The ACIT ,Central-1, Indore V. Prakash Asphalting & Toll of Highways (India) Ltd, Mhow

ITSSA 27/Ind/2021

AI Insights

The case involves a series of appeals and cross-objections related to the income tax assessments of Prakash Asphaltings & Toll of Highways (India) Ltd. for the assessment years 2012-13 to 2015-16. The appeals were filed by the Assistant Commissioner of Income Tax (ACIT), Central-1, Indore, challenging the orders of the CIT(A)-3, Bhopal, which had granted relief to the assessee by deleting various additions made by the Assessing Officer (AO). The main issues revolved around the deletion of additions related to bogus payments, unaccounted investments, and disallowances under section 14A of the Income Tax Act, as well as the eligibility for deductions under section 80IA. The Tribunal examined the submissions, evidence, and relevant legal provisions, including precedents from the Supreme Court and various High Courts, before arriving at its decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122586 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-11-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 31-01-2021
• Other Referred Cases: PCIT vs. Tejua Rohit Kumar Kapadia, CIT vs. Maxopp Investment Ltd. & Ors., CIT vs. JSW Steel Ltd., CIT vs. Gwalior Rayons Silk Manufacturing Company, Bajaj Tempo Ltd. vs. CIT, CIT vs. Hindustan Bulk Carriers, CIT vs. Chouhan Resorts, CIT vs. Navin Gera, CIT vs. Smt. Suraj Devi, CIT vs. KSM Guruswamy Nadar & Sons, CIT vs. Vridnaban Real estate (P) Ltd, CIT vs. Vijay Kumar D Gupta, CIT vs. Lahsa Construction Pvt. Ltd, CIT vs. Pratap Singh Amro Singh Rajendra Singh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Rejection of books of accounts; Unexplained investment; Value adopted by valuation officer; Search and seizure; Loose papers; Earning of tax free income; Question of law; Valuation report; Competent authority; Block assessment; Onus to prove; Rule 8D; Set aside; Bogus
• Section: 147; 69; 132; 69C; 143(3); 153A; 14A; 260A; 69B; 80IA; 158BC; 43; 13; 153; 145(3); 22; 153C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER IT(SS)A Nos.24 to 27/Ind/2021 Assessment Years: 2012-13 to 2015-16 The ACIT, Central-1, Indore. Vs. Prakash Asphaltings & Toll of Highways (India) Ltd., 76, Mall Road, Mhow – 453441. PAN: AABCP0398N (Appellant) (Respondent) CO Nos.40 to 43/Ind/2021 (IT(SS)A Nos.24 to 27/Ind/2021) Assessment Years: 2012-13 to 2015-16 Prakash Asphaltings & Toll of Highways (India) Ltd., 76, Mall Road, Mhow – 453441. PAN: AABCP0398N Vs. The ACIT, Central-1, Indore. (Cross Objector) (Respondent) Assessee by : Shri Anoop Garg & Vikash Guru, ARs Revenue by : Shri P.K. Mishra, CIT, DR Date of Hearing : 14.11.2022 Date of Pronouncement : 10.02.2023 ORDER PER C.M. GARG, JM: The above captioned appeals filed by the Revenue and the Cross Objections filed by the assessee are directed against the consolidated order dated 07.07.2020 of the CIT(A)-3, Bhopal, relating to Assessment Years 2012-13 to 2015-16. In the IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 2 beginning of hearing, the ld. Representatives of both the sides agreed that the grounds raised by the Revenue for AY 2013-14, 2014-15 and 2015-16 are identical and grounds No.2 to 5 raised by the Revenue for AY 2012-13 are also identical to the grounds raised by the Revenue in the said three appeals for AY 2013-14, 2014-15 and 2015-16. 2. The grounds of appeal raised by the Revenue read as under:- IT(SS)A No.24/Ind./2021 (AY 2012-13) “1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.2,05,83,759/- made on account of Bogus payment made to petrol pumps and has overlooked the findings of the AO mentioned in the assessment order. 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.91,09,036/- made u/s 14A and has overlooked the findings of the AO mentioned in the assessment order.” 3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.2,68,65,877/- made u/s 80-IA and has overlooked the findings of the AO mentioned in the assessment order.” 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing fresh claims u/s 80IA under Chapter VIA in the return of income filed in response of notice u/s 153A of the Act. 5. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing relief of Rs.2,90,836/- from addition made on account of DVO report of the property at Patalpani and has overlooked the findings of the AO mentioned in the assessment order.” IT(SS)A No.25/Ind./2021 (AY 2013-14) “1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.20,00,000/- made on account of unaccounted investment in Ashapura Land and has overlooked the findings of the AO mentioned in the assessment order. 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.1,37,54,770/- made u/s 14A IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 3 and has overlooked the findings of the AO mentioned in the assessment order.” 3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.8,96,47,333/- made u/s 80-IA and has overlooked the findings of the AO mentioned in the assessment order.” 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing fresh claims u/s 80IA under Chapter VIA in the return of income filed in response of notice u/s 153A of the Act. 5. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing relief of Rs.8,86,500/- from addition made on account of DVO report of the property at Patalpani and has overlooked the findings of the AO mentioned in the assessment order.” IT(SS)A No.26/Ind./2021 (AY 2014-15) “1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.74,60,045/- made on account of unaccounted investment in Ashapura Land and has overlooked the findings of the AO mentioned in the assessment order. 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.1,54,29,102/- made u/s 14A and has overlooked the findings of the AO mentioned in the assessment order.” 3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.11,99,68,510/- made u/s 80-IA and has overlooked the findings of the AO mentioned in the assessment order.” 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing fresh claims u/s 80IA under Chapter VIA in the return of income filed in response of notice u/s 153A of the Act. 5. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing relief of Rs.5,14,550/- from addition made on account of DVO report of the property at Patalpani and has overlooked the findings of the AO mentioned in the assessment order.” IT(SS)A No.27/Ind./2021 (AY 2015-16) “1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.10,00,000/- made on account of IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 4 unaccounted investment in Ashapura Land and has overlooked the findings of the AO mentioned in the assessment order. 2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.1,51,72,662/- made u/s 14A and has overlooked the findings of the AO mentioned in the assessment order.” 3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs.6,25,92,454/- made u/s 80-IA and has overlooked the findings of the AO mentioned in the assessment order.” 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing fresh claims u/s 80IA under Chapter VIA in the return of income filed in response of notice u/s 153A of the Act. 5. On the facts and in the circumstances of the case, the ld. CIT(A) erred in allowing relief of Rs.4,79,320/- from addition made on account of DVO report of the property at Patalpani and has overlooked the findings of the AO mentioned in the assessment order.” 3. The assessee has raised the following identical grounds of Cross Objections for all the assessment years:- “The grounds stated here under are independent of, and without prejudice to one another. Ground No. 1: Assessment order dated December 30, 2016 under 143(3) read with section 153A of Income tax Act, 1961 (“the Act”) is bad in law: On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeal) -3, Indore (hereinafter referred to as the learned CIT(A)) erred in not holding that assessment order dated December 30, 2016 under section 143(3) read with section 153A of the Act is bad in law. The Appellant prays that the assessment order dated December 30, 2016 under section 143(3) read with section 153 A of the Act be quashed as without jurisdiction and bad in law. The Appellant craves leave to add to or alter, by deletion, substitution, modification or otherwise or amend or withdraw the cross objections herein and to submit such statements, documents and papers as may be considered necessary either before or during the hearing of the appeal.” IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 5 4. The brief facts of the case are that the assessee is a company and is engaged in business of developing, operation and maintenance of infrastructure projects of roads and bridges, toll collection contracts etc. In this case, search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out at the various premises of the PATH Group including the assessee along with other concerns/ business associates on 27.08.2014. Consequently, notice u/s 153A of the IT Act, 1961 was issued on 28.09.2015 for AYs 2009-10 to 2014-15. In response to the above notice, the assessee filed return of income for A.Y. 2009-10 to 2014-15 on 30.03.2016. The details of the return of income for AYs 2012-13 to 2014-15 are as under :- A.Y. Date of filing of return u/s 139(1) Returned income (In Rs.) Date of filing of return by the assessee against notice u/s 153C Income declared in return u/s 153C (In Rs.) Additional income offered by the assessee (In Rs.) 2012-13 29.09.2012 4,15,15,780/- 30.03.2016 1,46,49,900/- (-)2,68,65,880/- 2013-14 30.09.2013 10,81,82,080/- 30.03.2016 1,85,34,740/- 08,96,47,340/- 2014-15 28.11.2014 14,35,62,680/- 30.03.2016 14,45,690/- 04,21,16,990/- 5. Regular return for AY 2015-16 was filed on 30.09.2015 declaring total income at Rs.32,54,30,470/-. The consolidated assessment order was passed u/s 143(3) r.w.s 153A of the Act on 30.12.2016 after making various additions. The details of additions made by the AO are as under:- IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 6 A.Y. 2012-13 A.Y. 2013-14 Income shown in the return u/s 153A Rs. 1,46,49,900/- Add: As per para 10.2.7 Rs. 2,05,83,759/- As per para 10.3.3 Rs. 32,60,000/- As per para 10.9.1 Rs. 2,94,497/- As per para 11.15 Rs. 91,09,036/- As per para 12.27 Rs. 2,68,65,877/- - As per para 14.2 - Ps. 3,36,163/- Total income assessed Rs. 7,50,99,232/- Rounded Off Rs. 7,50,99,230/- Income shown in the return u/s 153A Rs. 1,81,34,740/- Add: As per para 10.5.1 Rs. 20,00,000/- As per para 10.8.2 Rs. 2,73,000/- As per para 10.9.1 Rs. 2,50,322/- As per para 11.15 Rs. 1,37,54,770/- As per para 12.27 Rs. 8,96,47,333/- As per para 14.2 Rs. 9,64,334/- Total income assessed Rs. 12,50,24,499/- Rounded Off Rs. 12,50,24,500/- A.Y. 2014-15 Income shown in the return u/s 153A Rs. 14,45,690/-' Add: As per para 10.5.1 Rs. 74,60,045/- As per para 10.6.2 Rs. 41,06,500/- As per para 10.7.1 Rs. 5,75,000/- As per para 10.8.2 Rs. 2,32,050/- As per para 10.9.1 Rs. 2,12,774/- As per para 11.15 Rs. 1,54,29,102/- As per para 12.27 Rs. 14,21,16,990/- As per para 14.2 Rs. 5,24,714/- As per para 15 Rs. 76,693/- Total income assessed Rs. 17,21,79,558/- Rounded Off Rs. 17,21,79,560/- IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 7 6. Against this impugned assessment order passed u/s 153A r.w.s 143(3), the assessee has preferred appeals before the ld.CIT(A). The ld. CIT(A) granted relief to the assessee for all the said four assessment years, therefore, aggrieved, Revenue has filed above captioned four appeals. Ground No.1 of the Revenue for AY 2012-13 7. Apropos ground No.1, the ld.CIT-DR submitted that the AO considered the material found and seized during the search and seizure operation which was extremely incriminating excel sheets for making addition in the hands of the assessee. The ld.CIT-DR submitted that the AO not only considered the modus operandi adopted by the assessee for generation of cash but also took into consideration the excel sheets of computer of Shri Ajay Chouhan where such transactions were recorded. The ld.CIT-DR submitted that the evidence found during search and seizure operation revealed that the payments made to petrol pumps, namely, Maliram Filling Station and Hari Service Station whose bogus payments which were received back by the assessee in cash and the factum of generation of cash was not disclosed in the original return of income and return u/s 153A of the Income-tax Act, 1961 (for short, A.Y. 2015-16 Income shown in the return u/s 153A Rs. 26,28,38,020/- Add: As per para 10.6.2 Rs. 16,86,500/- As per para 10.8.2 Rs. 1,97,250/- As per para 10.9.1 Rs. 1,80,858/- As per para 10.10.2 Rs. 10,00,000/- As per para 11.15 Rs. 1,51,72,662/- As per para 12.27 Rs. 6,25,92,454/- As per para 14.2 Rs. 4,79,320/- As per para 15 Rs. 47,729/- Total income assessed Rs. 34,41,94,793/- Rounded Off Rs. 34,41,94,790/- IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 8 ‘the Act’). The ld.CIT-DR submitted that the CIT(A) has granted relief to the assessee without any justified reason and basis. Therefore, the impugned first appellate order may kindly be set aside and the order of the AO may be restored. 8. Replying to the above, the ld. AR drew our attention to para 4.16 of the first appellate order and submitted that while relying on the judgement of the Hon’ble Supreme Court in the case of PCIT vs. Tejua Rohit Kumar Kapadia (2018) 256 Taxman 213 (SC), the ld.CIT(A) rightly deleted the baseless addition, therefore, the impugned first appellate order on this issue may kindly be upheld by dismissing the ground No.1 of the Revenue for AY 2012-13. 9. On careful consideration of the rival submissions, first of all, we may point out that the ld.CIT(A) has granted relief to the assessee with the following observations and findings:- “4.16 Ground No. 3 for AY 2012-13:- Through these ground of appeals, the appellant has challenged addition of Rs. 2,05,83,759/- on account of bogus payments towards petrol pump. During the course of search various excel sheets were recovered from computer of Shri Ajay Chouhan DGM of appellant’s company. The said excel sheet were pertaining to unaccounted receipts by the assessee from certain petrol pumps. The AO during the course of assessment proceeding observed that the assessee has booked bogus expenses and received back the cash from Hari Service Station and Maliram Filing Station. Therefore, the AO required the assessee to explain these transaction. The assessee in reply accepted that the expenses towards petrol were inflated and made voluantary surrender of Rs. 1,86,21,226/-. Statement of Shri Ajay Chouhan was also recorded on oath wherein he has confirmed the modus operandi narrated by the appellant. The AO after considering entire reply of the assessee held that payments made to both the petrol stations are bogus and made addition of Rs. 2,05,83,759/- in AY 2012-13 year under consideration. 4.16.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. Undoubtedly, during the course of search an excel sheet was found from computer of Shri Ajay Chouhan DGM of appellant company. The excel sheet contain details of payments aggregating to Rs. 3,34,93,271/- made during the period 10.12.2010 to IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 9 10.01.2012 to Hari Service Station and Maliram Filing Station. The payments includes genuine bills and bogus bills. Against these bogus bills the appellant made voluntary surrender of Rs. 1,86,21,226/- in AYs 2011- 12 to 2014- 15 and due taxes have been paid. The AO during the course of assessment proceedings, the AO neither consider the surrender made by the appellant nor has considered the payments towards genuine bills are fully recorded in audited books of accounts. It is important to mention that the entries pertaining to inflated expenses i.e. by accepting bogus bills and making payments and receiving cash against these payments amounts to Rs. 80,00,000/- only. The relevant extract of excel sheet is as under:- Date Requirement details Debit Credit Remarks Cash RTGS Bill 09.06.2011 Cash reed (Maliram) 500000 500000 12.06.2011 Cash reed (Maliram) 500000 500000 28.06.2011 Cash reed (Maliram) 500000 500000 30.06.2011 Cash reed (Maliram) 500000 500000 07.07.2011 Cash reed (Maliram) 500000 500000 13.07.2011 Cash reed (Maliram) 500000 500000 17.07.2011 Cash reed (Maliram) 500000 500000 - IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 10 10.08.2011 Cash recd (Maliram) 500000 .500000 02.09.2011 Cash recd (Maliram) 500000 500000 06.09.2011 Cash recd (Maliram) 500000 500000 14.09.2011 Cash recd (Maliram) 500000 500000 19.09.2011 Cash recd (Maliram) 500000 500000 21.09.2011 Hari service station Diesel bill 215550 215550 RTGS by HO 215550 28.09.2011 Cash recd (Maliram) 400000 400000 29.09.2011 Cash recd (Maliram) 100000 100000 29.09.2011 Hari service station Diesel bill 172440 01.10.2011 Cash recd (Maliram) 300000 300000 04.10.2011 Cash recd (Maliram) 200000 200000 17.10.2011 Hari service station Diesel bill 6126793 3000000 RTGS by HO 300000 0 21.10.2011 Cash recd (Maliram) 500000 500000 11.11.2011 Hari service station Diesel bill 1799233 RTGS from 179923 3 16.11.2011 Cash recd (Maliram) 500000 500000 07.12.2011 Cash recd (Maliram) 500000 500000 07.12.2011 Hari service station Diesel bill 1783030 15.12.2011 Hari service station Diesel bill 6182836 5000000 RTGS from 500000 0 19.12.2011 Hari service station Diesel bill 2468478 2000000 RTGS from 200000 0 31.12.2011 Hari service station Diesel bill 568976 568976 10.01.2012 Hari service station Diesel bill 419332 \ Total 16949127 20583759 8000000 120147 83 568976 IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 11 The appellant has made payments of Rs. 1,20,14,783/- on various dates in FY 2011-12(AY 2012-13) through RTGS against bills raised by Hari Service Station and Maliram Filing Station. The AO has also not doubted the payments made towards these bills. The presumption drawn by the AO that entire excel sheet represents bogus expenses is purely hypothetical and without any nexus with cogent evidence. No material evidence is on record suggesting that except cash of Rs. 80,00,000/-, which has been accepted by the appellant, any sum has been received by the appellant. Neither appellant nor the parties i.e. Hari Service Station and Maliram Filing Station has every admitted that entire jottings of excel are bogus. Once, the appellant has explained purchase with supportive bills and vouchers and payments were made through cheques and no evidence of amount recycled back to appellant, no addition can be made in the hands of appellant u/s 69C of the Act as held by Hon’ble Supreme Court in the case of PCIT vs Tejua Rohit Kumar Kapadia (2018) 256 Taxman 213 (SC). 4.16.2 In view of the above discussion and judiciously following the decision in the case of Tejua Rohit Kumar Kapadia (supra), addition made by the AO amounting to Rs. 2,05,83,759/- is Deleted. Therefore, appeal on this ground is Allowed.” 10. On careful consideration of rival submissions and conclusion recorded by the ld.CIT(A) as reproduced hereinabove, first of all we may point out that during the course of search and seizure operation, various excel sheets were recovered from the computer of Shri Ajay Chouhan, DGM of the assessee company, allegedly as per AO, which was pertaining to unaccounted receipts of the assessee from certain petrol pumps. The AO observed that the assessee has booked bogus expenses and received back cash from Hari Service Station and Maliram Filling Station and the AO asked the assessee to explain the same. The assessee, in its reply, accepted that the expenses towards petrol pump were inflated and made voluntary surrender of Rs.1,86,21,226/-. Shri Ajay Chouhan explained the modus operandi of the said transactions and after considering the reply of the assessee, the AO made impugned addition, in addition to the said amount of voluntary surrender made by the assessee. The ld.CIT(A), after considering the stand of the AO, the amount of voluntary surrender made by the IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 12 assessee on this account, the addition made by the AO in addition to voluntary surrender, concluded that the excel sheets contained detail of payments aggregating to Rs.3,34,93,271/- made by the assessee during the period 10.12.2010 to 10.01.2012 to Hari Service Station and Maliram Filling Station which included genuine and bogus bills. The ld.CIT(A) further noted that against the bogus bills, the assessee made voluntary surrender of Rs.1,86,21,226/- from AY 2011-12 to 2014-15 and due taxes have been paid thereon. The ld.CIT(A) further noted that the AO neither considered the surrender made by the assessee nor has considered the payments towards genuine bills which were fully recorded in the audited books of account. These facts have not been controverted by the ld.CIT-DR during the arguments before us. The ld.CIT(A) also noted that the entries pertaining to inflated expenses of accepting bogus bills and making payments and receiving cash against these payments amounts to Rs.80 lakh only. Thus, we are in agreement with the contention of the ld. AR that the amount voluntarily surrendered by the assessee is more than double of the amount of bogus bills making payments and receiving cash. We also observe that the ld.CIT(A) before granting relief to the assessee also noted that the assessee has made payments of Rs.1,20,14,783/- on various dates during AY 2012-13 to RTGS against bills represent the payment of actual purchase of petrol, etc. from Hari Service Station and Maliram Filling Station which have not been doubted by the AO in any manner. 10.1 In view of the above, we are in agreement with the conclusion recorded by the ld.CIT(A) that the presumption drawn by the AO that the entire excel sheets represents bogus expenses is baseless and without any nexus and cogent adverse material. Therefore, no material evidence was on record to suggest that, except IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 13 amount of cash of Rs.80 lakh which has been accepted by the assessee and included in the voluntarily surrendered amount, the assessee had actually received back alleged cash amount from said two petrol pumps. Therefore, once the assessee has explained the purchase with supportive bills and vouchers and payments were made through cheque, no evidence of amount recycling back to the assessee is on record, then, no addition can be made in the hands of the assessee either u/s 69C or under any other provisions of the Act. The ld.CIT(A) has rightly relied on the judgement of the Hon’ble Supreme Court in the case of PCIT vs. Tejua Rohit Kumar Kapadia (supra) for deleting the addition considering the amount of Rs.80 lakh accepted by the assessee and voluntarily surrendered amount of Rs.1,86,21,226/- from AY 2011-12 to 2014-15 and payment of due tax, etc., thereon. Accordingly, ground No.1 of the Revenue for AY 2012-13 is dismissed. 11. As we have already noted above that the grounds No.2 to 5 of the Revenue in all four appeals are identical and similar and based on similar facts and circumstances, we are taking up the appeal of the Revenue for AY 2012-13 as a lead appeal for adjudication of these four identical grounds listed as No.2 to 5 of all four appeals. Ground No.2 for AY 2012-13 12. The ld. CIT-DR submitted that the AO in para 11.15 made addition u/s 14A of the Act in all four assessment years based on the same factual matrix. He further submitted that the AO rightly invoked the provisions of section 14A and Rule 8D(2)(ii) of the Income-tax Rules, 1963 (for short, ‘the Rules’). The ld.CIT-DR submitted that the effect of section 14A of the Act is to ascertain the theory of apportionment of expenditure and u/s 14A expenditure can be allowed as a deduction in relation to IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 14 income which does not form part of the total income and, therefore, the AO rightly invoked the provisions for making the addition in the hands of the assessee under the said provisions. 13. Replying to the above, the ld. AR took us through the relevant part of the assessment order as well as the first appellate order and submitted that the AO made addition on his own whims and fancies without having substance, therefore, the same was rightly deleted by the ld.CIT(A). The ld. AR took us through the relevant para 4.15 to 4.15.13 of the first appellate order and submitted that the ld.CIT(A), after considering the entire facts and circumstances of the case, has rightly deleted the addition made by the AO. The ld. AR submitted that on the issue of disallowance u/s 14A of the Act r.w.r 8D of the Rules for AY 2009-10 to 2011-12, the ITAT has granted relief to the assessee by order dated 20.09.2016 in ITA No.589/Ind/2015 and ITA No.227 & 228/Ind/2017 vide order dated 25.04.2018 by stating that the investments made in quoted/unquoted share was made out of interest free funds and facts for AY 2012-13 to 2015-16 are similar and identical to AY 2009-10 to 2011-12. Therefore, the ld.CIT(A) was right in deleting the addition for all four years by following the orders of ITAT, Indore for AYs 2009-10 to 2011-12 (supra). 14. On careful consideration of rival submissions, first of all, we note that the ld.CIT(A) has granted relief to the assessee with the following observations and findings:- “I have considered the above contention and found that undisputedly the assessee has not claimed any expenditure in relation to exempt income. The Hon’ble Delhi High Court in the case of Maxopp Investment Ltd. & Ors. v/s. CIT (2011) 347 ITR 272 (Del.) has held that as per legal requirement, the AO before embarking upon the exercise of determination of the amount of expenditure incurred in relation to exempt income would IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 15 be triggered only if the AO records a finding that he is not satisfied with the correctness of the claim of the assessee. In the present case, the Ld. AO has failed to do so and simply applied Rule 8D mechanically on the basis of presumption. I find significant force in the argument of the appellant and find that addition is not sustainable on this basis in view of the above decisions. 4.15.6 The appellant has also argued that there were sufficient interest free funds for investment in quoted/unquoted shares of various companies as discussed above. In support appellant has filed copies of audited financial statements for AYs 2012-13 to 2015-16. On perusal of audited financial statement for AY 2012-13, it is seen that appellant was having capital and reserves at Rs. 118.8845 crores in AY 2012-13, Rs. 131.4575 crores in AY 2013-14, Rs. 144.8807 crores in AY 2014-15 and Rs. 165.312 crores in AY 2015-16 and total investment in equity shares of SPV, Mutual Funds and Quoted equity shares amounting to Rs. 65.2312 crores in AY 2012-13, Rs. 95.5834 crores in AY 2013-14, Rs. 124.1883 crores in AY 2014-15 and Rs. 125.4163 crores in AY 2015-16. Thus, the appellant has having sufficient interest free funds to make fresh investment in shares of various companies. 4.15.7 The Ld. AR has put forth another contention that investment from which exempt income had been earned was made out of net owned funds and no part of interest expenditure thereon could be attributed to the said investment merely on presumption that the said investment had been made out of borrowed funds. It is also a fact that the AO could not establish by bringing any positive evidence to prove any nexus between borrowed funds and its use for investment in Shares. The assessee also submitted the details which show that no interest bearing borrowed funds have been used in Investments yielding ‘exempt income’. Further, it has been claimed by the AR of the appellant that the assessee was having sufficient interest free funds in the form of Share Capital which is sufficient to cover up investments in shares of various companies capable of yielding “exempt income”. The contention of the appellant has significant force and element of truth and therefore, same is found acceptable. 4.15.8 The appellant could demonstrate that interest bearing funds were utilized in business itself earning taxable income by submitting necessary details. This is a case of mixed funds, i.e. borrowed funds as well as owned funds used in business and earning exempt income. In such a situation, a presumption has to be drawn that investments were out of interest free funds. It has been decided by various courts that when own funds are far more than the investments made to earn exempt income, then presumption has to be drawn that investments were made out of ‘own funds’ and not out of borrowed funds. Decision of Bombay High Court in the case of CIT v/s Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom.) and Gujarat High Court decision in the case CIT v/s Suzzlon IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 16 Energy Ltd. 354 ITR 630 (Guj.) & CIT V/s. Torrent Power Ltd. (2014) 363 ITR 474 (Guj.) duly support this proposition. I have perused the facts and case laws and found that ratio of above-cited decisions is squarely applicable to the facts of this case. 4.15.9 It is also seen that the Hon’ble Gujarat High Court in the case of - CIT V/s UTI Bank (2013) 32 taxmann. Com 370 (Guj) has laid down that “where the assessee had sufficient interest free funds to meet its tax free investments yielding exempt income, it could be presumed that such investments were made from interest free funds and not from Loan Funds, and thus no disallowance under Section 14A being warranted.” 4.15.10Further Hon’ble ITAT Banglore Bench in the case of DCIT V/s Subramanya Construction & Development Co Ltd.(2015) 58 taxmann.- Com 219 (Banglore) has held that:- “It was found from records that interest free funds were available with assessee which was substantially higher than the investments made by it. It is not necessary to draw a one to one nexus between investments and interest free funds. When the funds had gone out of a common pool and the assessee had interest free funds in excess of the investments, it could take a valid plea that such investments were made out of interest free funds. This being the case, question of disallowance of interest under section 14A, do not arise at all. ” 4.15.11 Hon’ble High Court of Gujarat in the case of PCIT Vs. India Gelatine & Chemicals Ltd. (2016) 66 taxman.com 356 (Guj.) - has held that where the assessee is having sufficient interest-free funds to cover the investments, no portion of the interest expenditure can be disallowed u/s.14A r.w.r. 8D. Hence, the issue is directly and squarely covered by the above cited decisions of jurisdictional High Court. Thus, I find significant force in the argument of the appellant that there is no direct nexus that borrowed funds were utilized in making investments giving rise to exempt income. On the other hand the borrowed funds have been proved as used for normal profit earning activities. Hence, the contention of the appellant is found acceptable. Accordingly, in view of the facts of the case and also because the ratio of jurisdictional Gujarat High Court is directly applicable to assessee’s case that where owned funds (interest free funds) are far more than borrowed funds, presumption has to be drawn that investments were out of owned funds. In view of this, disallowance made by assessing officer is held to be not sustainable. 4.15.12 Furthermore, it is worth mentioned that in the case of appellant itself, the issue of disallowance u/s 14A r.w.r 8D for AYs 2009-10 to 2011- 12 has already been dealt with by Hon’ble jurisdictional ITAT Indore vide IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 17 appeal no ITA 589/Ind/2015 dated 20.09.2016 and 227, 228/Ind/2017 dated 25.04.2018. Hon’ble ITAT has allowed claim of the stating that the investment made in quoted/unquoted shares was made out of interest free funds. The facts of the case for AY 2012-13 to 2015-16 are similar to AYs 2009-10 to 2011-12. Therefore, judiciously following the order of Hon’ble ITAT Indore in the case of appellant addition made by the AO is deleted. 4.15.13 Nevertheless, the investment in unquoted shares, Partnership Firm, agricultural land etc. which do not require much human effort or incurring of any kind of administrative expense. I also agree that investment in unquoted shares is capable of generating taxable income by way of LTCG/STCG. The sources of investment have been established by the assessee by way of furnishing the details of capital (owned funds) & interest free funds available with him. Thus, it is evident that source of investment giving rise to exempt income could not be established to be out of interest bearing or borrowed funds, hence presumption has to arise that same were out of own sources. Broadly speaking, in general interest bearing borrowed funds had been invested in assets having potential of generating taxable income. Hence, no part of interest expenditure could be attributed to the said investment generating exempt income. In view of this, no interest expenditure need to be disallowed as per Rule 8D. I find significant force in this argument that source of investments generating exempt income were out of ‘own funds’ & interest free funds and not from ‘borrowed funds’, therefore, no disallowance U/S.14A r.w. Rule 8D is warranted. The apprehension of the AO that loan funds has been utilized to acquire investment has no legs to stand upon. I find from audited statement that either there are term loan linked to asset acquisition/project or working capital loan to meet working capital gap. The statutory auditor has commented in its CARO report that loan funds were utilized for the purpose for which the same were taken. Therefore, any fund diversion is ruled out. From the balance sheet it is discernible that shares are not considered as current assets so even working capital loans are not to acquire investments, hence, apprehension of the AO is not founded on firm footings. Respectfully following the decisions cited above, addition made by the AO amounting to Rs.91,09,036/- in AY 2012- 13, Rs. 1,37,54,770/- in AY 2013-14, Rs. 1,54,29,102/- in AY 2014-15 and Rs. 1,51,72,662/- in AY 2015-16 are Deleted. Therefore, appeal on these grounds is Allowed.” 15. In view of the above, the ld.CIT-DR could not show us any distinct or dissimilar facts and circumstances from AY 2009-10 to 2011-12 wherein the Tribunal has granted relief to the assessee by orders dated 20.09.2016 (supra) and 25 th April, 2018 (supra) to take a different or deviated view regarding the addition made by the AO IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 18 u/s 14A of the Act r.w.r. 8D of the Rules. Therefore, ground No.2 of the Revenue for AY 2012-13 is dismissed. Grounds No.3 and 4 of the Revenue for AY 2012-13 16. The ld. CIT-DR, apropos grounds No.3 and 4 of the Revenue for AY 2012-13, submitted that the assessee withdrew its claim for AY 2009-10 to 2011-12 u/s 80IA of the Act during the course of assessment proceedings. The ld. CIT-DR further submitted that the AO considered the submissions of the assessee regarding claim u/s 80IA of the Act and after detailed verification, examination, the ld. AO rightly concluded that the assessee has attempted to misutilise the provisions of section 80IA of the Act. The ld. CIT-DR submitted that for AY 2012-13, the AO, after detailed verification of the contract agreement, rightly concluded that the assessee is eligible for BOT project u/s 80IA of the Act regarding Katni By-pass Road Project and MR-10 ROB Project, but, it was not eligible for deduction u/s 80IA of the Act on other four projects, viz., Ratlam ROB Road Project, Sultanpur Khamariya Road Project, Jaipur Rengus Road Project and Mhow ROB Road Project. Therefore, the AO was right in dismissing the incorrect claim of the assessee. The ld. CIT-DR vehemently pointed out that the claim of the assessee was completely incorrect and devoid of facts and, thus, the assessee has attempted to put cart before the horse and no agreement was appearing in the submissions of the assessee in totality and the assessee selectively picked up the clauses in its favour which was rightly pointed out by the AO and it was rightly concluded that the assessee has made an attempt to surpass the tax liability by making incorrect claim u/s 80IA of the Act. Supporting the conclusion of the AO, the ld.CIT-DR submitted that the claim of deduction u/s 80IA of the Act is provided to give boost to the infrastructure sector in an infrastructure starved country like India IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 19 which cannot be allowed to be misutilised to suppress or evade tax liability by the assessee. The ld. CIT-DR also submitted that the ld. First appellate authority has given relief to the assessee without any basis, therefore, the impugned first appellate order may kindly be set aside by restoring that of the AO. 17. Replying to the above, the ld. AR took us through the relevant part of the first appellate order and submitted that the Hon’ble Bombay High Court in the case of CIT vs. JSW Steel Ltd. (2020) 115 taxmann.com 165 (Bom) submitted that in view of the second proviso to section 153A of the Act, once the assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding u/s 153A(1) r.w. section 143(3) of the Act which was not claimed in its regular return of income because the assessment was never made/finalized in the case of the assessee in such a situation. The ld. Counsel submitted that the tax authorities are duty-bound to provide purposive interpretation to the deduction/exemption provisions which are provided by the legislature as an incentive and, thus, such incentive provision for growth of infrastructure facility in the country should be interpreted liberally as per the judgement of the Hon’ble Supreme Court in the case of CIT vs. Gwalior Rayons Silk Manufacturing Company, 196 ITR 149 (SC) and another judgement of the Hon’ble Apex Court in the case of Bajaj Tempo Ltd. vs. CIT, 196 ITR 188 (SC). The ld. AR also drew our attention towards paras 4.14 to 4.15.5 and submitted that the ld.CIT(A), after considering the stand of the AO, submissions of the assessee and the totality of the facts and circumstances of the claim of the assessee regarding deduction u/s 80IA (4) of the Act has granted relief to the assessee. Therefore, the first appellate order may kindly be upheld by dismissing the grounds of the Revenue. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 20 18. On careful consideration of the above rival submissions, first of all, from the relevant part of the first appellate order, we observe that the AO has granted relief to the assessee with the following observations and findings:- “4.14 Findings in summarized manner: In view of the above discussion, I am of considered view that appellant fulfills all the necessary conditions to become eligible for claiming deduction u/s 80IA(4) of the Act. My decision is broadly based on the following conclusions drawn based on the facts of this case which are narrated in a summarized manner:- (a) The assessee is an enterprise owned by a company registered in India. Hence, conditions stipulated in sec 80IA(4)(i)(a) is fulfilled. (b) The assessee has entered into agreement with state road development authority, State Government, NHAI and undertaking under control/ownership of state/central govt. So, condition mandated in sec 80IA (4)(i)(b) is also fulfilled. (c) The assessee has started operating and maintaining infrastructure facility on or after 1st day of April 1995. Condition stipulated in sec 80IA(4)(i)(c) is also fulfilled. (d) Assessee engaged in road development work (including construction, up gradation and widening) which is covered within meaning of “infrastructure facility” defined under Explanation to sec 80IA(4) of the Act. It is not the case there is merely a relaying or carpeting of the road which does not deserve allowance under section 80IA. (e) The person who paint the picture is a painter and not the person who pays for it, therefore the Appellant has actually exposes itself to several risk involved in development process and merely receiving payment against it does not eclipse the character of it being a developer. (f) The definition Infrastructure facility given in explanation to 80IA (4) states “a road including a toll road”, therefore to confine deduction under section 80IA to only BOT Project is not intention of the law. Legislature would have used the word only “toll road” if it wanted to confine deduction to only toll road. On the other side, the amendment brought by Finance Act 2001 which supply “Or” between (i) Develop(ii) Operate and Maintain (iii) Develop, operate and Maintain indicate the IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 21 legislative intent that three conditions are not cummulative. Therefore the law has never limited the deduction to a BOT Project only. (g) The appellant has carried out all the activities related to development of road by itself and not through any other entity or sub- contractor. (h) Agreement entered into by appellant are not for a ‘specific work’ but for development of infrastructure facility as a whole. (i) In the project executed by the appellant govt/statutory body handed over the possession of sites/premises of projects to the assessee for development of infrastructure facility. Possession is handed over back the developed facility to the govt/owner on completion of the development. (j) The contract executed by appellant involves all the works viz design, survey, development, operating/maintenance, financial involvement, defect correction and liability period, deployment of funds, men, material on its own and assumes various kinds of risk-financial, entrepreneurial risk, etc. (k) The work awarded by state govt/state public undertakings/municipal corporations by inviting tenders through request for proposal (RFP) inviting bids from developers. After clearing technical bid, financial bid is submitted being successful. The appellant was issued Letter of Intents (LOI) in its name which is accepted by it and contract is awarded (LOA). Due to conditionality of frame work of Govt of India, assessee has to form a fully owned SPV for better execution of projects wherein owners, SPV and assessee jointly signed^4concession agreement” on EPC/DBFOT basis. (l) Letter of Awards (LOA) are in the name of assessee and accepted by appellant, this constitutes a binding agreement between the appellant and state govt/statutory body. (m) Appellant has assumed financial risk by giving performance guarantee, placing security deposit, obtaining bank guarantee etc. before commencement of project the appellant has to furnish ‘performance security which is liable to be forfeited if the appellant does not perform to the expectation of the contract. The appellant has apart from involving its own capital borrowed from bank/fmance company by incurring huge amount on interest. There is considerable retention money from bills, which gets released only on one year successful running of facility. (n) Appellant has to bear all the risk related to loss/damage to physical property, personal loss/injury to human and liquidated damages. Appellant has to bear expenses on insurance obtain to mitigate the risk. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 22 (o) Appellant is also responsible for damage and need to compensate the owner for imperfections for a definite period of time as ‘defect liability’ under which it shall have to rectify and repair all defects at its own cost. (p) Appellant has to take ‘technical risk’ by making survey, drawings \ and designs for all type of structures and then after obtaining approval from owner execute the projects. For technical purpose, appellant is Required to recruit minimum number of personnel’s having requisite qualification and experience. q) Appellant has to procure material, employ requisite staff, deploy requisite machinery and equipment for execution of work and invest funds. (r) Considering terms and conditions entered into and work performed by the assessee it can safely be concluded that assessee executed all the projects as ‘developer3 and not as “work contractor”. (s) Except challenging that the assessee worked as “works contractor”, Id AO has not raised any doubts about fulfilling of any other mandatory conditions. By this it can be inferred that assessee has fulfilled all other mandatory conditions. (t) The AO has not disputed the quantification of eligible profit from the enterprise on which appellant has claimed deduction u/s 80IA(4) of the Act. Nevertheless, Auditor in his report filed under 10CCB has certified the eligible amount for deductions claimed by the appellant. (u) There is no duplication of deduction as apprehended by AO. Profit derived from a development of project during development period is also eligible and thereafter when it is transferred to SPV for operation and maintenance, such profit derived by SPV during operation and maintenance period shall also be eligible under 8 01 A, therefore two aspects does not overlap. (v) The claim of deduction made in return filed u/s 153 A of the Act for AYs 2012-13 to 2015-16 is permissible based on decided cases. The reliance by the AO on Commissioner of Income-tax Vs. Sun Engineering (198 ITR 297) case rendered in the context of section 147 to deny the deduction claimed in return filed in response to notice u/s. 153A is misplaced. Conclusion: Therefore, considering the various judicial precedents (supra), I hold that the work performed by the appellant in all the projects fall under the provisions of section 80IA and therefore, the profits from such projects as claimed by the appellant are eligible for deduction u/s 80IA(4) of the Act. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 23 Thus, in view of the foregoing discussion the additions made by the AO amounting to Rs.2,68,65,877/- in AY 2012-13, Rs. 8,96,47,333/- in AY 2013- 14, Rs. 14,21,16,990/- (actual claim made by the appellant Rs. 11,99,68,510/- but mistakenly taken by AO as Rs. 14,21,16,990 in order) in AY 2014-15 and Rs. 6,25,92,454/- in AY 2015-16 are Deleted and consequently the claim made by Appellant in its return of income filed under section 153A amounting to Rs.2,68,65,877/- in AY 2012-13, Rs. 8,96,47,333/- in AY 2013-14, Rs. 11,99,68,510/- in AY 2014- 15 and Rs. 6,25,92,454/- in AY 2015-16 are Deleted. Therefore, appeal on these grounds is Allowed.” 19. On careful consideration of the above factual position, allegations and basis of the action taken by the AO in denying deduction u/s 80IA(4) of the Act to the assessee and the first appellate order granting relief to the assessee, first of all, we may point out that the ld.CIT(A) in para 4.14 has enlisted 22 reasons/conclusions based on the facts of the case to hold that the assessee fulfills all the necessary conditions to become eligible for claiming deduction u/s 80IA(4) of the Act. The ld. CIT(A) has also considered various judgements and orders including order of Hon’ble Allahabad High Court in the case of CIT vs. PNC Construction Company Ltd. (2015) 55 taxmann.com 21 (All) and the judgement of the ITAT, Indore Bench in the case of Ayush Ajay Construction Ltd. vs. ITO, 79 ITD 213 (Indore Tribunal) and, thereafter, held that the work performed by the assessee in all the projects fall under the provisions of section 80IA(4) of the Act and, therefore, profits/gains from such projects as claimed by the assessee are eligible for deduction u/s 80IA(4) of the Act. 20. Before we part with the issue, we may also point out that on being asked by the Bench, the ld.CIT-DR could not show us any valid reason or ground to reverse the findings arrived at by the ld.CIT(A) in para 4.14 of the first appellate order wherein the ld.CIT(A) has given as many as 22 reasons for holding that the assessee is entitled to deduction u/s 80IA(4) of the Act on all four projects. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 24 21. At the cost of repetition, we may point out that the facts and circumstances along with certain documentary evidences clearly reveals that the assessee has completed the contract of development of new infrastructure facility by undergoing all kinds of risk and by employing financial and non-financial, human resources, taking services of experts/engineers by mobilizing plant and other resources for its effective use, by supervising the progress of contract work by designing and planning the project and, then, implementing the same. In this situation, the ld. CIT(A) was right in holding that it cannot be said or substantiated by the AO that the assessee has merely acted as work contractor, but, effectively deployed the infrastructure facilities. In this situation, purposive interpretation of incentive provisions of section 80IA(4) of the Act can be validly possible only by taking into consideration the judgements of the Hon’ble Supreme Court in the case of CIT vs. Gwalior Rayons Silk Manufacturing Co. Ltd. (supra), Bajaj Tempo Ltd. (supra) and CIT vs. Hindustan Bulk Carriers (2003) 259 ITR 449 (SC). In these judgements, the crux of the proposition was that provision for deduction and exemption should be construed reasonable, said provisions contained for growth and development in the taxing statute should be interpreted liberally and such provision should not be construed so as to advance the objective of such provisions and not to frustrate them. The Hon’ble Supreme Court also observed that the construction which reduces the statute to the futility has to be avoided as the statute or any enacting provision therein must be so construed as to make it effective and operative by giving liberal construction so as to uphold such provision. In our humble view, the ld. CIT(A) at page 203 recorded his observations adjudicating the issue as to whether the assessee is merely a work contractor or developer. The relevant part reads as under:- IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 25 “ • Purposive interpretation should be provided: Eleventh Five Year Plan document articulated the need for adequate cost effective and quality infrastructure as a pre-condition for sustaining the growth momentum since inadequate infrastructure has been recognized as a major constraint of India’s growth potential. Traditionally, infrastructure has been funded through public investment. However, in view of scarcity of budgetary resources and lack of capacity within the government to implement these ambitious programmes, the strategy of the government relies significantly on promoting investment through a combination of public investment and private participation through PPP mode. In effect, PPP infrastructure projects are public project in which private capital being deployed for the benefit of the economy and the users. Since PPP projects are aimed at providing efficient services at competitive costs, their essence lies in ensuring that these objectives are fully realized. Therefore, institutional structures are objectives are fully realized. Therefore, institutional structures are established and guidelines for monitoring PPP projects have been issued and model concession agreements and monitoring mechanism duly provided. In order to promote more and more private participation tax incentives along with other concessions have been provided but these are available to the undertakings who engage in infrastructural development etc and not to the “works contractors”. As discussed earlier, on the basis of facts and evidences, it could be concluded that the appellant has executed the TA contract of development of new infrastructural facility by employing its financial and non financial human resources and by assuming various kinds of risk, by deploying experts/engineers, by mobilizing plants and other resources, by supervising it, by designing and planning the project and then implementing it etc. Thus it could not be said that assessee was merely acted as ‘work contractor’ but effectively developed the infrastructural facilities. Giving a purposive interpretation to the incentive provision of sec 80IA(4) of the Act, it could be very well concluded that case of assessee falls within the ambit and scope of provision of sec 80IA(4) of the Act as developer. It should be kept in mind that while interpreting the provision of law and implementing the same Heydon’s Rule of Mischief should be kept in mind. This rule directs that the courts must adopt that construction which “shall suppress the mischief and advance the remedy. The stated purpose of insertion of Explanation below sub-Section 13 of sec 80IA was to remove the cases of ‘double deduction’ and disentitle those persons who work, execute any work as “work contractors” and not as ‘developer’. In my detailed discussion, I have reached to the definitive finding that the assessee was working as ‘developer’ and not as mere ‘works contractor’. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 26 22. In view of the above, the ld.CIT(A) rightly noted the purpose of insertion below sub-section (13) of section 80IA to remove the possibility of double deduction and disentitle those persons who work, execute any work as work contractor and not as a developer, but, the dl.CIT(A) reached to a finding that the assessee was working as developer and not merely a work contractor. 23. In view of the foregoing discussion, we reach to a logical conclusion that when the assessee has successfully demonstrated and substantiated that he is eligible for claiming deduction u/s 80IA(4) of the Act, then, nothing left in the hands of the assessee for denying the claim of deduction u/s 80IA(4) to the assessee. The ld. CIT- DR could not show us any dissimilarity or distinguishing facts and circumstances which could lead us to take a different view. Accordingly, ground No.3 and 4 of the assessee being devoid of merits are dismissed. Ground No.5 of the Revenue for AY 2012-13. 24. Apropos ground No.5, the ld.CIT-DR submitted that the AO in para 14 of the assessment order, rightly noted that the assessee was making a plea that the DVO had received 2012 DSR which, as per the assessee, is not correct rates. The ld.CIT- DR also pointed out that the monetary valuation of any physical object projects requires a benchmark DSR in such a benchmark the valuation officer is independent authority having expertise domain knowledge and is a specialist. He further submitted that the valuation officer is competent authority for evaluation and, thus, the valuation report is an expert opinion which cannot be ignored. The ld.CIT-DR submitted that the AO rightly made additions in the hands of the assessee on this count which was deleted by the ld.CIT(A) without any justified and plausible reason, IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 27 therefore, the impugned first appellate order may kindly be set aside by restoring that of the AO. 25. Replying to the above, the ld. AR briefly reiterated the findings recorded by the ld.CIT(A) in para 14.2 to 14.3 of the first appellate order and submitted that the valuation officer is an independent authority having expertise and domain knowledge as a specialist and he is competent authority for making valuation of a property. The ld. AR has also submitted that the valuation report is an expert opinion/evidence which cannot be ignored at the threshold. The ld. AR submitted that the ld.CIT(A) has granted relief to the assessee after considering the entire facts and circumstances of the case which cannot be kept aside. The ld. Counsel also pointed out that in para 4.17 to 4.17.9, the ld.CIT(A) rightly appreciated the facts and circumstances of the case and comparative picture of investment shown by the assessee and that estimated by the DVO, after allowing 30% margin, i.e., 25% for difference in PWD rates and 5% for self supervision. Therefore, the ld.CIT(A) has granted relief to the assessee on sound footing which cannot be disturbed without bringing any cogent and adverse positive evidence against the assessee on record. Therefore, first appellate order may kindly be upheld. 26. On careful consideration of the above rival submissions, first of all, we may point out that the ld.CIT(A) has granted relief to the assessee on this issue in para 4.17.6 to para 4.17.9 with the following observations and findings:- “4.17.6 Conclusion:- As discussed earlier in this case, reference u/s 142A of the Act was made without examining the books of accounts maintained regularly by the assessee. In the books, expenditure incurred on each and every day with regard to construction have been recorded and supporting bills and IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 28 vouchers have been maintained by the assessee which were subjected to audit. It is evident from record that the assessee had maintained regular books of accounts and bills/vouchers in support of cost of construction of building and % the AO did not point out any defect therein. As observed by the AO in para 14 of assessment order, the said reference was made to ascertain the exact quantum of investment in property at Patalpani without refering to any incriminating/seized material in this regard. This is an undisputed fact that the impunged addition was made solely on the basis of valuation report and the A.O. did not bring any positive material or cogent evidence to establish that actually assessee made investment out of books i.e. over and above the amount of investment shown in the books. This is also an admitted fact that during search and seizure operation no incriminating material or seized material was found suggesting any undisclosed "investmenrTn college" building nor the AO has referred to any such material/evidence in assessment order. The AO verified the books and other records but failed to point out any defect and deficiencies therein and books were not rejected u/s 145(3) of the Act. It is settled law that onus probandi lies on the Assessing Officer to establish that the assessee has understated or conceal the actual cost of construction and without discharging the onus, the assessing Officer is not empowered to rely upon the valuation estimate given by DVO, when books of accounts were never rejected. This is settled law that addition made solely on the basis of valuation report is not sustainable in law until and unless books are rejected. This proposition finds support ifom the following case laws:- (1) CIT Vs. Chouhan Resorts359 ITR 394 (P&H)- Section 69B of the Income-tax Act, 1961 - Undisclosed investments - Assessment year 2007- OS - No addition could be made on account of undisclosed investment in construction of building on basis of report of DVO without books of account being rejected, wherein every expenditure relating to construction was recorded [In favour of assessee (2) Family of Sp S.S.S. P- Subramanium Chettiar Vs. ITO 372 ITR 203[Mad)- Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Valuation by DVO) - Assessment year 1996-97 - Whether primary burden to prove under statement or concealment of income is on revenue and it is only when such burden is discharged that it would be permissible to rely upon valuation given by District Valuation Officer(DVO) – Held, yes - Whether opinion of DVO, per se, is not an information and cannot be relied upon without books of account being rejected - Held, yes - Whether in instant case, since matter was referred to DVO without rejecting books of account of assessee, Assessing Officer was not entitled to resort to section 69B - Held, yes [Paras 8 and 9][ln favour of assessee] IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 29 .............. 4. Even though this appeal was admitted on the questions of law referred to supra, the learned counsel on either side fairly concede that the core issue to be determined in this appeal is "Whether the Assessing Officer is entitled to resort to section 69B of the Act and, consequently, refer the matter to the Departmental Valuation Officer, when the books of account were not rejected?" 5. The main plea taken by the learned counsel for the assessee is that the onus probandi lies on the Assessing Officer to establish that the assessee has understated or concealed the actual cost df~ construction and without discharging the onus, the Assessing Officer is not empowered to rely upon the valuation given by the Departmental Valuation Officer; when the books of account were never rejected. 6. The learned standing counsel for the Revenue is not disputing the fact that the books of account furnished by the assessee were never rejected by the Department. 7. In the case on hand, it is beyond any cavil that the books of account furnished by the assessee were never rejected. No explanation was called for from the assessee stating that there was concealment or understatement of amount in the books of account. The initial burden cast on the Department to prove that there was understatement or concealment of income has not been discharged and, therefore, the Assessing Officer is not empowered to refer the matter to the Departmental Valuation Officer or rely on such report. 8. The above said view of this court is fortified by the following decisions: (i) In Saraam Cinema v. CIT [20101 328 ITR 513/120111 197 Taxman 203, the Supreme Court has held as under (page 514): "In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been considered by the High Court. In the circumstances, reliance placed on the report of the DVO was misconceived." (emphasis supplied) (ii) Following the above decision of the Supreme Court, a Division Bench of the Delhi High Court in CIT v. Bajrang Lal Bansal (20111 335 ITR 572/200 Taxman 188 (Map.)/12 taxmann.com 88. has held as under (headnote): IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 30 "The primary burden to prove understatement or concealment of income was on the Revenue and it was only when such burden was discharged that it would be permissible to rely upon the 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 had made any payment over and above the consideration mentioned in the return of the assessee." (Emphasis Supplied) (iii) In K. K. Seshaiyerv. CIT f20001246 IT Ft 351/, '20-01: 114 Tcxman 353 (Mad.), a Division Bench of this court held as under (headnote) : "When the actual cost of construction was duly recorded by the assessee and that cost also was set out in the agreement with the contractor, specifying the rates, and which rates had been accepted by the Tribunal', and there was no finding that the building was larger than the assessee had claimed or had better quality of construction or fixtures than the assessee had recorded in his books, the opinion of the valuer could not be straightaway substituted for the actual cost that was recorded in the assessee's books. The Tribunal had not found that the books maintained by the assessee were not credible. Therefore, the Tribunal was not right in not accepting the valuation of house property submitted by the assessee." 9. In view of the findings recorded above and the law enunciated in the decisions referred to supra, this appeal deserves to be allowed. (3) CIT Vs. Khushal Chand Nirmal Kumar 263 ITR 77(M.P.)- Section 158BC of the Income-tax Act, 1961 - Block assessment in search cases - Procedure for - Block period 1-4-1986 to 31-3-1996 - Whether no additions could be made in income of assessee merely on basis of report obtained from Departmental Valuation Officer, whose evidence was not found during course of search - Held, yes - Whether, in instant case, since nothing was found during search in assessee's premises with regard to investment in house, Tribunal was justified in deleting additions made by Assessing Officer on account of unexplained investment in construction - Held, yes (4) CIT Vs. Manoj Jain287 ITR 28S(Delhi)- Section 158BC of the Income-tax Act, 1961 - Block assessment in search cases - Procedure for - Tribunal having found as a fact that search on assessee's premises did not lead to seizure of any incriminating evidence to suggest that any income had not been or would not have been disclosed for tax purpose, deleted addition made by Assessing Officer on IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 31 basis of report of Valuation Officer in regard to two of properties purchased by assessee - Whether in view of clear finding of fact by Tribunal no substantial question of law arose for consideration - Held, yes (5) CIT Vs. Sadhna Gupta352 ITR 595 (Delhi)- Section 69B of the Income-tax Act, 1961 - Undisclosed investments [Investment in property] - Assessment year 2007-08 - Whether, where there was no other material to indicate that any extra consideration had passed from assessee, over and above declared value in respect of purchase of property, addition under section 69B could be made based merely on report of District Valuation Officer - Held, no [Para 4] [In favour of assessee] Badar Durrez Ahmed, J. - This appeal has been filed by the revenue under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the said Act) being aggrieved by the order dated 30.11.2011 passed by the Income Tax Appellate Tribunal in ITA No.5266(Del)/2010 relating to assessment year 2007-08. It appears that this appeal had been admitted for hearing by an order passed by this Court on 30.07.2012. However, learned counsel for the parties pointed out that there is some typographical error in the question of law which has been framed. Consequently, we reframe the substantial question of law as under:- "Whether the Tribunal fell in error in not placing reliance on the district valuation officer's report under section 142A and thereby deleting the addition of Rs. 2,81,83,000/- made by the assessing officer under section 69B of the Income Tax Act, 1961?" 2. We have heard learned counsel for the parties. The facts are that the assessing officer made an addition of Rs.2,81,83,000/- under section 69B of the said Act on the basis of a valuation report which he received from the District Valuation Officer (DVO). This was in respect of purchase of a property by the respondent/assessee at 2-B, Goela Lane, Under Hill Road, Civil Lines, Delhi. The assessee had disclosed that the said property had been purchased through two sale deeds dated 03.05.2006 for a total sum of Rs. 59,50,000/-. The purchase consideration as per the sale deeds signified a rate of Rs. 8,500/- per sq. yd., which appeared to be low to the assessing officer and, therefore, he referred the matter of valuation to the DVO. The DVO submitted his report and indicated that in his opinion the total fair market value ought to be Rs. 3,41,33,000/- as against the declared value of Rs. 59,50,000/-. The difference of Rs. 2,81,83,000/- was added by the assessing officer by invoking the provisions of Section 69B of the said Act. 3. Being aggrieved by the said addition the respondent assessee preferred an appeal before the CIT (Appeals) who deleted the said addition after referring to the decision K.P. Varghese v. ITO [1981] 131 IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 32 ITR 597/7 Taxman 13 (SC). The Commissioner of Income Tax (Appeals) held that the addition had been made on the basis of the valuation report without there being any other material to indicate that any extra consideration had passed in respect of the said purchase of property. Thereafter, the revenue, being aggrieved by the order passed by the CIT (Appeals), preferred an appeal before the Tribunal which has been dismissed by the Tribunal by confirming the deletion made by the CIT (Appeals). The revenue is in appeal before us. 4. The only point to be considered is whether the valuation rendered by the DVO is to be taken into account or not. It has been argued by the learned counsel for the revenue that the assessing officer was justified in referring the matter to the DVO for an opinion with regard to the fair market value of the property and once that opinion has been rendered, the same has to be taken into account and if that were to be so, the addition of Rs.2,81,83,000/- would be fully justified. Consequently, it was submitted by the learned counsel for the revenue that the Tribunal had erred in deleting the addition. On the other hand the learned counsel for the respondent referred to a Division Bench decision of this Court in the case of CIT v. Puneet Sabharwal (20111 338 ITR 485/16 taxmann.com 320/(20121204 Taxman 16 (Delhil (Mag.). In that decision a specific question had been raised as to whether the Income Tax Appellate Tribunal was right in holding that notwithstanding the report of the DVO the revenue had to prove that the assessee had received extra consideration over and above the declared value of the same. That question was answered by this Court in favour of the assessee and against the revenue. The Division Bench in the case of Puneet Sabharwal (supra) had also placed reliance on the decision of Supreme Court in K.P. Varghese (supra) as also on another decision of a Division Bench of this Court in CIT v. Smt. Suraj Devi 120101328 ITR 604/(20111 197 Taxman 173 (Delhi) (Mag.) wherein this Court held that the primary burden of proof with regard to concealment of income was on the revenue and it was only when the said burden was discharged that reliance could be placed on the valuation report of the DVO. There are several other decisions of this Court in the same vein. One such case being the case of CIT v. Vinod Singhal (IT Appeal No.482/2010 decided on 05.05.2010) where, again, reliance was placed on the very same decision of the Supreme Court in K.P. Varghese (supra) and also on a decision of this Court in CIT v. Smt. Shakuntala Devi (20091316 ITR 46. It was observed that there must be a finding that the assessee had received an amount over and above the consideration stated in the sale deed and for this the primary burden was cast on the revenue. It is only when this burden is discharged by the revenue that it would be permissible to rely upon the value as given in the valuation report of the DVO. 5. The law seems to be well settled that unless and until there is some other evidence to indicate that extra consideration had flowed in the transaction of purchase of property, the report of the DVO cannot form IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 33 the basis of any addition on the part of the revenue. In the present case there is no evidence other than the report of the DVO and, therefore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the revenue. The appeal is dismissed. (6) CIT Vs. Lahsa Construction Pvt. Ltd 357 ITR 671 (Delhi) Section 142A of the Income-tax Act, 1961 - Estimate made by Valuation Officer - Assessment year 1999-2000 - Whether addition can be made solely relying upon report of Departmental Valuation Officer - Held, no [Para 5] [In favour ofassessee] 1. Revenue in this appeal under Section 260A of the Income Tax Act, 1961 ("Act" for short) impugns order dated 25.06.2010, passed by the Income Tax Appellate Tribunal in the case 'M/s. Lahsa Construction Pvt. Ltd.' on the ground of perversity. The appeal pertains to the Assessment Year 1999- 2000. (incorrectly mentioned in the impugned order as assessment year 2006-07). 2. Property in question bearing No.C-20, NDSF, South Ex., Part-II, New Delhi had two sellers. The respondent/assessee -Lahsa Construction Pvt. Ltd. had sold 50% share of-the property in favour of Mrs. Madhu Arora, whereas the second group of owners consisting offour individuals had sold 50% of the property in favour of Mrs. Madhu Arora and her husband Mr. Om Prakash Arora. 3, It is stated by the counsel for the respondent that Revenue had accepted the order of the Tribunal in the case of said four individuals as addition was made solely on the report of the Departmental Valuation Officer. This statement is not controverted or accepted by the counsel for the Revenue as he has no information. 4. The Departmental Valuation Officer had opined that the value of the property at the time of purchase was Rs.2,84,72,600/- and this became the basis of the addition made by the assessing officer. The respondent/assessee had disclosed sale consideration of as Rs. 39,00,000/- for sale, of their 5014 share, in the property to Mrs. Madhu Arora. Mrs. Madhu Arora and Mr. Om Prakash Arora paid an amount of Rs. 44.00.000/- to the four individual co-. owners for purchase of the balance 50% share. Thus, in all they had shown sale consideration of Rs.83,00,000/-, instead of Rs.2,84,72,600/-, as opined by the Departmental Valuation Officer. This property was sold in the period relating to the Assessment Year 2004-05 for Rs. 1,00,00,000/-. No addition was made by the Assessing Officer on this sale consideration. 5. Whether an addition can be made solely and on the basis of the report of the Departmental Valuation Officer, is no longer res integra and IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 34 is covered by the decision of this court in CIT v. S.K. Construction Co. (20081167 Taxman 171. CIT v. Navin Gera 120101 328ITR 516/(2011) 198 Taxman 93 (Delhi). CITv. Smt. Suraj Devi(2010) 328 ITR 604/(2011) 197 Taxman 173 (Delhi) (Mas.). and CIT v. Bajrang Lai Bansal (2011) 335 ITR 572/200 Taxman 188 (Mas.)/12 taxmann.com 88 (Delhi). It has been repeatedly held that addition cannot be justified solely relying upon the valuation report. Decision of the Supreme Court in the case of K.P. Varghesev. ITO (1981) 131 ITR 597/7 Taxman 13 has been followed. 6. In view of the aforesaid position order of the Tribunal does not require Interference. No substantial question of law arises. The appeal is accordingly dismissed. ” (7) CIT v/s Pratap Singh Amrosingh Rajendra Singh 200 ITR 788 Held, that there was no dispute that the assessee maintained proper books of account and the same- had been accepted in the past and no defect were pointed out in the books. The expenses were fully supported by vouchers. Full details were also mentioned in respect of each item in the books. Simply because the valuation report was of a higher amount, the books could not be said to be unreliable. The Tribunal was, therefore, justified in deleting the addition ofRs. 55,780/- (8) CIT v/s v/s Vijay Kumar D Gupta (2014) 365 ITR 470 (Guj) “ ........Moreover, it is apparent that the only reson for making the addition udnder section 69 of the Act is that there is a difference in the cost of construction as determined by the Valuation Officer and as shown by the assessee. At no stage of the assessment proceedings does the assessing officer appear to have mentioned that the books f account are defective or that the cost of construction as shown in the books of account is not the true cost of construction. Thus, while making the reference to the valuation officer, the assessing officer has not recorded any defect in the books of account nor has he rejected the same. Except for the difference in the estimated cost determined by the Valuation Officer and the actual cost as shown by the assessee, the assessing officer has not brought any material on record to establish that the assessee had made any unaccounted investment in the construction of the building in question and that the books of account do not reflect the correct cost of construction. Under the circumstances, there was no occasion for the assessing officer to make a reference to the Valuation Officer. As held by the Supreme Court in the case of Sargam Cinema (Supra), unless the books of accounts are rejected, the assessing Officer cannot make a reference to Valuation Officer. The reference made to the Valuation Officer, not being in consonance with the provision of law, was, therefore, invalid. Accordingly, the report made by the Valuation Officer pursuant to such an invalid reference could not have been made the basis for addition under section 69of the Act ” IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 35 (9) The ITAT Third Member Delhi Bench in the case of Harsarup Cold Storage & General Mills Vs. ITO reported in ITO 27 ITD 1 (TM). In that case also, the crucial question that arose for consideration before the Tribunal was whether the AO without finding defects or mistakes in the books and without rejecting the books can resort to an estimate of cost of construction basing on the report of the valuation cell. The Tribunal held in that case that the ltd not having pointed out any defects in the account books should not have rejected the accounted version and should not have made an addition based on the report of the valuation cell regarding the cost of construction. The Tribunal while upholding that maintenance of books of account and recording of investments in those books of accounts being compulsory as per the legislative mandate, it is not open to the ITO to ignore the evidence provided by the entries in the said books of account without pointing out any defects in the books and go only by the valuation report given by the Valuation Officer, held as follows: "When the ITO looks into an evidence he must record his observation as to the reliability, authenticity and correctness of the evidence. It becomes, therefore, imperative by reading ss. 69 and 143(3) together, that the ITO must, rather he has a statutory duty to examine the evidence produced by the assessee in support of his cost of construction, viz., the books of account, record a finding about the falsity or unreliability not just by expressing a capricious view, but by pointing out evidence, material and flaws in the evidence, if any. It is only after the evidence is rejected, the ITO will get the power to estimate the cost of construction. It is at that point of time that he can rely upon the report of the Valuation Officer." (10) ITO Vs. Tek Chand reported in 51 TTJ 607 (Jp). In this case it is held that – Sec. 34 of the Indian Evidence Act, 1872 makes entries in the books of account relevant in judicial proceeding. The said section says that entries in the books of account, regularly kept in the course of business, are relevant when they refer to a matter into which the Court has to enquire but such statements shall not alone be sufficient evidence to charge any person with liability. The necessary requirements for availing the benefit of this provision are that the entries should have been made in the books of account, that such books of account have been regularly kept in the regular course of business and that such entries refer to a matter being enquired into by the Court. But such entries would not by themselves fasten a liability on the other. The statements made through such entries are in the nature of admission of certain facts by a person which no doubt are not conclusive proof of the matters admitted but may operate as estoppel against the maker and may be proved against him. The possible use of such statement against the maker thereof attaches the degree of IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 36 credibility to them and enhances their probative value. Therefore, wherever such statements are relied upon to prove the existence of a fact they are required to be considered in right perspective and should not be lightly ignored or rejected. It is in conformity with this fundamental principle of law of evidence that it is by now well established that the account of construction of a building maintained by a person in the regular course of business should be given due weight and not be rejected without finding specific defects therein. Such account becomes all the more credible and reliable if the same is reflected in the regularly kept books of account pertaining to the business being carried on by him and also gets some corroboration from other independent evidence. The assessee had admittedly kept a record of the expenditure incurred on the construction of the hotel building over the years. Such record was duly supported with relevant vouchers and contained the detailed particulars of the item-wise expenditure on day to day basis. The expenditure had duly been reflected in the account books regularly maintained by the assessee in the course of his business. On scrutiny the Assessing Officer might have found some defect in the account relating to sales but no specific defect in the account maintained for expenditure incurred on the construction/renovation of hotel building was pointed out by him. Under such circumstances the Assessing Officer was certainly not justified in rejecting such specific record of expenditure and relying upon estimation of such cost by an expert person, particularly when the account of construction submitted by the assessee got good corroboration from the opinion of other similar expert. (11) The Hon'ble Delhi High Court in the case of Commissioner of lncome Tax vs. Bajrana Lal Bansal (2011) 335 ITR 572 (Delhi) has held as under: "The primary burden to prove understatement or concealment of income was on the Revenue and it was only when such burden was discharged that it would be permissible to rely upon the 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 had made any payment over and above the consideration mentioned in the return of the assessee." (12) CIT v/s Vridnaban Real estate (P) Ltd (2012) 254 CTR (All) 10 Although above cited case pertains to re-opening of the case based on DVO's report but ratio laid down is equally applicable to the instant case. Hon’ble court has deleted th re-opening of assessment u/s 147 by holding that DVO’s report perse is not an information for the purpose of reopening of assessment u/s147-AO has to apply his mind on the information, if any, collected and must form a belief thereon for re-opening of assessment- IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 37 there has to be something more than the report of DVO for the belief of AO. By observing so, hon'ble court dismissed the appeal of revenue. (13) Whether an addition can be made solely and simply on the basis of the valuation report submitted by DVO. is no longer 'res integra' and is covered by the various decision of Hon'ble Courts mentioned below:- • CIT vs. S.K. Construction Co. 120081 167 Taxman 171. • CIT v. Navin Gera 120101328ITR 516/120111198 Taxman 93 (Delhi). • CITv. Smt. Suraj Dev [2010] 328 ITR 604/[2011] 197 Taxman 173 (Delhi (Maq) • It has been repeatedly held that addition cannot be justified solely relying upon the valuation report. Decision of the Supreme Court in the case ofK.P. Varghese v. ITO f19811131 ITR 597/7 Taxman 13. • Nirpal singh v/s CIT (2013) 359 ITR 398 (P & H) • Raghuraj Agro Industries (P)Ltd (2013) 38 Taxmann.com 318(AII). 4.17.7. Considering the aforesaid fact and circumstances of the matter and the law as erpreted by several High Courts and the Hon’ble Supreme Court – the findings on this issue in respect of peculiar facts of this case are as below: i) Admittedly, the appellant maintained its regular books of accounts supported by bills/vouchers and other records which were subjected to Audit. The AO has neither pointed out any defect in books nor brought any positive material on record to establish alleged unaccounted investment in property at Patalpani. Most importantly, the AO has neither before making reference to DVO nor even after receipt of valuation report rejected the books of accounts. There is nothing like implied rejection of books under the law. Simply because the valuation report discloses a higher figure, the books cannot be said to be unreliable unless defects pointed out by AO. In view of these facts, valuation report obtained from DVO cannot form a foundation ipso facto for making addition towards alleged suppression of cost of investment. Neither DVO nor AO has pointed out that certain or specific item of expenditure on certain or specific items/construction was incurred which was not recorded in the books maintained by the assessee. Hence, additions made by AO is not sustainable in law being based merely on valuation report received from DVO. ii) The A.O. has not mentioned any reason in the assessment order or in the reference to the valuation, that he had any incriminating material which led to form his belief that the appellant had actually under stated or under disclosed the cost of construction referred for valuation. It is very relevant to understand that the appellant group was subjected to search and seizure action u/s 132 of the Act which apparently did not yield to IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 38 seizure of any incriminating papers/documents suggesting unaccounted investment in property at Patalpani. Lack of any incriminating material/evidence regarding under reporting of cost of construction being pointed out by the A.O. and that too, having search and seizure action against the assessee simply made addition of huge amount on the basis of DVO’s report which is totally unjustified and unwarranted. iii) It is important to note that DVO has prepared his report based on DSR- 2012. Interestingly, DVO has applied same rate for cost of construction of the project even though the investment is spread over many years. As per appellant, DVO should have adopted MPPWD rates after making certain adjustment for the construction done by the assessee in different assessment years. Appellant in support has filed a copy of valuation done by a Govt Registered Valuer estimating less value as compared to DVO and on the basis of state PWD rates. Hon’ble Allahabad High Court in the case of CIT v/s Raj Kumar 182 ITR 436 (All) has held that value of property under PWD rates is much lower than the cost of value of property as per CPWD rates. Similarly, in the case of CIT v/s Prem kumara Murdiya 296 ITR 508 (Raj) wherein hon’ble court refused to interfere in the order of ITAT holding that appropriate to be taken into consideration would be PWD rates and holding difference between CPWD rates and PWD rates at 20%. Similar views have been expressed in the case of ITO v/s Nilesh maheshwari (2011) 53 DTR 43 (ITAT Jaipur). iv) I am of the view that as a consequence of such under reporting, the AO is required to reject the books of accounts of the assesses. In the case of the appellant the AO has neither rejected the books of accounts before making a reference to DVO for valuation of property nor he did after receipt of valuation report from DVO. Apart from the case laws referred in this order, it is pertinent to refer to the decision of ITO v/s Dreamland enterprises 80 Taxman 143 (ITAT Abd) wherein it was held that when the cost of construction declared by the assessee was supported by regular books of accounts and vouchers, correctness of which was not disturbed by the AO or DVO by bringing any specific material on record, the CIT(A) was fully justified in holding that no addition could be validly made on account of any understatement of cost of construction merely because of difference as estimated by the DVO. Hence, on this count, I am of the view that addition made merely on the basis of DVO’s report is not sustainable. v) The valuation report of DVO is not binding on the AO because it is merely an opinion of an expert. In the context of the controversy in issue, it may also be germane to notice the expression used by legislature i.e. “estimate”. Thus, resort can be made to the said provision by the AO for the purpose of “estimating” the value of any investment, bullion, jewellery or any valuable article etc. However, this is settled legal position that addition cannot be made solely on the basis of valuation report which is only give an estimate as held by various High Courts, discussed earlier. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 39 vi) It is apparent from record that assessing officer has not brought any material on record to establish that the assesee had made any unaccounted investment in property at Patalpani and that books of accounts do not reflect the correct cost of construction. It is evident that only reason for making the addition u/s 69B of the Act is that there is a difference in the cost of construction as estimated by the valuation officer and as shown by the assessee in its books of accounts. 4.17.8 It is interesting to note that valuation of the property under consideration was done by the DVO after applying cost index on the basis of DSR-2012 (as base). It is settled law that DSR rates adopted by DVO are higher that PWD rates. Hon’ble High Court of Rajasthan in the case of CIT v/s Prem Kumari Murdiya 296 ITR 344 (Raj) refused to interfere in the order of ITAT holding that appropriate rate to be taken into consideration would be PWD rates and holding difference between CPWD rates and PWD rates at 20-25%. Similarly, in the case of ITO v/s Nilesh Maheshwari (2011) 53 DTR 43 (ITAT Jaipur) held after relying on the decision of Tek Chand v/s ITO 51 TTJ (JPR) 607 that there is variation in local PWD rates and CPWD rate by margin of 20-25%. On perusal of the Valuation report, it is seen that valuation has been done purely on estimate basis. It has been held in the case of CIT v/s lahsa Construction (P) Ltd. (2013) 357 ITR671 (delhi) that no-addition can be made solely on the basis of valuation report of DVO. Ld AR also placed reliance on the decision of CIT v/s VS Pratap Singh Amro Singh (1993) 200 ITR 788 (Raj) that addition to income could not be made on the basis of the report of the Valuation Officer. 4.17.9 In view of the above discussion, the comparative picture of investment shown by the assessee and that estimated by the DVO after allowing margin of 30% ( 25% for difference in CPWD and PWD rates and 5% for self supervision) comes out as under:- Thus, the addition made by the AO amounting to Rs. 45,327/- in AY 2012- 13, Rs. 77,834/- in AY 2013-14 and Rs. 10,164/- in AY 2014-15 are Confirmed and the appellant gets relief of Rs. 2,90,8361- in AY 2012-13, Rs. 8,86,500/- in AY 2013-14, Rs. 5,14,550/- in AY 2014-15 and Rs. 4,79,320/- in Ay 2015-16. Therefore, appeal on this ground is Partly Allowed.” A.Y. Declared by Assessee (Rs.) 70% of estimate made by the DVO Difference 2012-13 633290 678617 45327 2013-14 1990663 2068497 77834 2014-15 1190451 1200615 10164 2015-16 1199488 1175165 NIL IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 40 27. Neither the AO in the assessment order, nor the ld.CIT-DR before this Bench could demolish or destroy the factual position that the DVO has prepared his report based on DSR-2012 and the DVO applied the same rate for cost of construction of project even though the investment was spread over many years. We may also take respectful cognizance of the judgement of the Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar, 182 ITR 436 (All) and the judgement of the Hon’ble Rajasthan High Court in the case of Prem Kumara Murdiya, 296 ITR 508 (Raj) wherein the Hon’ble High Court refused to interfere in the order of the ITAT holding that appropriate to be taken into consideration would be PWD rates and holding difference between CPWD rates and PWD rates at 20%. The ld.CIT(A) has noted glaring facts while deciding this issue which was having a bearing on the issue, therefore, we are unable to see any valid reason to interfere with the findings recorded by the ld.CIT(A) on this issue and, thus, we uphold the same. Accordingly, ground No.5 of the Revenue for AY 2012-13 is dismissed. Ground No.1 of the Revenue for AY 2013-14. 28. In the beginning of the hearing, the ld. Representatives of both the sides jointly conveyed to the Bench that the ground No.1 of the Revenue for AY 2013-14 is quite similar and identical to the ground No.1 of the Revenue for AYs 2014-15 and 2015-16 and the order of the ld.CIT(A) for AY 2013-14 can be taken as a lead case for adjudication of grievance of the Revenue. 29. Drawing our attention to the consolidated order of the ld.CIT(A), the ld.CIT-DR submitted that the first appellate authority has erred in law in deleting the addition of IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 41 Rs.20 lakhs made on account of unaccounted investment in Ashapura land and has overlooked the findings of the AO mentioned in the assessment order. 30. The ld.CIT-DR, referring to the assessment order, submitted that the AO made addition of Rs.20 lakhs for AY 2013-14 on account of undisclosed investment towards purchase of agricultural land at village Ashapura, Tehsil Mhow, Indore District. The ld.CIT-DR submitted that the AO was right in rejecting the baseless and unplausible justification and explanation given by the assessee during the assessment proceedings. The ld.CIT-DR submitted that the AO, by way of substantial material brought on record to shown that the assessee has made investment in the Ashapura land which was not recorded in the books of the assessee and, therefore, the AO was right in making addition in the hands of the assessee in this regard. The ld.CIT-DR submitted that since the first appellate order is not sustainable, the same may kindly be set aside and the order of the AO may be restored by allowing the ground of the Revenue. 31. Replying to the above, the ld. AR submitted that the AO proceeded to make the addition without any cogent basis. Therefore, the first appellate order cannot be held as not sustainable and the same should be upheld. 32. The ld. AR vehemently opposing to the action taken by the AO and supporting the order of the ld. First appellate authority, drew our attention to para 4.18 of the first appellate order wherein ground No.4 for AY 2013-14 and Ground No.7 for AY 2014-15 has been adjudicated by the ld.CIT(A). The relevant part reads as under:- “ 4.18 3 Ground No. 4 for AY 2013-14 and Ground No 7 for AY 2014-15:- Through this ground of appeal, the appellant has challenged addition of Rs. 20,00,000/- in AY 2013-14 and Rs. 74,60,045/- in AY 2014-15 on account of unaccounted payment in purchase of Aashapura land. During IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 42 the course of search loose paper 13 to 20 of LPS-55 were found and seized from premises of the appellant. The AO during the course of ussessment-proeeedingsYound-that-the-saiddoeuments-eontain-details-of- investments made towards purchase of agricultural land at Village Ashapura. Therefore, the assessee was required to explain contents of the loose paper and reconcile the same with books of accounts. The assessee in reply submitted that initially, a sum of Rs. 11,00,000/- was paid as an advance for purchase of land from Smt Aruna Mittal, however, due to disagreement regarding encroachment the advance amount was returned back. Thereafter, when the dispute got resolved the said land was purchased by appellant for Rs. 83,45,000/-. The AO after considering reply of the assessee did not find the same acceptable and stated that the appellant has paid huge interest on delayed payment and the sale consideration was at Rs. 1.50 crores and made addition in relevant assessment years. 4.18.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant during the course of appellate proceedings has admitted that cash amounting to Rs. 63,41,676/- was paid towards purchase of land in addition to the sale consideration of Rs. 83,45,000/-. The appellant therefore, was required to explain source of cash payments. The appellant in reply submitted that the said cash payment was made out of amounts received from M/s Hari Service Station and M/s Maliram Filling Station. As discussed above in para 4.3, duimg the course of search and excel sheet was retrieved from computer of Shri Ajay Chouhan DGM of appellant company wherein details of entire receipt of cash and bills (genuine and non-genuine) was jotted down. The appellant voluntarily admitted receipt of cash against bogus bills of Rs. 1,86,21,226/- for AYs 2011-12 to 2014-15. The appellant has also paid taxes on the said amount. Once, it is proven beyond doubt that appellant has received cash from the said parties and appellant has paid due taxes, the said amount was available with the appellant for investment/use. It is worth mentioning that the AO has also accepted - receipt-of dash by the appellant. Thus, there was a fund with appellant for disposal against investment in agricultural land at Ashapura. The AO has completely failed to bring on record any evidence suggesting that the said cash was utilized by the appellant for some other purpose and not against investment in the said land. Hon’ble jurisdictional Madhya Pradesh High Court in the case of Addl. CIT v. Dharamdas Agarwal (144 ITR 143) (MP) has held as under:- “In Anantharam Veerasing haiah & Co. v. CIT [1980] 123 ITR 457 (SC), it was held that secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in his account books. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 43 In the instant case, the Tribunal had pointed out that the additions made in previous years represented income from business outside the account books which the assessee was carrying on in the name of some benamidar as also income from undisclosed sources. The assessee had also made an application to the ITO wherein he had confessed to having done so and had expressed his willingness to be assessed therefor in his own hands. The Tribunal had, in the circumstances, come to the conclusion that the impugned cash credits came out of income earned in the earlier years which had already borne tax. The finding so reached by the Tribunal was a finding of fact and could not be interfered with. ” Similar view was taken by Hon’ble Bombay High Court in the case of CIT v. Jawanmal Gemaji Gandhi (151 ITR 353) (Bom) wherein it has been held that:- ‘ ’The Supreme Court has held in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 that the secret profits or undisclosed income of an assessee earned in an earlier assessment year can constitute a fund, though concealed, from which the assessee may draw subsequently. The assessee, in the instant case, acquired the gold in the latter half of the assessment year: it could then very well be that the undisclosed income earned in that very year, which had been added on account of the increased estimated turnover, constituted the fund from which this asset was acquired. The conclusion reached in this behalf by the Tribunal was reasonable and justifiable. 4.18.2 Hon’ble Madras High court in the case of CIT vs KSM Guruswamy Nadar & Sons (1984) 149 ITR 127 (mad) has held that in addition to the bogus cash credit there is an addition towards suppression of profit, in such a case as this when there are two additions, it is always open to the assessee to explain that the suppressed profit during the year has been brought in as cash credits and therefore, one has to be telescoped into the other and there can be only one addition. In the instant case, also, the appellant has received cash against bogus bills and has accepted receipt of cash and paid due taxes, therefore, now the cash is available with the appellant for investment or usage and no addition can be made on this account. Therefore, I am of the considered opinion that benefit of telescoping should be provided to the appellant for avoiding double taxation. Similar view was taken by Hon’ble Jaipur ITAT In the case of Arun Kala vs ACIT (2005) 98 TTJ 1046 (ITAT JP). 4.18.3 In view of the above discussion, addition made by the AO amounting to Rs. 20,00,000/- in AY 2013-14 and Rs. 74,60,045/- in AY 2014-15 are Deleted. Therefore, appeal on this ground is Allowed.” IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 44 33. In view of the above, the assessee has challenged the addition of Rs.20 lakhs in AY 2013-14 and Rs.74,60,045/- in AY 2014-15 on account of unaccounted payment in purchase of Ashapura land. It is pertinent to note that during the course of search and seizure operation, loose papers from 13 to 20 of LPS-55 were found and seized from the premises of the assessee. During the course of assessment proceedings, the AO found that the said documents contained details of investments made towards purchase of agricultural land at village Ashapura. Therefore, the assessee was required to explain the contents of loose papers and reconcile them with the books of account. The assessee explained that initially a sum of Rs.11 lakh was paid as advance for purchase of land from Smt. Aruna Mittal and due to disagreement regarding encroachment, the advance amount was written back. The AO further pointed out that when the said dispute got resolved, the sand land was purchased by the assessee for Rs.83,45,000/- and the AO did not accept the same merely on imaginary presumption that the assessee has paid huge interest on delayed payment and the sale consideration was Rs.1.50 crores. On this issue, it was submitted by the assessee that cash payment was made out of amounts received from M/s Hari Service Station and Maliram Filling Station. The assessee voluntarily admitted receipt of cash against bogus bills of Rs.,1,86,21,226/- for AYs 2011-12 and 2014-15. Therefore, the ld.CIT(A) was right in granting relief to the assessee by taking support from the judgement of the Hon’ble jurisdictional High Court of Madhya Pradesh in the case of CIT vs. Dharamdas Aggarwal, 144 ITR 143. 34. In view of the foregoing and findings recorded by the ld.CIT(A), we are of the view that when the assessee has received cash against bogus bills and the AO has accepted the receipt of cash and paid taxes thereon, then, it has to be presumed that IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 45 the cash was available with the assessee for investment or use and no addition can be made on this account. We may point out that undisputedly, rather, admittedly, the assessee has voluntarily surrendered an amount of Rs.1,86,21,226/- received back in cash against bogus bills and the AO has made addition of Rs.20 lakhs for AY 2013-14, Rs.74,60,045/- for AY 2014-15 and Rs.10 lakh for AY 2015-16, totaling to Rs.104,60,045/- which is approximately 60% of the total surrendered amount of Rs.1,86,21,226/-. Therefore, the ld.CIT(A) was right in granting relief to the assessee on this count. We are unable to see any valid reason to interfere with the findings arrived at by the ld.CIT(A) and, thus, we uphold the same. Accordingly, ground No.1 of the Revenue for AY 2013-14 is dismissed. Ground No.1 of the Revenue for AY 2014-15 and 2015-16 35. Since the facts and circumstances of ground No.1 of the Revenue for AY 2013- 14 are quite identical and similar to the ground No.1 for AYs 2014-15 and 2015-16, therefore, the conclusion drawn by us in the earlier part of this order on ground No.1 of the Revenue for AY 2013-14 would apply, mutatis mutandis, to ground No.1 of the Revenue for AYs 2014-15 and 2015-16. Consequently, ground No.1 of the Revenue for the said two assessment years is also dismissed. Ground No.2 of the Revenue for AY 2013-14 to 2015-16 36. Since the facts and circumstances for AY 2012-13 are quite identical and similar to the facts and circumstances of subsequent three assessment years on the issue of disallowance u/s 14A of the Act r.w.r. 8D of the IT Rules, therefore, our conclusion drawn in the earlier part of this order on ground No.2 of the Revenue for AY 2012-13 would apply, mutatis mutandis, for AYs 2013-14, 2014-15 and 2015-16. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 46 Consequently, ground No.2 of the Revenue for the said three assessment years is also dismissed. Grounds No.3 and 4 of the Revenue for AY 2013-14, 2014-15 & 2015-16 37. Since the facts and circumstances for AY 2012-13 are identical and similar to the facts and circumstances of subsequent three assessment years i.e., 2013-14, 2014-15 & 2015-16, therefore, our conclusion drawn in the earlier part of this order on grounds No.3 and 4 of the Revenue for AY 2012-13 would apply, mutatis mutandis , to grounds No.3 and 4 of the Revenue for AYs 2013-14, 2014-15 and 2015- 16. Accordingly, grounds No.3 and 4 of the Revenue for the assessment years 2013- 14, 2014-15 & 2015-16 are also dismissed. Ground No.5 of the Revenue for AY 2013-14, 2014-15 & 2015-16 38. The AO has made identical additions on account of DVO’s report of property at Patalpani under similar facts and circumstances. Therefore, our findings recorded for AY 2012-13 would apply, mutatis mutandis, to AYs 2013-14, 2014-15 and 2015-16. Accordingly, ground No.5 of the Revenue for the subsequent three assessment years i.e., 2013-14, 2014-15 & 2015-16 is also dismissed. 39. In the result, the appeals filed by the Revenue for all four years are dismissed. Cross Objection Nos.40 to 43 of the assessee for AYs 2012-13 to 2015-16 40. The ld. AR submitted that the assessee does not want to press these Cross Objections as the same were merely supportive to the first appellate order. IT(SS)A No.24 to 27/Ind/2021 CO No.40 o 43/Ind/2021 47 Therefore, the cross objections of the assessee for all four assessment years are dismissed as ‘not pressed.’ 41. In the result, all four appeals of the Revenue and all four Cross Objections are dismissed. Order pronounced u/r 34(4) of the Income-tax (Appellate Tribunal) Rules, 1963 on 10.02.2023. Sd/- Sd/- (BHAGIRATH MAL BIYANI) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 10 th February, 2023. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Date 1. Draft dictated on 27.01.2023 2. Draft placed before the author 30.01.2023 3. Draft placed before the other Member 4. Approved Draft comes to the Sr.PS/PS 5. Order uploaded on 6. File sent to the Bench Clerk 7. Date on which file goes to the Head Clerk. 8. Date on which file goes to the AR 9. Date of dispatch of Order.