAR 2009-10, THE ORIGINAL RE TURN OF INCOME WAS FILED BY THE ASSESSEE ON 25/09/2009 WHEREAS TIME AVAILABL E FOR FILING THE RETURN 33 WAS 31/10/2009 AND IN ASSESSMENT YEAR 2010-11, TIME AVAILABLE FOR REVISING THE RETURN WAS UP TO 31/03/2012 AND THE RETURN U/S 133A WAS FILED ON 31/03/2012 I.E. WITHIN THE TIME AVAILABLE FOR FILIN G THE REVISED RETURN OF INCOME AND TILL THE DATE OF SEARCH, DUE DATE OF FIL ING THE RETURN HAS NOT EXPIRED. CONSIDERING THESE FACTS THAT IN THESE TWO YEARS I.E. A.Y. 2007 08 & 08 09, WHERE THE TIME AVAILABLE FOR FILING THE REVISED RETURN HAS EXPIRED BEFORE THE DATE OF SEARCH, CIT(A) HAS HELD THAT THE CLAIM MADE FOR DEDUCTION U/S 80IA(4) IN THE RETURN FILED BY THE AS SESSEE U/S 153A IS NOT ACCEPTABLE BUT IN THE LATER TWO YEARS I.E. ASSESSME NT YEAR 2009-10 AND 2010-11, SINCE THE TIME WAS AVAILABLE FOR FILING TH E REVISED RETURN/RETURN OF INCOME U/S 139 (5)/ 139 (1) AND THE ASSESSEE COULD NOT FILE THE REVISED RETURN OF INCOME WITHIN THE AVAILABLE TIME BECAUSE OF SEARCH, THE RETURN FURNISHED IN RESPONSE TO NOTICE ISSUED BY THE ASSES SING OFFICER U/S 153A SHOULD BE CONSIDERED AS A RETURN FILED U/S 139(1) O F THE ACT AND THEREFORE, ON THIS ISSUE ALSO, WE FIND NO INFIRMITY IN THE ORD ER OF CIT(A) AND THEREFORE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE IN TWO ASSESSMENT YEARS I.E. ASSESSMENT YEAR 2009-10 AND 2010-11 WHEREAS IN THE EARLIER TWO YEARS IN WHICH THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE IN ITS C.O. IN ASSESSMENT YEAR 2007-08 AND 2008-09, THIS ISSUE IS BEING DECID ED AGAINST THE ASSESSEE. OUR DECISION IS ON THIS BASIS THAT WHERE TIME WAS AVAILABLE FOR REVISING THE RETURN OF INCOME TO REVISE THE RETURN ORIGINALLY FI LED U/S 139 (1) AS IN A. Y. 2009 10 OR TO FILE THE RETURN U/S 139 (1) AS IN A . Y. 2010 11, THE RETURN FILED U/S 153A SHOULD BE CONSIDERED AS A RETURN FIL ED U/S 139 (1) AND HENCE ALL CLAIM RAISED IN THESE RETURNS SHOULD BE DECIDED ON MERIT BUT WHERE THE TIME AVAILABLE TO FILE REVISED RETURN HAS ELAPSED B EFORE SEARCH AS IN A.Y. 2007 08 AND 2008 09, THE NEW CLAIM RAISED IN TH E RETURN FILED U/S 153A IS NOT ACCEPTABLE. 34 17. ISSUE NO. 5 IS RAISED BY THE REVENUE IN ASSESSM ENT YEAR 2009-10 IS AS PER GROUND NO. 7, WHICH READS AS UNDER: 7. THAT THE LEARNED CIT(A)-III, LUCKNOW HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.1,3 0,23,020/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF VALUA TION REPORT OF D.V.O. 18. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE R OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED CIT(A). 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THIS ISSUE HAS BEEN DECIDED BY CIT(A) IN FAVOUR OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS ON PAGES 44 TO 52 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER, REMAND REPORT AS WELL AS FACTS STATED IN THE ASSESS EE'S SUBMISSION AND REJOINDER. THE ASSESSEE HAS MADE AN INVESTMENT IN PROPERTY AT B-5/21, VISHAL KHAND, GOM TI NAGAR, LUCKNOW, ON 13.05.2008.THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS MENTIONED THAT AS THE ASSESSE E COULD NOT EXPLAIN THE INVESTMENT MADE IN THE SUBJECT PROP ERTY BEFORE THE ASSESSING OFFICER, THE A.O. REFERRED THE MATTER OR INVESTMENT IN HOUSE CONSTRUCTION U/S 142A OF THE I. T. ACT TO THE DEPARTMENTAL VALUATION OFFICER(DVO), ACCORDINGLY, V IDE THIS OFFICE LETTER DATED 08-012-2013, REFERENCE WAS MADE U/S 142A TO THE DVO TO ELUCIDATE CORRECT COST OF CONSTRUCTIO N (RECONSTRUCTION/FURNISHING AS CLAIMED BY THE ASSESS EE). THE VALUATION OFFICER SUBMITTED HIS REPORT DATED 16 -03-2013 ESTIMATING THE COST OF CONSTRUCTION IN THE AFORESAI D HOUSE PROPERTY AT RS.2,10,61,200/- WHICH WAS CONFRONTED T O THE ASSESSEE. THE ASSESSEE SUBMITTED HIS COMMENTS ON 18 -03- 29013 BY RAISING THE FOLLOWING OBJECTIONS TO THE VA LUATION REPORT STATING THEREIN THE FOLLOWING FACTS: 35 THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNTS WHICH ARE PART OF THE SEIZED RECORD AND TH ERE WAS NOTHING CONTAINED IN THE SEIZED MATERIAL WHICH COULD SUGGEST THAT THE ASSESSEE HAS NOT ACCOUNTED FOR THE INVESTMENT IN THE OFFICE PREMISES AT 5/21 VISHAL KH AND GOMTI NAGAR, LUCKNOW. THE SECTION 142A(1) OF I.T.AC T 1961, READ AS UNDER: FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF T HE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 O R SECTION 69B OR THE VALUES OF ANY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN SECTION 69A O R SECTION 689B (OR FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SUB SECTION (2) OF SECTION 56] IS REQUIRED TO BE MA DE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. YOUR HONOUR WILL APPRECIATE THAT THE PROPERTY UNDER REFERENCE DOES NOT FALL WITHIN THE PROVISIONS OF SE CTION 69, 69A, 69B AND 56(2) OF THE I.T. ACT. THIS IS BECAUSE UNDER SECTION 69, 69A AND 69B, THE FIRST CONDITION WHICH IS TO BE SATISFIED IS THAT THE INVESTMENT EITHER SHOULD NOT BE RECORDED IN THE BOOKS OF ACCOUNTS OR IF RECORDED, T HE AO SHOULD FIND THAT THE INVESTMENT IS UNDER RECORDED. IT IS ALSO NOT COVERED U/S 56(2) AS THE PROPERTY IN QUEST ION HAS NOT BEEN GIFTED TO ANYONE. THEREFORE THE REFERE NCE MADE TO THE DVO IS UNCALLED FOR AND BAD IN LAW. IN SUPPORT OF OUR CONTENTION WE ARE ENCLOSING HERE WIT H THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT. IN TH E CASE OF PRAHALAD KUKMAR JINDAL V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AGRA. SECTION 142A, READ WITH SECTION 145 OF THE INCOME- TAX ACT, 1961 - VALUATION OFFICER - ESTIMATE BY, I N CERTAIN CASES - REFERENCE TO DVO - ASSESSMENT YEAR 2004-05 - ASSESSING OFFICER WITHOUT REJECTING BOOKS OF ACCOUN T MAINTAINED BY ASSESSEE MADE A REFERENCE UNDER SECTI ON 142A TO DVO FOR VALUATION OF FACTORY BUILDING OF AS SESSEE - ASSESSING OFFICER FURTHER ON BASIS OF COST OF CON STRUCTION ESTIMATED BY DVO MADE CERTAIN ADDITION TO INCOME OF ASSESSEE - COMMISSIONER (APPEALS) ALSO ESTIMATED CO ST OF CONSTRUCTION ON BASIS OF DVO'S REPORT AND REDUCED ADDITION TO SOME EXTENT - WHETHER REFERENCE UNDER 36 SECTION 142A TO DVO WITHOUT REJECTING BOOKS OF ACCO UNT REGULARLY MAINTAINED BY ASSESSEE WAS WITHOUT JURISD ICTION - HELD, YES - WHETHER ACTION OF COMMISSIONER (APPEA LS) FOR ESTIMATION OF CONSTRUCTION COST ON BASIS OF DVO 'S REPORT COULD NOT BE APPROVED PARTICULARLY WHEN ASSE SSING OFFICER MADE REFERENCE TO DVO WITHOUT REJECTING BOO KS OF ACCOUNT - HELD, YES [PARAS 7 AND 10]. I.T.A.T. AGRA BENCH [2012] 27 TAXMANN.COM 17 (AGRA). WITHOUT PREJUDICE TO LEGAL POSITION AS STATED ABOVE WE WOULD LIKE TO SUBMIT REGARDING THE VALUATION REPORT OF THE DVO AS UNDER: 2. THAT THE ASSESSEE HAD PURCHASED LAND AND BUILDIN G VIDE PURCHASE DEED DATED 13-05-2008, WHICH INCLUDED A LAND AND CONSTRUCTED BUILDING AREA OF 511 SQ.MTS AS STATED IN THE DEED (COPY ENCLOSED). AN ADDITIONAL A REA OF 377.49SQ.MTS..(888.49-511) ALONG WITH SOME CHANGED IN THE INTERNAL STRUCTURE WAS ADDED TO THIS CONSTRUCTI ON. HOWEVER, THE LD. D.V.O. NOT GIVEN THE CREDIT FOR SU CH EXISTING CONSTRUCTION WHICH WAS PURCHASED BY THE ASSESSEE, AS THE COST OF THE SAME WAS INCLUDED IN T HE COST OF THE PURCHASE. THE PURCHASE PRICE CONSISTS O F RS.22,17,600/- TOWARDS THE COST OF LAND AND RS.3582400/- TOWARDS THE COST OF CONSTRUCTED AREA, TOTALLING TO RS.58,00,000/-. THE VALUATION OF LAND AND BUILDING FOR THE PURPOSE OF SECTION 50C OF THE I.T. ACT, BY THE REVENUE AUTHORITY WAS DETERMINED AT RS.57,94,60 0/-. HOWEVER, THE ASSESSEE HAD PURCHASED THE SAME FOR RS.58,00,000/- WHICH WAS MORE THAN THE VALUE TAKEN BY THE STAMP AUTHORITIES FOR THE PURPOSE OF SECTION 50 C OF THE I.T. ACT. THUS THE COST OF LAND AND BUILDING PU RCHASED EARLIER STANDS FULLY DISCLOSED IN THE BOOKS OF ACCO UNTS. THEREFORE, THIS COST OF LAND AND BUILDING CANNOT BE DISPUTED BEFORE ANY AUTHORITY FUNCTIONING UNDER T HE INCOME TAX ACT. THE ASSESSEE SHOULD BE ALLOWED CRED IT OF THE SAME, FOR THE PURPOSE OF VALUATION. 3. THE ASSESSEE AFTER PURCHASING THE SAID BUILDING DID THE CONSTRUCTION IN THE YEAR 2008-09 RELEVANT TO A. Y. 2009-10. COPY OF THE CONSTRUCTION ACCOUNTS HAS ALRE ADY BEEN FILED. THE LD. DVO HAD APPLIED THE RATE OF CONSTRUCTION RELEVANT TO FEBRUARY, 2013 AND AN AMOU NT 37 OF RS.89,47,687/- HAD BEEN ADDED BY THE DVO TO THE COST OF CONSTRUCTION, STATING ADD ' COST OF INDEX 183 TO BRING THE VALUED AS ON DATED FEB.2013=8947,887.00'. BUT A S THE CONSTRUCTION WAS CARRIED OUT IN BETWEEN SEPTEMB ER, 2008 AND MARCH, 2009, THE INDEX TAKEN BY THE DVO IS INCORRECT. THE SAME MAY KINDLY BE SUBSTITUTED WITH CORRECT FIGURES. 4. THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION BUSINESS AND THE ENTIRE CONSTRUCTION WAS DONE BY THEMSELVES AND UNDER THEIR OWN SUPERVISION AND THE IN CONSTRUCTION BUSINESS EFFECT HAS NOT BEEN CONSIDERE D BY THE DVO. NO COST TOWARDS ARCHITECT EXPENDITURE WAS INCURRED BY THE ASSESSEE AS THE ASSESSEE HIMSELF IS IN CONSTRUCTION BUSINESS. FURTHER, ASSESSEE BEING IN CONSTRUCTION BUSINESS, USE TO MAKE BULK PURCHASES, THAT TOO AT A COMPETITIVE RATES. THIS WILL FURTHER REDUC E THE COST OF CONSTRUCTION. THIS ASPECT SHOULD ALSO BE GI VEN CREDIT BY THE DVO, FOR THE PURPOSE OF VALUATION OF THE FRESH CONSTRUCTED AREA. 5. THAT WE ARE ENCLOSING HERE WITH THE DETAILED WORKING TO ARRIVE AT THE COST TAKEN THE RATES TAKEN BY DVO. 6. IT APPEARS THAT THE LD. DVO HAS DONE THE VALUATI ON FOR WEALTH TAX PURPOSES AS THE RATE FOR INDEX HAD B EEN TAKEN FOR FEBRUARY, 2013 INSTEAD OF AVERAGE RARE FO R THE PERIODS FROM SEPTEMBER 2008 AND MARCH, 2009 THE PERIOD OF ACTUAL CONSTRUCTION. 7. THAT THE LD. DVO HAS STATED IN HIS REPORT THAT N O DETAILS WERE PROVIDED. SINCE THE REFERENCE WAS NOT AS PER THE PROVISIONS OF SECTION 142A(I) OF I.T. ACT 1961 SO NO DETAILS WERE PROVIDED. HOWEVER, ALL THE REQUIRED DE TAILS WERE FILED BEFORE YOUR HONOUR. 8. THAT THE ASSESSEE HAD SHOWN AND INVESTMENT IN THE BUILDING AS UNDER: PURCHASE OF PROPERTY AS PER DEED 58,00,000 ADD STAMP DUTY 5,80,000 TOTAL COST OF PURCHASES OF LAND AND 38 511 SQ.MTS. OF CONSTRUCTED AREA 63,80,000 COST OF CONSTRUCTION OF 377.49 SQ. MTS. OF BUILDING AND RENEWALS ETC. 95,96,116 TOTAL AMOUNT OF INVESTMENT AS PER BOOKS 1,59,76,116 THUS THE AMOUNT OF INVESTMENT FOR THE AREA CONSTRU CTED BY THE ASSESSEE AND RENEWALS IS RS.95,96,1166/- 9. THE POINT OF DISCREPANCIES IN DVO AREA AS UNDER: A. AREA OF 511 ST.MTS. AS PER DEED VALUED AT RS.35,82,400/- SHOULD BE TAKEN AND NOT AT THE VALUE WORKED AS PER CPWD RATES. THE AREAS OF CONSTRUCTION AND ITS PHOTO AT THE TIME OF PURCHASE ARE BEING ENCLOSE D AS SLATED ABOVE. B. THE BASE RATE HAVE BEEN TAKEN AS 2007 RATES AND ADDITIONS OF 83% HAVE BEEN ADDED TO THE VALUE WORKE D OUT BY THE DVO WHICH IS THE INDEX RATE FOR FEBRUARY 2013. HOWEVER, AS THE CONSTRUCTION HAD TAKEN PLACE BETWEEN SEPTEMBER 2008 AND MARCH 2009 SO THE AVERAGE RATE FOR THIS PERIOD SHOULD BE TAKEN. AS P ER THE CPWD CIRCULAR (COPY ENCLOSED) THE INDEX RATE FOR MA RCH 2009 WAS 113. SO INSTEAD OF 183 TAKEN BY THE DVO 1 13 SHOULD BE TOKEN. C. THE %AGE COST FOR SERVICES SHOULD BE TAKEN ON T HE VALUE OF CONSTRUCTION FOR 377.49 SQ MTS. ONLY. D. CREDIT FOR SELF SUPERVISION AND ASSESSEE BEING I NTO CONSTRUCTION ACTIVITIES SHOULD ALSO BE GIVEN WHICH IS ABOUT 8 TO 10%. IF ONLY THE AREA AND INDEX RATES ARE CORRECTED IN T HE DVO REPORT THE COST OF INVESTMENT SHALL BE RS.66,83,271 /- AGAINST WHICH THE ASSESSEE HAD SHOWN AN INVESTMENT OF RS.95,96,116/-. IN VIEW OF ABOVE THE VALUATION DONE BY THE DVO IS N OT CORRECT AND SHOULD NOT BE RELIED UPON. 39 THE AFORESAID OBJECTIONS WERE FORWARDED TO THE VALU ATION OFFICER VIDE THIS OFFICE LETTER DATED 22.03.2013. T HE VALUATION OFFICER IN HIS COMMENTS VIDE HIS LETTER DATED 26.03,2013 REITE RATED HIS FINDINGS IN THE VALUATION REPORT AND REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE STATING AS UNDER:- 'PARAWISE REPLY ON ASSESSEE'S OBJECTIONS DATED 22.0 3.2013 ARE AS FOLLOWING:- 1. NO COMMENTS ARE REQUIRED FROM THIS END. 2. IN RESPONSE TO THIS OFFICE NOTICE NO. 1406/VO/ITDS/LKO/12-13/272 DT. 11.01.2013, ASSESSEE 'S CHOSE NOT TO PROVIDE ANY INFORMATION. NO PURCHASE D EED WAS PROVIDED. EVEN NOW IT HAS NOT BEEN DONE. SOME PATES OF DEED ONLY HAVE BEEN ENCLOSED. BO COPY OF D EED IS ENCLOSED IN THIS OBJECTION. THE PRESENT STRUCTUR E IS TOTALLY DIFFERENT FROM THE ONE WHICH IS ANNEXED AS A DOUBLE STOREYED RESIDENTIAL STRUCTURE. A RESIDENTIA L UNIT OF DOUBLE STOREY IS NORMALLY A LOAD BEARING STRUCTURE WHEREAS THE PRESENT STRUCTURE IS PURELY A R.C.C. FR AMED STRUCTURE. THE PRESENT STRUCTURE IS HAVING BASEMENT PLUS THREE ADDITIONAL STOREYED PURELY SUPPORTED ON R.C.C . COLUMNS & BEAMS. THUS THE PRESENT STRUCTURE IS NOT POSSIBLE WITHOUT DISMANTLING ENTIRELY THE OLD STRUC TURE. ASSESSEE HAS TRIED TO ESCAPE THIS VITAL POINT. PRES ENT STRUCTURE IS TOTALLY NEW IN ENTIRELY. ONLY ADDITION OF 377.49 SQM. AVERMENT IS THUS BASELESS. TOTAL AREA O F 884.49 SQM. HAS BEEN CONSTRUCTED BY ASSESSEE ONLY. THUS, NO CREDIT ON ACCOUNT OF ALLEGED EXISTING STRU CTURE (OLD) CANNOT BE GIVEN. PURCHASE COST HAS NOT RELEVA NCE IN INVESTMENT WORKED OUT IN VALUATION REPORT AS ONLY INVESTMENT IN PRESENT STRUCTURE HAS BEEN ACCOUNTED. 3. NO PROOF OF CONSTRUCTION IN YEAR 2008-09 HAS BEEN G IVEN WITH OBJECTION HENCE IT IS UNTENABLE. NO MODIFICATI ON IN COST INDEX IS REQUIRED. 4. NO PROOF OF SELF-SUPERVISION/CONSTRUCTION HAS BEEN GIVEN THEREFORE NO WEIGHTAGE ON THIS ACCOUNT CAN BE GIVEN . NO PROOF OF PURCHASE ON COMPETITIVE RATES HAS BEEN GIV EN HENCE CLAIM IS UNTENABLE. 5. THE ENCLOSED WORKING OF RATES IS UNTENABLE AS THE A REAS HAS BEEN REDUCED WHICH IS CONTRARY TO WHAT IS EXIST ING. 40 6. IN ABSENCE OF PERIOD OF CONSTRUCTION THE VALUATION IS PREPARED AS PER EXISTING NORMS OF VALUE AS ON DATE OF INSPECTION. 7. NO COMMENTS. 8. ALREADY REPLIED UNDER PARA 2. 9. (A) AREAS AS PER DEED IS INADMISSIBLE IN LIGHT OF AVERMENTS UNDER PARA 2. (B)ALREADY REPLIED UNDER PARA 3. COST INDEX ENCLO SED BY ASSESSEE IS FOR DELHI AND NOT LUCKNOW. (C)PERCENTAGE OF SERVICES HAS BEEN RIGHTLY TAKEN FO R ENTIRE NEW STRUCTURE AREA. (D)NO CREDIT FOR SELF SUPERVISION IS ADMISSIBLE IN ABSENCE OF ITS PROOF. THE ASSESSING OFFICER OBSERVED THAT: IN VIEW OF THE ABOVE COMMENTS OF THE VALUATION OFFI CER, THE OBJECTIONS RAISED BY THE ASSESSEE REGARDING QUA NTUM OF VALUATION OF CONSTRUCTION IN THE SAID HOUSE PROP ERTY WAS REJECTED AND VALUE OF CONSTRUCTION IS TAKEN AS THAT ESTIMATED BY THE DVO VIDE HIS REPORT DATED 26.03.20 23 PREPARED ON THE BASIS OF HIS INSPECTION OF THE PROP ERTY ON 19.02.2013. SO FAR AS ASSESSEE'S CLAIM OF CONSTRUCT ION OF THE PROPERTY IN FINANCIAL YEAR 2008-09 I.E. THE YEA R UNDER CONSIDERATION IS CONCERNED THE SAME IS ACCEPTED AND THE VALUE ESTIMATED THE DVO I.E. RS.2,20,62,200/- TAKEN AS CORRECT COST OF INVESTMENT IN THE HOUSE PROPERTY. A S OBSERVED BY THE LD. DVO THE PRESENT STRUCTURE IS NO T POSSIBLE WITHOUT DISMANTLING ENTIRELY THE OLD STRUC TURE, THE WHOLE BUILDING IS TAKEN AS CONSTRUCTED DURING T HE YEAR IN QUESTION ANEW. IN ITS REPLY DATED 22.03.201 3 THE ASSESSEE HAS CLAIMED INVESTMENT OF RS.95,96,126/- I N THE CONSTRUCTION OF THE IMPUGNED BUILDING AFTER ITS PUR CHASE IN SEPTEMBER, 2008 AND FURNISHED COPY OF 'NEW OFFIC E MAINTENANCE' ACCOUNT AS PER ITS BOOKS OF ACCOUNTS T O SUPPORT RECONSTRUCTION/FURNISHING OF THE SAID BUILD ING. HOWEVER, AS PER THE 'NEW OFFICE MAINTENANCE' ACCOUN T ENCLOSED THE DISCLOSED EXPENDITURE IS AT RS.80,38,1 80/- ONLY. AND, AFTER CONSIDERING THIS AMOUNT OF RS. 80,38,180/-, THE UNDISCLOSED INVESTMENT IN THE CONSTRUCTION OF THE SAID BUILDING WAS WORKED OUT AT RS.2,30,23,020/-. 41 FROM THE ABOVE STATED FACTS IT IS SEEN THAT THE ASS ESSEE PURCHASED A HOUSE PROPERTY BEARING NUMBER -B-5/21, VISHAL KHAND, GOMTI NAGAR, LUCKNOW ON 13-05-2008, DURING T HE FINANCIAL YEAR 2008-09 AND CARRIED OUT CERTAIN RENOVATION/ALTERATION DURING THE FINANCIAL YEAR. IT IS A FACT THE ASSESSEE DID ONLY SOME COSMIC CHANGES IN THE BUILDI NG IS A FACTUAL MATTER AND IS SUPPORTED BY PHOTOGRAPH ENCLO SED BY THE ASSESSEE OF THE BUILDING. THE OLD BUILDING WAS ALSO ON RCC FRAMED STRUCTURE CONSTRUCTED IN 2002. THE DVO HAS W RONGLY STATED THAT THE BUILDING WAS DOUBLE STORIED WITH RB STRUCTURE. THE BUILDING PURCHASED WAS A RCC FRAMED STRUCTURE W ITH A BASEMENT AND THERE FLOORS. IT IS SEEN THAT THE PURCHASE AND RENOVATION WERE DU LY DISCLOSED IN THE ORIGINAL RETURN SO FILED. THE VALUATION BY T HE DVO SUFFERS FROM A BASIC AND INHERENT DEFECT AS IT HAS NOT TAKE N INTO CONSIDERATION THE FACT THAT THIS PROPERTY HAS BEEN PURCHASED AND THEN RENOVATION WAS CARRIED OUT IN A FULLY CONS TRUCTED STATE AS BEING FLOOR SPACE IN A COMMERCIAL BUILDING. MOREOVER, THIS IS A SEARCH CASE HENCE IN THE ABSENC E OF ANY INCRIMINATING MATERIAL FOUND/SEIZED DURING SEARCH, NO ADDITION CAN BE MADE. FURTHER, BOOKS OF ACCOUNTS HAVE NOT BE EN REJECTED. IN THIS REGARD MY ATTENTION IS ALSO DRAWN TO THE SU PREME COURT CASE LAW IN THE CASE OF SARGAM CINEMA. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: (1) SARGAM CINEMA V. COMMISSIONER OF INCOME-TAX (2011) 197 TAXMAN 203 (SC) HEADNOTE: 'SECTION 142A OF THE INCOME-TAX ACT, 1961 - ASSESSM ENT - ESTIMATE BY VALUATION OFFICER IN CERTAIN CASES - WHETHER AN ASSESSING AUTHORITY CAN REFER ANY MATTER TO DEPARTMENTAL VALUATION OFFICER WITHOUT BOOKS OF ACC OUNT BEING REJECTED - HELD NO' IT IS ONLY AN ESTIMATE. RELIANCE IS PLACED ON SUPRE ME COURT'S CASE OF '2..SARGAM CINEMA (2010) 328 ITR 05 13- SARGAM CINEMA V. COMMISSIONER OF INCOME TAX 42 (SUPREME COURT OF LNDIA) THAT.. 1 VALUATION REPORT HAS BEEN CONSIDERED TO BE ONLY AN OPINION, SO THAT IT C ANNOT FORM A FIRM BASIS EITHER FOR ASSESSMENT OR FOR ASSU MPTION OF JURISDICTION FOR REASSESSMENT . IT HAS BEEN SO S ECEDED IN VARIOUS CONTESTS, SOME OF WHICH ARE AVAILABLE EV EN IN THE PRESENT VOLUME. WHERE THE ASSESSEE'S EXPENDITURE ON CONSTRUCTION OF PROPERTY WAS SUPPORTED BY THE ASSESSEE'S BOOKS, THE QUESTION OF GETTING VALUATION REPORT CANNOT POSSIBL Y ARISE. IT WAS SO HELD BY THE SUPREME COURT IN SARGAM CINEM A V. CIT (2010) 328 ITR 513 IN THE CONTEXT OF THE CATEGORICAL FINDING OF THE TRIBUNAL THAT WHERE THE BOOKS WERE NOT REJECTED, REFERENCE TO DEPARTMENTAL VALUAT ION OFFICER IS MISCONCEIVED. IT IS ON THIS VIEW THAT TH E SUPREME COURT SET ASIDE THE HIGH COURT JUDGMENT TO THE CONTRARY RESTORING THE DECISION OF THE TRIBUNAL...' THERE ARE OTHER CASE LAWS ON SIMILAR FACTS WHICH A RE AS UNDER: (1) CIT VS BAJRANG LAS BANSAL [2011] 335 ITR 572 (DELHI) UNDISCLOSED INVESTESTMT- ADDITION ON BASIS OF REPORT OF DISTRICT VALUATION OFFICER- NO EVIDENCE SUGGESTING ASSESSEE MADE ANY PAYMENT ABOVE CONSIDERATION MENTIONED IN RETURN- BOOKS OF ACCOUNT NOT REJECTED-ADDITION NOT PERMISSIBLE-INCOME TAX ACT,1961,S.69B A SEARCH WAS CONDUCTED AT THE ASSESSEE'S RESIDENCE BY THE DEPARTMENT AND UNEXPLAINED CASH AND FIXED DEPOS IT RECEIPTS WERE FOUND. DURING THE SEARCH, NO EVIDENCE WAS FOUND SUGGESTING A HIGHER VALUATION FOR THE PROPERT Y. HOWEVER, THE ASSESSING OFFICER SOLELY ON THE BASIS OF THE REPORT OF THE DISTRICT VALUATION OFFICER MADE AN AD DITION OF RS. 99,33,000/- UNDER SECTION 69B OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNDISCLOSED INVESTMENT. THE COMMISSIONER (APPEALS) DELETED THE ADDITION. THE TRIBUNAL UPHELD THIS DECISION. ON APPEAL. HELD, DISMISSING THE APPEAL, THAT THE PRIMARY BURDE N TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME WAS O N THE REVENUE AND IT WAS ONLY WHEN SUCH BURDEN WAS DISCHARGED THAT IT WOULD BE PERMISSIBLE TO RELY UPO N THE 43 VALUATION GIVEN BY THE DISTRICT VALUATION OFFICER. THE OPINION OF THE DISTRICT VALUATION OFFICER, PER SE, WAS NOT AN INFORMATION AND COULD NOT BE RELIED UPON WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED WHICH HAD NOT BEEN DONE IN THE ASSESSEE'S CASE. MOREOVER, THERE WAS NO EVIDENCE FOUND AS A RESULT OF THE SEARCH TO SUGGEST THAT THE ASSESSEE HAS MADE ANY PAYMENT OVER AND ABOVE TH E CONSIDERATION MENTIONED IN THE RETURN OF THE ASSESS EE. CASES REFERRED TO : CIT (ASSESSMENT) V. DHARIYA CONSTRUCTION CO. [2010] 328 ITR 515 (SC) (PARA 7) (2) DVO VALUATION : THE HIGH COURT OF DELHI AT NEW DELHI JUDGMENT DELIVERED ON -23-01-2013 + ITA42/201 3 ABHINAV KUMAR MITTAL6. WE HAVE NO REASON TO DIFFER FROM THE VIEW TAKEN BY THE TRIBUNAL, PARTICULARLY, AS NO MATERIAL WAS FOUND IN THE SEARCH AND SEIZURE OPERAT IONS, WHICH WOULD JUSTIFY THE ASSESSING OFFICER'S ACTION IN REFERRING THE MATTER TO THE DVO FOR HIS OPINION ON VALUATION OF THE SAID PROPERTIES. IF THAT BE THE CA SE, THEN THE VALUATION ARRIVED AT BY THE DVO WOULD BE OF NO CONSEQUENCE. IN ANY EVENT, THE TRIBUNAL HAS ALSO, O N FACTS, HELD THAT THE DVO'S VALUATION WAS BASED ON INCOMPARABLE SALES, WHICH IS NOT PERMISSIBLE IN LAW . (3) CIT VS. SMT. SURAJ DEVI [2011] 64 DTR (DEL) 372; 20 10 328 ITR 604 INCOME FROM UNDISCLOSED SOURCES-ADDITION UNDER S.69 B- UNDISCLOSED INVESTMENT IN PROPERTY VIS-A-VIS REPORT OF DVO-PRIMARY BURDEN OF PROOF TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE-OPINION OF THE DVO, PER SE, IS NOT INFORMATION AND CANNOT BE RELIE D UPON WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED -MOREOV ER, NO EVIDENCE MUCH LESS INCRIMINATING EVIDENCE WAS FO UND AS A RESULT OF THE SEARCH TO SUGGEST THAT THE ASSES SEE HAD MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION MENTIONED IN THE REGISTERED PURCHASE DEED -ADDITION NOT JUSTIFIED. HELD: IT IS SETTLED LAW THAT THE PRIMARY BURDEN OF PROOF TO PROVE UNDERSTATEMENT OR CONCEALMENT OF INCOME IS ON THE REVENUE AND IT ONLY WHEN SUCH BURDEN IS DISCHARGED THAT 44 IT WOULD BE PERMISSIBLE TO RELY UPON THE VALUATION GIVEN BY THE DVO, IN ANY EVENT, THE OPINION OF THE DVO, P ER SE, IS NOT AN INFORMATION AND CANNOT BE RELIED UPON WITHOUT THE BOOKS OF ACCOUNT BEING REJECTED WHICH H AS NOT BEEN DONE IN THE PRESENT CASE. MOREOVER, IN THE PRESENT CASE, NO EVIDENCE MUCH LESS INCRIMINATING EVIDENCE WAS FOUND AS A RESULT OF THE SEARCH TO SUG GEST THAT THE ASSESSEE HAD MADE ANY PAYMENT OVER AND ABO VE THE CONSIDERATION MENTIONED IN THE REGISTERED PURCH ASE DEED. A READING OF THE AO'S ORDER DOES NOT DISCLOSE D THAT THE ASSESSEE HAD MADE ANY ADMISSION IN HER ALLEGED STATEMENT UNDER S. 132(4), IN FACT, NO SUCH STATEME NT HAS BEEN PRODUCED. IT IS ALSO PERTINENT TO MENTION THAT NO ADJUSTMENT ON ACCOUNT OF SALES CONSIDERATION HAS BEEN MADE BY THE REVENUE IN THE CASE OF THE SELLER. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT APPEAL WHICH, BEING BEREFT OF MERIT, IS DIS MISSED- KP VARGHESE VS.ITO (1981) 24 CTR (SC) 358; (1981) 131 ITR 597 (SC), CIT VS. SMT. SHAKUNTALA DEVI (2 009) 224, CTR (DEL) 79; (2009) 316 1TR 46 (DEL), SARGAM CINEMA VS CIT (2011) 241 CTR (SC) 179 AND ASSTT. CI T VS. DHARIYA CONSTRUCTION CO. (2010) 236 CTR (SC) 22 6; (2010) 47 DTR (SC) 288 FOLLOWED. (3)CIT VS. LAHSA CONSTRUCTION PVT. LTD. [2013] 357 ITR 0671-(DEL) HC ADDITION CANNOT BE JUSTIFIED SOLELY RELYING UPON TH E VALUATION REPORT BY THE DEPARTMENTAL VALUATION OFFI CER- CIT V. S.K. CONSTRUCTION CO. [2008] 167 TAXMAN 171 (DELHI), CIT V. NAVEEN GERA (2010) 328 ITR 516 (DEL HI), CIT V. SURAJ DEVI (2010) 328 ITR 604 (0) AND CIT V. BAJRANG LAL BANSAL [2011] 335 ITR 572 (DELHI) FOLLO WED. A PROPERTY WAS SOLD IN THE PERIOD RELATING TO THE ASSESSMENT YEAR 2004-05 FOR RS. 1 CRORE. THE PROPER TY HAD TWO SELLERS, I.E. (I) THE ASSESSEE, AND (II) FO R INDIVIDUAL CO-OWNERS. THE ASSESSEE DISCLOSED A SALE CONSIDERATION OF RS. 39,LAKHS FOR SALE OF ITS 50 PE R CENT. SHARE, IN THE PROPERTY, RS. 44 LAKH WAS PAID TO THE FOUR INDIVIDUAL CO- OWNERS FOR PURCHASE OF THE BALANCE 5 0 PERCENT, SHARE. THUS, IN ALL THEY SHOWED A SALE CONSIDERATION OF RS. 83 LAKHS. IN THE ASSESSEE'S CA SE , THE 45 DEPARTMENTAL VALUATION OFFICER OPINED THAT THE VALU E OF THE PROPERTY AT THE TIME OF PURCHASES WAS RS. 2,84,72,600 AND THIS BECAME THE BASIS OF ADDITION M ADE BY THE ASSESSING OFFICER. THE TRIBUNAL HELD IN FAVO UR OF THE ASSESSEE. ON APPEAL;(HELD) DISMISSING THE APPEA L, THAT NO ADDITION COULD BE MADE SOLELY ON THE BASIS OF THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER. CIT V. S.K. CONSTRUCTION CO. {2008} 167 TAXMAN 171 (DEL.)-FOLLOWED, COMMISSIONER OF INCOME TAX V. NAVE EN GERA [2010] 328 ITR 0516 (DEL.)-FOLLOWED , COMMISSIONER OF INCOME TAX V. SMT. SURAJ DEVI[2010] 328 ITR 0604 (DEL)-FOLLOWED, COMMISSIONER OF INCOME - TAX V. BAJRANG LAL BANSAL (2011)335 ITR 0572 (DEL.) - FOLLOWED. FURTHER JURISDICTIONAL HIGH COURT HAS ALSO HELD THE SAME VIEW: (I)THE DECISION OF THE APEX COURT IN THE CASE OF SA RGAM CINEMA (SUPRA) HAS BEEN FOLLOWED BY THE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY REPORTED IN (2011) 339 ITR 588 (ALLD). (II)ITO VERSUS DR. MAHENDRA KUMAR AGARWAL 2007 (9) MTC 97 (TRIB. ALLD) HEADNOTE: 'INCOME-TAX ACT, 1961- SECTION 69A- INVESTMENT IN CONSTRUCTION OF BUILDING- DEPARTMENT VALUER ESTIMATING COST AT HIGHER AMOUNT-NO EVIDENCE THAT COST SHOWN WAS NOT CORRECT-BOOKS OF ACCOUNT NOT HELD INCOMPLETE OR INCORRECT-ADDITION OF DIFFERENCE AS UNEXPLAINED INVESTMENT- NOT JUSTIFIED.' (III) ACIT V. CITY ASSOCIATES 2009 (13) MTC 926 (TRIB. LKO) HEADNOTE: 'INCOME-TAX ACT, 1961-SECTIONS 69 AND 145- CONSTRUCTION OF COMMERCIAL PROPERTY FORMING PART OF BUSINESS ASSESTS- COST OF CONSTRUCTION RECORDED IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE- DVOS REPORT ESTIMATING CONSTRUCTION COST AT HIGHER FIGURES-ADDITION FOR UNEXPLAINED INVESTMENT COULD NOT BE MADE WITHOUT REJECTING BOOKS OF ACCOUNTS. 46 EVEN ON THE MERIT THE APPELLANT HAS A STRONG CASE A S THE APPELLANT HAS POINTED VARIOUS DEFECTS IN THE VALUAT ION REPORT AS EVIDENT FROM PAGES 16 TO 18 AND 30 TO 33 OF THIS A PPEAL ORDER, WHICH HAS NOT BEEN ADJUDICATED BY THE ASSESSING OFF ICER. HE HAS SIMPLY RELIED ON DVO'S TECHNICAL EXPERTISE. HAD THIS BEEN SO LEGISLATURE WOULD NOT HAVE PROVIDED FURTHER OPPORTU NITY TO THE ASSESSEE GRANTED BY THE ASSESSING OFFICER TO GIVE C OMMENTS. HE HAS NOT CONSIDERED THAT THIS PROPERTY WAS DIRECT LY PURCHASED BY THE ASSESSEE AND THEN RENOVATED AND PHOTOGRAPH O F THE BUILDING BEFORE RENOVATION AND AFTER RENOVATION WAS SUBMITTED BEFORE THE AUTHORITIES AND THE SAID INVESTMENT WAS DULY DISCLOSED BY THE ASSESSES IN THEIR INCOME TAX RETUR NS REGULARLY SUBMITTED WITH THE I.T. DEPARTMENT. FURTHER, THE DVO REPORT DOES NOT SAY THAT THERE IS AN EXTRA INVESTMENT OVER AND ABOVE THE DECLARED AMOUNT. HIS REPORT IS ONLY AN ESTIMATE OF THE FAIR MARKET VALUE AND NOT A N ESTIMATE OF INVESTMENT. DVO'S VALUATION REPORT IS BASED ON FAIR MARKET VALUATION AND THIS FAIR MARKET VALUE IS RELEVANT FO R WEALTH TAX PURPOSES BUT UNDER SECTION 69 THE TERM USED IS UNEX PLAINED INVESTMENT IN THE PROPERTY. U/S 69 OF THE I.T. ACT ONLY UNEXPLAINED INVESTMENT CAN BE ADDED NOT THE FAIR MA RKET VALUATION FOR EG. IF THE INVESTMENT IN THE BUILDING WAS RS. 1,00,000 IN APRIL, 2003 AND NOW THE FAIR MARKET VAL UATION OF THE SAME BUILDING IN DECEMBER, 2003 BECOMES RS 1,45,000 /-, THEN NO ADDITION CAN BE MADE OF RS. 45,000/-. AFTER CONSIDERING THE ABOVE FACTS AND THE VARIO US CASE LAWS THE APPEAL OF THE APPELLANT IS ALLOWED AND THE ADDITION OF RS.1,30,23,020/- IS HEREBY DELETED. 19.1 FROM THE ABOVE OBSERVATIONS OF CIT (A), IT IS SEEN THAT AS PER THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF SARGAM CINEMA V. COMMISSIONER OF INCOME-TAX 328 ITR 513, REFERENCE B Y ASSESSING OFFICER TO THE D.V.O. WITHOUT REJECTION OF BOOKS OF ACCOUNTS I S NOT VALID. IN THE PRESENT CASE ALSO, REFERENCE WAS MADE WITHOUT REJEC TION OF BOOKS OF ACCOUNTS AND THEREFORE, THE SAME IS NOT VALID. ON MERIT ALSO, HE HAS GIVEN A FINDING THAT THE ASSESSING OFFICER HAS NOT CONSIDER ED THIS ASPECT THAT THIS PROPERTY WAS DIRECTLY PURCHASED BY THE ASSESSEE AND THEN RENOVATED AND 47 PHOTOGRAPH OF THE BUILDING BEFORE RENOVATION AND AF TER RENOVATION WAS SUBMITTED BEFORE THE ASSESSING OFFICER AND THE SAID INVESTMENT WAS DULY DISCLOSED BY THE ASSESSEE IN ITS INCOME TAX RETURNS BUT THE DVO REPORT DOES NOT SAY THAT THERE IS AN EXTRA INVESTMENT OVER AND ABOVE THE DECLARED AMOUNT. HIS REPORT IS ONLY AN ESTIMATE OF THE FAIR MARKET VALUE AND NOT AN ESTIMATE OF INVESTMENT. HE HAS GIVEN A FINDING THA T THE DVO'S VALUATION REPORT IS BASED ON FAIR MARKET VALUE AND THIS FAIR MARKET VALUE IS RELEVANT FOR WEALTH TAX PURPOSES BUT UNDER SECTION 69, THE TERM USED IS UNEXPLAINED INVESTMENT IN THE PROPERTY. HE HAS GIVEN EXAMPLE T HAT IF INVESTMENT IS MADE OF RS.1,00,000 IN APRIL, 2003 AND THE FAIR MAR KET VALUE OF THE SAME BUILDING IN DECEMBER, 2003 BECOMES RS.1,45,000/-, T HEN NO ADDITION CAN BE MADE OF RS.45,000/- BEING DIFFERENCE BETWEEN INVEST MENT IN APRIL, 2003 AND FAIR MARKET VALUE IN DECEMBER, 2003. LEARNED D. R. OF THE REVENUE COULD NOT POINT OUT ANY DEFECT IN THIS FINDING OF CIT (A) ON MERIT ALSO AND CONSIDERING THE TOTALITY OF FACTS, WE FIND NO INFIR MITY IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. THIS ISSUE IS DECIDED IN FAVOU R OF THE ASSESSEE. 20. THE ISSUE NO. 6 IS REGARDING DISALLOWANCE U/S 1 4A, WHICH HAS BEEN DELETED BY CIT (A). THIS ISSUE HAS BEEN RAISED BY THE REVENUE VIDE GROUND NO. 8 IN ASSESSMENT YEAR 2009-10 AND 2010-11. 21. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE R OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED CIT (A). 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER U/S 14A AS PER RULE 8D IN ASSESSMENT YEAR 2009-10 AND 2010-11 AND THE SAME WA S DELETED BY CIT (A) ON THIS BASIS THAT SINCE THERE WAS NO EXEMPT IN COME IN THESE TWO YEARS, NO DISALLOWANCE U/S 14A CAN BE MADE. WHILE HOLDING SO, CIT(A) HAS 48 FOLLOWED THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COU RT RENDERED IN THE CASE OF DCIT VS. SHIVAM MOTORS (P) LTD. IN I.T.A. NO.17/ LKW/2012. WE HAVE TAKEN A VIEW IN VARIOUS JUDGMENTS AFTER CONSIDERING THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SHIVAM MOTORS (SUPRA) ON THIS BASIS THAT SINCE THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF RAJENDRA PRASAD MOODY 115 ITR 519 WAS NOT CITED BEF ORE HON'BLE ALLAHABAD HIGH COURT IN SHIVAM MOTORS AND THEREFORE, WE HAVE TO FOLLOW THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF RAJENDRA PRASA D MOODY (SUPRA). AS PER THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF RAJENDRA PRASAD MOODY (SUPRA), IT WAS HELD IN THE CONTEXT OF ALLOWA BILITY OF EXPENSES U/S 57(III) THAT ACTUAL EARNING OF DIVIDEND INCOME IS N OT NECESSARY FOR THE PURPOSE OF ALLOWING INTEREST EXPENDITURE INCURRED F OR BORROWING FOR MAKING INVESTMENT IN SHARES. WE HAVE HELD THAT ON THE SAM E ANALOGY, FOR THE PURPOSE OF MAKING DISALLOWANCE U/S 14A ALSO, ACTUAL EARNING OF DIVIDEND INCOME IS NOT NECESSARY AND IF IT IS SEEN THAT THE EXPENDITURE WAS INCURRED FOR EARNING DIVIDEND INCOME, DISALLOWANCE HAS TO BE MADE U/S 14A OF THE ACT. ACCORDINGLY, ON THIS ISSUE, WE REVERSE THE OR DER OF CIT (A) AND RESTORE THAT OF THE ASSESSING OFFICER. THIS ISSUE IS DECID ED AGAINST THE ASSESSEE. 23. THE ISSUE NO. 7 IS REGARDING VEHICLE EXPENSES. THIS ISSUE HAS BEEN RAISED BY THE REVENUE IN ITS APPEAL FOR ASSESSMENT YEAR 2011-12 AS PER GROUND NO. 5, WHICH IS REPRODUCED BELOW: 5. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,91,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VEHICLE RUNNING EXPENSES WITH OUT APPRECIATING THE FACT THAT THE ADDITION HAS BEEN MA DE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SE ARCH. 24. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE R OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED CIT (A). 49 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN PARA 7 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2011-12, I T IS NOTED BY THE ASSESSING OFFICER THAT IN THE COURSE OF SEARCH, A D OCUMENT INVENTORIZED AS ON PAGE NO. 195 OF ANNEXURE A-11, THERE WAS PAYMENT OF RS.2,91,000/- AGAINST REPAIR OF THREE VEHICLES. THE ASSESSING OF FICER ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THIS PAYMENT WAS RECORDED IN T HE BOOKS OF ACCOUNTS AND ALSO PROVE ITS GENUINENESS AND BUSINESS PURPOSE . IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER THAT THE TRANSACTION IS DULY RECORDED IN THE BOOKS OF ACCOUNTS BUT THE A SSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AS IT FAILED TO FURNISH ANY SUPPORTING EVIDENCE. THIS ADDITION WAS DELETED BY CIT (A) ON THE BASIS THAT THE ASSESSING OFFICER HAS NOT MENTIONED THE SECTION OF I.T. ACT IN WHICH HE HAS DISALLOWED WHETHER IT IS SECTION 69C OR 37 ETC. AND BOOKS OF ACCOUNTS WERE ALSO NOT REJECTED AND THEREFORE, THE DISALLOWANCE W AS DELETED. WE ARE OF THE CONSIDERED OPINION THAT THE ORDER OF CIT (A) IS NOT SUSTAINABLE BECAUSE ALTHOUGH SECTION 69C IS NOT MENTIONED BY THE ASSESS ING OFFICER, THIS COMES OUT FROM THE LANGUAGE OF PARA 7 OF THE ASSESSMENT O RDER THAT THE ASSESSEE COULD NOT EXPLAIN AS TO HOW THIS PAYMENT FOUND RECO RDED IN THE SEIZED PAPER WAS RECORDED IN THE BOOKS OF ACCOUNTS. IF THE ASSE SSEE FAILS TO ESTABLISH BY BRINGING EVIDENCE THAT THE ENTRY OF EXPENSES FOUND IN SEIZED MATERIAL WAS RECORDED IN BOOKS OF ACCOUNTS OR THAT THE SAME WAS PAID OUT OF KNOWN SOURCES OF FUND, ADDITION HAS TO BE MADE U/S 69C AN D DEDUCTION FOR CORRESPONDING EXPENDITURE IS NOT ALLOWABLE. SINCE THE ASSESSEE COULD NOT ESTABLISH BY BRINGING EVIDENCE ON RECORD BEFORE US OR BEFORE LOWER AUTHORITIES THAT THE EXPENDITURE NOTED IN THE SEIZE D MATERIAL WAS IN FACT RECORDED IN THE BOOKS OF ACCOUNTS OR WAS PAID OUT O F KNOWN SOURCES OF FUND, THE ADDITION MADE BY THE ASSESSING OFFICER IS TO BE CONSIDERED AS ADDITION U/S 69C AND SINCE BEFORE CIT(A) OR BEFORE US ALSO, THE ASSESSEE COULD NOT ESTABLISH THAT THE ENTRY WAS MADE IN THE BOOKS OF ACCOUNTS OR THAT 50 THE SAME WAS PAID OUT OF KNOWN SOURCES OF FUND, DEL ETION OF ADDITION BY CIT(A) IS NOT PROPER. THEREFORE, WE REVERSE THE OR DER OF CIT (A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. T HIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 26. THE LAST ISSUE BEING ISSUE NO. 8 IS RAISED BY R EVENUE IN ASSESSMENT YEAR 2011-12 AS PER GROUND NO. 6, WHICH IS REPRODUC ED BELOW: 6. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.69,83,015/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH PAYMENT EXCEEDING RS.20, 000/- WITHOUT APPRECIATING THE FACT THAT THE ADDITION WAS MADE ON THE BASIS OF SEIZED MATERIAL/INCRIMINATING DOCUMENTS FO UND DURING THE SEARCH. 27. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDE R OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT (A). 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IN PARA 8 OF THE ASSESSMENT ORDER, IT IS NOTED THAT DURING THE COURS E OF SEARCH, A NUMBER OF INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED AND O N EXAMINATION, IT WAS FOUND THAT THE DOCUMENTS INVENTORIZED AS PAGE NO. 20 TO 26 AND 33 TO 34 OF ANNEXURE A-24, CONTAINED DETAILS OF CASH PAYMENTS EXCEEDING RS.20,000/- MADE BY THE ASSESSEE IN RESPECT OF CERTAIN EXPENDITURE IN VIOLA TION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER HAS MADE SUMMARY OF THESE PAGES AND THE TOTAL AMOUNT HAS BEEN WORKED OUT AT RS.69,83,01 5/-. AS PER PARA 8.1 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER ASKED THE A SSESSEE TO EXPLAIN THE REASONS FOR SUCH CASH PAYMENTS BUT NO COMPLIANCE WAS MADE A ND THEREFORE, THE ASSESSING OFFICER DRAWN INFERENCE THAT THE ASSESSEE DOES NOT HAVE ANY MATERIAL TO PROVE THAT THE DEFAULT WAS COMPULSIVE AND COVERED BY RULE 6DD OF THE I.T. RULES, 1962. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT AND THE TOTAL AMOUNT OF RS.69,83,015 /- ALLEGED AS PAID IN CASH EXCEEDING RS.20,000/- WAS DISALLOWED. WHEN THE ASS ESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), HE DELETED THE DISALLOWAN CE. IT IS NOTED BY CIT(A) ON PAGE NO. 31 OF HIS ORDER THAT PART OF EXPENSES ARE RELATED TO ASSESSMENT YEAR 2008-09 AND IN THAT YEAR, WHEN THE A. O. ASKED THE ASSESSEE TO EXPLAIN, IT WAS 51 SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER THAT CASH PAYMENTS WERE NOT MADE TO ONE SINGLE PERSON ON ONE SINGLE DAY AND THERE WAS NO BAR UNDER THE PROVISIONS OF IT ACT FOR MULTIPLE PAYMENTS BEING MA DE TO DIFFERENT PERSONS WHICH WERE LESS THAN RS.20,000/- FOR EACH PERSON. THE CI T(A) HAS NOTED DOWN SOME INSTANCES ALSO THAT AMOUNT OF RS.85,894/- HAS BEEN STATED TO HAVE BEEN MADE IN CASH CONSISTING OF PAYMENTS OF RS.19,894 + RS.20,00 0 + RS.18,000 + RS.15,000 + RS.15,000. REGARDING ONE MORE PAYMENT OF RS.1.05 L AC, IT WAS NOTED BY CIT(A) THAT THIS IS NOT A SINGLE PAYMENT TO ONE PARTY BUT IS BEING PAID TO VARIOUS PARTIES AND IN SUPPORT, COPIES OF ACCOUNTS ARE ENCLOSED. S IMILARLY PAYMENT OF RS.1,10,000/- AND RS.10,01,420/- WAS MADE BUT IT WA S STATED THE SAME IS DULY RECORDED IN THE BOOKS OF ACCOUNTS BEING PAID TO VAR IOUS PERSONS AS PER BOOKS OF ACCOUNTS PRODUCED. CONSIDERING THESE FACTS THAT TH E CASH PAYMENT IN EXCESS OF RS.20,000/- WAS NOT MADE TO A SINGLE PERSON ON SING LE DATE, WE DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A) ON THIS IS SUE. ACCORDINGLY, ISSUE NO. 8 IS DECIDED IN FAVOUR OF THE ASSESSEE. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AS SESSMENT YEAR 2005-06 IS DISMISSED AND CROSS OBJECTIONS OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AND 2008-09 ARE ALSO DISMISSED AND OUT OF SEVEN APPEALS OF THE REVENUE, THREE APPEALS FOR ASSESSMENT YEAR 2009-10, 2011-11 AND 20 11-12 ARE PARTLY ALLOWED AND REMAINING 4 APPEALS ARE ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED:30/10/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT . REGISTRAR