M/s. Shyam Sel & Power Ltd. , Kolkata V. ACIT, CC-1(!), Kol, Kolkata

ITSSA 79/KOL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5078 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-08-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 13-05-2024
• Assessment Year: misc
• Appeal Filed On: 14-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Depreciation; Search and seizure; Loose papers; Document seized; Earning of tax free income; Retrospective amendment; Question of law; Corroborative evidences; Capital receipt; Onus to prove; Retraction; Documents seized; TDS; Set aside; Bogus
• Section: 32; 131; 69C; 139; 143(3); 133A; 153A; 14A; 260A; 115JB; 133(6); 139(5); 80IA; 139(1); 43; 48; 13; 22; 20

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA Įी राजपाल यादव, उपाÚय¢ एबं Įी राजेश क ु मार, लेखा सदèय के सम¢ [Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member ] I.T.(SS).A. Nos. 108 ,79& 109/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. (PAN: AAECS 9421 J) Vs. ACIT, CC-1(1), Kolkata Appellant / )अपीलाथȸ( Respondent / (Ĥ×यथȸ) I.T.(SS).A. Nos. 129, 91 &130/Kol/2023 Assessment Years: 2017-18 , 2018-19 & 2019-20 DCIT, CC-1(1), Kolkata Vs. M/s Shyam Sel & Power Ltd. (PAN: AAECS 9421 J) Appellant / )अपीलाथȸ( Respondent / (Ĥ×यथȸ) I.T.(SS).A. Nos. 106 & 107/Kol/2023 Assessment Years: 2017-18 & 2018-19 M/s Shyam Metalics and Energy Ltd. (PAN: AAHCS 5842 A) Vs. ACIT, CC-1(1), Kolkata Appellant / )अपीलाथȸ( Respondent / (Ĥ×यथȸ) I.T.(SS).A. Nos. 127 & 128/Kol/2023 Assessment Years: 2017-18 & 2018-19 DCIT, CC-1(1), Kolkata Vs. M/s Shyam Metalics and Energy Ltd. (PAN: AAHCS 5842 A) Appellant / )अपीलाथȸ( Respondent / (Ĥ×यथȸ) 2 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. Date of Hearing / स ु नवाई कȧ Ǔतͬथ 14.05.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 12.08.2024 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri A. K. Tulsiyan, FCA For the Respondent/ राजèव कȧ ओर से Shri Abhijit Kundu, CITDR ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the two different assessees and revenue against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-22, Kolkata (hereinafter referred to as the Ld. CIT(A)”] for the AY 2017-18, 2018-19 & 2019-20.Since there are common issues involved in all these appeals , therefore these are being clubbed and heard together and are disposed off by this common order for the sake of convenience and brevity. First of all, we shall adjudicate assessee’s appeal in IT(SS)A No. 108/Kol/2023 for AY 2017-18 (M/s Shyam Sel & Power Ltd). 2. The common facts in all these appeals are that a search and seizure action u/s 132(1) of the Act was carried out on 17.01.2019 and subsequent dates on the residential premises of the directors/key personnel as well as business premises of Shyam Sel group of cases at Kolkata and other places. Besides the search and seizure action, surveys u/s 133A of the Act were also conducted on different business premises of the concerns/individuals belonging to the said group. The assessee 3 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. company was part of the said actions. The assessee has been engaged in the business of manufacturing steel and power. 3. Issue raised in ground no. 1 is against the order of Ld. CIT(A) confirming the disallowance u/s 32AC of the Act amounting to Rs. 20,82,51,125/- being 15% of the plant and machinery amounting to Rs. 1,38,83,40,819/- put to use during the year AY 2017-18 on the ground that the aggregate value of these additions did not exceed 25.00 crores and therefore the same was not eligible for deduction u/s 32AC of the Act. 4. Consequent to the search operation, a notice u/s 153A dated 12.09.2019 was issued to the assessee and in compliance, the assessee filed the return of income u/s 153A of the Act on 18.10.2019 declaring total income of Rs. 3,87,89,750/- under the normal provisions of the Act and Rs. 41,01,80,997/- as book profits u/s 115JB of the Act. Pertinent to mention that the assessee had filed return of income for the impugned assessment year u/s 139(1) of the Act on 30.11.2017 declaring total income of Rs. 8,44,58,910/- under the normal provisions of Act and Rs. 41,01,80,997/- u/s 115JB of the Act. Subsequently the return was revised u/s 139(5) on 1.12.2017 declaring total income of Rs. 8,44,58,910/- under the normal provisions and Rs. 41,01,80,997/- as book profit. Thereafter the statutory notices were duly issued and served upon the assessee and the assessee also made compliance thereto from time to time. Finally the assessment was framed u/s 153A read with Section 144C(3) of the Act vide order dated 25.08.2021 making various additions to the returned income thereby assessing the income at Rs. 56,08,49,642/- under the normal provisions of the Act and Rs. 41,23,75,311/- u/s 115JB of the Act. Pertinent to state that the assessee claimed for the first time, deduction u/s 32AC of the Act of Rs. 20,82,51,125/- in the return filed u/s 153A as stated above which was disallowed by the AO on the ground that claim made for the first time in the return filed u/s 153A cannot be made under the provisions of the Act by relying on certain decisions. It is also pertinent to note that the assessment has abated for the impugned assessment year on the date of search as it has not 4 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. attained finality conferring the AO the jurisdictions to make any addition as is available to him in the assessment framed u/s 143(3) of the Act. 5. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee on this issue by holding that the details furnished by the assessee in respect of plant and machinery to the tune of Rs. 119.27 crores were nothing but only the entries made in the books of account and therefore due to incomplete information as to the nature and dates when the items of plant and machineries were installed however accepting the balance amount of additions to plant and machineries of Rs. 19.55 crores as eligible for deduction u/s 32AC but held the same to be not allowable as for the purpose of deduction u/s 32AC the additions did not exceed 25.00 crores which is the basic condition provided u/s 32AC of the Act. In other words the assessee out of total additions of plant and machineries of Rs. 138.83 Crores , the ld CIT(A) accepted the eligibility of additions amounting to Rs. 19.55 crore and for the remaining additions of Rs. 119.27 crores rejected on the ground that it is not possible as to when the assets were acquired and whether all these assets were eligible for deduction u/s 32AC of the Act. Thus the Ld. CIT(A) ignored the claim of Rs. 119.27 crores for the purpose of computing deduction u/s 32AC of the Act. 6. After hearing the rival contentions and perusing the material on record, we note that undisputedly the assessee has made addition to the plant and machinery which according to it were eligible for deduction u/s 32AC of the Act however due to non- furnishing of evidences before the Ld. CIT(A), the claim was rejected nonetheless the Ld. CIT(A) has recorded a finding that the assessee is entitled to claim deduction in respect of additions of Rs. 19.55 crores to plant and machinery. However the same being less than 25.00 crores and therefore threshold limit for investment was not met and thus dismissed the appeal of the assessee on this issue. While in the assessment proceedings the AO simply rejected the claim of the assessee that no fresh additional claim could be made in the return of income filed u/s 153A that too without calling for any information/details/explanation from the assessee. We note that the assessment in 5 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. the impugned assessment year was abated one and the AO had all the powers to examine the books of accounts, records and other evidences and also make additions irrespective of facts whether anything was found and seized during the search operations. Therefore in our opinion, the return filed u/s 153A of the Act for the impugned assessment year is as good as return filed u/s 139(1) and fresh claim could be made in the said return. To this extent, we are in agreement with the findings of the Ld. CIT(A). The ld appellate authority has rejected the claim qua additions partly to the extent of 119.27 Crores on the ground that details filed by the assessee were incomplete and the necessary information required for the purpose of ascertaining the deduction u/s 32AC of the Act could not be extracted and verified from the said details whereas assessee’s eligibility was accepted with regards to additions to plant and machinery to the extent of Rs. 19.55 Crores however rejected the deduction on the ground of non satisfaction of mandatory conditions of threshold limit of addition of Rs. 25.00 Crores. In our opinion, the ends of justice could be met if the issue is restored and relegated back to the file of AO to examine all the evidences and details qua the said additions to the plant and machinery and ascertain the eligibility of the assessee to claim deduction on the said additions afresh as per the provisions of the Act. Accordingly we restore this issue to the file of AO with the direction to examine the same as per the facts and the provisions of the Act. Simultaneously we direct the assessee to file all the evidences in support of its claim without fail, so that the issue could be decided correctly. Accordingly the ground raised by the assessee is allowed for statistical purposes. 7. Issue raised in ground no. 2 by the assessee is against the confirmation of disallowance by the Ld. CIT(A) as made by the AO u/s 80JJAA amounting to Rs. 15,12,649/- on the ground that the same was not claimed in the return filed u/s 139(1) of the Act. 8. Facts in brief are that the assessee claimed deduction u/s 80JJAA of the Act of Rs. 15,12,649/- towards additional employees cost @ 30% incurred during the instant 6 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. assessment year as well as in AY 2015-16. The assessee had employed 117 new employees during the year out of which the cost relating to 27 employees was eligible for deduction u/s 80JJAA of the Act. The assessee had also obtained required certificate in form 10DA which certified that the assessee was eligible to claim deduction of Rs. 11,89,353/- being 30% of additional employees cost of Rs. 39,64,465/- who were recruited during the year. Besides the assessee has claimed Rs. 3,23,310/- being 30% of additional employees cost of Rs. 10,77,770/- of employees who were recruited in AY 2015-16. Thus, in aggregate the assessee claimed deduction of Rs. 15,12,649/-. The AO rejected the claim of the assessee on the ground that this was not claimed in the return of income u/s 139(1) of the Act but claimed in the return u/s 153A which could not be allowed. 9. In the appellate proceedings, the Ld. CIT(A) rejected the claim of the assessee u/s 80JJAA of the Act on the ground that the same was not claimed u/s 139(1) and the claim made for the first time in return filed u/s 153A was not allowable in terms of provisions of Section 80AC of the Act. 10. After hearing the rival contentions and perusing the material on record, we find that in this case, the assessment was undoubtedly an abated assessment on the date of search and therefore the original assessment stood merged with 153A assessment. In other words, the powers of AO in the search assessment proceedings u/s 153A of the Act were para-meteria with powers in the normal scrutiny assessment proceedings u/s 143(3) of the Act meaning thereby that the AO can examine any issue during the assessment proceedings and if according to him any claim(s) by the assessee is(are) not allowable in terms of provisions of the Act, then he has the power and jurisdiction to add the same to the income of the assessee. But in the present case, we observe that the Ld. CIT(A) has simply rejected the claim of the assessee by referring to the provisions of Section 80AC of the Act that the claim was not made in the return of income filed u/s 139(1) of the Act. We have also perused the provisions of the said section carefully and find that though the provisions of Section 80AC of the Act 7 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. specifically provide that return u/s 139(1) should be filed on or before the due date of filing return but the section is not applicable to any claim u/s 80JJAA of the Act for AY 2017-18 as it applies to Section 80IA, 80IAB, 80IB, 80ID and 80IE of the Act. Therefore the section 80AC is not applicable to instant claim made under section 80JJAA of the Act in the instant AY 2017-18. In our considered opinion the assessee is apparently entitled to make any claim in the return filed u/s 153A of the Act because the assessment has abated on the date of search and all the issues are open before the AO and therefore the assessee can make any such claim which was left out or not made inadvertently in the original return of income filed by the assessee u/s 139(1) of the Act. Moreover the assessee is at liberty to file any additional claim before the appellate authority which the Ld. CIT(A) has failed to consider by wrongly relying on the provisions of Section 80AC of the Act. The case of the assessee finds support form the decision of Hon’ble Apex Court in the case of Jute Corporation of India Ltd. vs. CIT [1991] 187 ITR 688 (SC) and Goetz (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC). Considering the above propositions of law as propounded by the Hon’ble Apex court, we are inclined to hold that the assessee is entitled to deduction u/s 80JJAA of the Act. The assessee has already filed all the evidences qua the said claim before the authorities below as well as before us which in our opinion need to be examined at the level of AO. Accordingly we restore the issue to the file of the AO and direct to examine and decide the same. Therefore the issue restored for verification only after affording reasonable opportunity to the assessee. Accordingly ground no. 2 raised by the assessee is allowed for statistical purpose. 11. Issue raised in ground no. 3 is against the appellate order in partly accepting the revised claim made u/s 80IA based on the correct arm’s length price i.e. where the ALP has the effect of reducing the claim of the assessee such reduced claim was accepted whereas claim based on the same ALP having the effect of enhancing the claim u/s 80IA of the Act, was rejected. 8 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 12. Facts in brief are that during the appellate proceedings, the assessee has filed before the appellate authority revised correct purchase rates as per the assessee’s purchase of power from outside agencies while at the time of filing return u/s 139(1) and 153A, the claim was arrived on the basis of wrong transfer cost per unit. The assessee submitted before the appellate authority that power purchase price incurred by the assessee in different manufacturing units through IPCL at Mangalpur and DVC at Jamuria plant were in variance than what have taken earlier for the purpose of calculating the claim u/s 80IA of the Act. Based on the said revised purchase rates , the assessee revised its claim u/s 80IA which were in fact the rectified average purchase rates per unit of each of captive power plants. In respect of Mangalpur CPP- II, the average purchase rate per unit was Rs. 4.52 whereas in respect of Jamuria Power Plant-JPP-I and JPP-II, the average purchase rate was Rs. 4.68. The Ld. CIT(A) ,in order to verify the revised claim of the assessee based on the revised rates per unit, called for a remand report from the AO and the AO has confirmed the authenticity and correctness of the average purchase rates as ascertained by the assessee in respect of each of the captive power plants. Based on the said calculation the claim of the assessee was reduced to Rs. 3,68,88,020/- from Rs. 12,78,33,964/- in respect of captive power plant at Mangalpur whereas the claim of the assessee has gone up to Rs. 32,24,60,378/- from original claim of Rs. 26,96,25,523/- in respect of JPP-I at Jamuria and to Rs. 19,71,71,776/- as against the original claim of Rs. 11,53,06,671/- in respect of JPP-II at Jamuria. Thus an aggregate amount of claim was Rs. 55,65,20,174/- while the Ld. CIT(A) allowed only Rs. 42,18,20,214/- whereas in the original return assessee had claimed Rs. 51,27,66,158/-. In one word, MCPP-II the claim has reduced whereas in other two units claim has gone up. The Ld. CIT(A) accepted the revised computation where the claim has come down from Rs. 12,78,33,964/- to Rs. 3,68,88,020/- whereas rejected the revised claims in Jamuria CCP- 1 & 11 based on the revised average purchase rate which has the effect of enhancing the claim of the assessee. 9 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 13. After hearing the rival contentions and perusing the material on record, we find that the assessee has revised its claim u/s 80IA of the Act in respect of its three CCPs before the ld CIT(A) vis-a-vis the original claim made in the return filed u/s 139(1) as well as 153A of the Act. According to the assessee the aggregate claim made in the return filed u/s 139(1) as well as u/s 153A was wrong because of taking wrong average purchase price per unit by these three CPPs and hence a revised claim was made before the appellate authority. We also note that the Ld. CIT(A), in order to verify the revised purchase price per unit in respect of three CPPs and the resultant revised claim, has remanded the issue to the file of the AO and the AO, after examining and carrying out the detailed verification of the documentations furnished by the assessee in the remand proceedings, confirmed the revised purchase prices per unit to be correct. Thereafter the Ld. CIT(A) accepted the revised rate in respect of MCPP-2 where the revised average rate has the effect of reducing the claim of the assessee from Rs. 12,78,33,964/- to Rs. 3,68,88,020/-but rejected the revised claim where the claim of the assessee has gone up based on the revised average purchase rates in respect of JPP- I & II. The summary of the original and revised claims as per the original return, revised claim before ld CIT(A) and claim allowed by the ld CIT(A) assessee are given hereunder for the ready reference: Sl. No. Name of the unit Eligible amount as per auditor’s report-10CCB Revised claim submitted by the assessee Claim granted by the Ld. CIT(A) 1 Mangalpur-CPP-II 12,78,33,964 3,68,88,020 3,68,88,020 2 Jamuria Power Plant- JPP-I 26,96,25,523 32,24,60,378 26,96,25,523 3 Jamuria Power Plant- JPP-II 11,53,06,671 19,71,71,776 11,53,06,671 51,27,66,158 55,65,20,174 42,18,20,214 10 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. It is very surprising to note that when the AO has certified the average purchase rates based on the evidences produced by the assessee in the remand report to be correct, how the Ld. CIT(A) can accept the remand report partly accepting the reduced claim in respect of Mangalpur CPP-II and rejecting that part of the remand report which is not in favour of the revenue qua JPP-I & II. In our opinion, this is not fair on the part of ld CIT(A) to adopt the dual approach in the matter of accepting partly the claims u/s 80IA of the Act especially when the revised purchase rates per unit stood verified and examined by the AO in the remand proceedings. In other words the Ld. CIT(A) has accepted the claim in respect of Mangalpur-CPP-II but rejected the claim in respect of Jamuria Power Plant-I and Jamuria Power Plant-II. This duality in the approach of appellate authority is not justified and therefore we are in concurrence with his conclusion on the issue. In our opinion the claim u/s 80IA needs to be examined at the level of AO. Therefore, considering these facts and circumstances of the case, we set aside the order of Ld. CIT(A) on this issue and direct the AO to verify the above table and allow the claim u/s 80IA of the Act accordingly. Accordingly ground no. 3 raised by the assessee is allowed for statistical purposes. 14. Issue raised in ground no. 4 is against the confirmation of disallowance of Rs. 21,94,314/- by the Ld. CIT(A) as made by the AO u/s 14A of the Act while computing the books profit u/s 115JB of the Act. 15. Facts in brief are that during the year the assessee has earned exempt income by way of dividend of Rs. 37,28,920/- and suo-motto disallowed a sum of Rs. 21,94,314/- u/s 14A of the Act as expenses being relating to earning of exempt income. According to the AO, the assessee has not added these expenses while computing the book profit u/s 115JB of the Act and accordingly added the same to the book profit of the assessee u/s 115JB of the Act. 11 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 16. In the appellate proceedings, the Ld. CIT(A) by referring the decision of Hon’ble Calcutta High Court in the case of CIT vs. Jayshree Tea Industries Ltd. [GA No. 1501 of 2014 dated 19.11.2014 held that amount was rightly added back by the AO in accordance with the provisions as contained in clause (f) of Explanation (1) to Section 115JB and dismissed the appeal of the assessee on this issue. 17. After hearing the rival contentions and perusing the material on record, we note that the issue of disallowance u/s 14A while computing book profit u/s 115JB of the Act has been settled once and in view of the decision of Hon’ble Apex Court in the case of Appollo Tyres Ltd. vs. CIT [2002] 122 taxman 562 (SC) wherein the Hon’ble Apex Court has held that book profit is to be calculated u/s 115JB of the Act as per Companies Act Schedule III and hence any disallowance is not permitted to be added in the calculation of book profit u/s 115JB of the Act. In view of the above said decision of Hon’ble Apex Court, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition made to the book profit. Accordingly ground no. 4 is allowed. 18. Issue raised in ground no. 5 is general in nature and needs no adjudication. IT(SS)A No. 129/Kol/2023 for AY 2017-18(Revenue’s Appeal). 19. The revenue has raised a common issue in ground nos. 1 to 4 challenging the order passed by the Ld. CIT(A) whereby the assessee’s claim has been allowed u/s 80IA of the Act by accepting the internal CUP method for computing the profit for the purpose of claim u/s 80IA. 20. Facts qua the CPPs have already been discussed in the assessee’s appeal however these are being briefly touched upon. The assessee has three eligible CPPs i.e Mangalpur CPP-II, JPP CPP-I & JPP CPP-II at Jamuria which produced electricity wholly and exclusively for the manufacturing units of the assessee located at Mangalpur and Jamuria district , Burdwan, West Bengal. The assessee had not sold 12 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. any electricity to the grid or any third party. The CPPs are qualified as eligible units engaged in the business of generation of power u/s 80IA(4)(iv) of the Act and assessee accordingly prepared standalone accounts of each of the eligible units in terms of Section 80IA(5)/(7) of the Act. Transfer of power was reported as specified domestic transactions in terms of Section 80IA(8) read with Section 92BA of the Act and was duly reported by the auditor in Form No. 3CEB and these transactions were benchmarked following the comparable uncontrolled pricing method (hereinafter referred to as CUP). The manufacturing /non-eligible units were taken as tested party. They were procuring/purchasing power/electricity both from CPPs as well as independent entities i.e. Indian Power Corporation Ltd./DVC. The AO referred the issue to TPO for ascertaining the correct arm’s length price of these specified domestic transactions and TPO passed an order u/s 92CA(3) on 25.01.2021 determining arm’s length price of sale of power by CPPs to manufacturing units at Rs. 2.48 per unit whereas the rates at which the power was transferred by the CPPs to the tested party were Rs. 5.55 per unit for Mangalpur CPP-11 and Rs. 4.20 Per Unit JPP CPP-1 & JPP CPP-11.The AO determined the adjusted sale price based upon the average rate for transfer of power as determined by the TPO who took five comparable parties for determining the power rates as under: “9.6. In its order dated 25.01.2021, the TPO held that the power rates should be taken as the purchase price by power grid and the TPO took five parties for determining the power rates who are supplying only surplus power. Hence, he applied External CUP method for determining ALP. The AO following the contention of the TPO disallowed the deduction u/s 80IA. We don’t have any rate of sale of power by generating companies to SEBs. However, the rates of sale of power by generating companies to SEBs are given by the TPO in the TP order for AY 2017-18, which are as under: Sl. No. Name of Seller/Power generating Plant Rate/Unit 1 Himadri Chemical & Industries Limited 2.74 2 Reshmi Cements 2.84 3 Tata Power Co Ltd. Haldia 1.86 13 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 4 Ennore Coke 2.10 5 Bengal Energy Limited 2.84 Mean (Average Rate) 2.48 Accordingly the claim of the assessee u/s 80IA was reduced. 21. In the appellate proceedings, the Ld. CIT(A) allowed the appeal by accepting the internal CUP method. After taking into consideration the decision of various High Courts on the similar issue which were discussed at length in the appellate order. 22. After hearing the rival contentions and perusing the material on record, we observe that the issue of determining the claim of the assessee u/s 80IA in respect of CPPs which were supplying power to other non eligible units were determined on the basis of electricity at which the power was procured by the assessee from the Indian Power Corporation Ltd. We find that the case is squarely covered by the decision of Hon’ble Apex Court in the case of CIT vs. M/s Jindal Steel & Power Ltd. 460 ITR 162 (SC) wherein the identical issue has been decided in favour of the assessee by holding that the rate at which the electricity board supplied/sold power to various customers has to be taken to market value/price for computing deduction u/s 80IA of the Act. The relevant portion of the said decision are extracted below: “17. In so far facts of the present case are concerned, there is no dispute. Since electricity from the State Electricity Board to the industrial units of the assessee was inadequate, the assessee had set up captive power plants to supply electricity to its industrial units. For disposal of the surplus electricity, the assessee could not supply the same to any third-party consumer. Therefore, in terms of the provisions of Section 43A of the 1948 Act, the assessee had entered into an agreement dated 15-7-1999 with the State Electricity Board as per which, the assessee had supplied the surplus electricity to the State Electricity Board at the rate of Rs. 2.32 per unit determined as per the agreement. Thus, for the assessment year under consideration, the assessee was paid at the rate of Rs. 2.32 per unit for the surplus electricity supplied to the State Electricity Board. We may mention that the State Electricity Board had supplied power (electricity) to the industrial consumers at the rate of Rs. 3.72 per unit. 18. There is also no dispute that the assessee or rather, the captive power plants of the assessee are entitled to deduction under section 80-IA of the Act. For the purpose of computing the profits and gains of the eligible business, which is necessary for 14 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. quantifying the deduction under section 80-IA, the assessee had recorded in its books of accounts that it had supplied power to its industrial units at the rate of Rs. 3.72 per unit which rate is disputed by the revenue as not being the market value of electricity. 19. While the assessing officer accepted the claim of the assessee for deduction under section 80-IA, he, however, did not accept the profits and gains of the eligible business computed by the assessee on the ground that those were inflated by showing supply of power to its own industrial units for captive consumption at the rate of Rs. 3.72 per unit. Assessing officer took the view that there was no justification on the part of the assessee to claim electricity charge at the rate of Rs. 3.72 for supply to its own industrial units when the assessee was supplying surplus power to the State Electricity Board at the rate of Rs. 2.32 per unit. Finally, the assessing officer held that Rs. 2.32 per unit was the market value of electricity and on that basis, reduced the profits and gains of the assessee thereby restricting the claim of deduction of the assessee under section 80-IA of the Act. 20. We have already analyzed Section 80-IA of the Act. There is no dispute that respondent-assessee is entitled to deduction under section 80-IA of the Act for the relevant assessment year. The only issue is with regard to the quantum of profits and gains of the eligible business of the assessee and the resultant deduction under section 80-IA of the Act. The higher the profits and gains, the higher would be the quantum of deduction. Conversely, if the profits and gains of the eligible business of the assessee is determined at a lower figure, the deduction under section 80-IA would be on the lower side. Assessee had computed the profits and gains by taking Rs. 3.72 as the price of electricity per unit supplied by its captive power plants to its industrial units. The basis for taking this figure was that it was the rate at which the State Electricity Board was supplying electricity to its industrial consumers. Assessing officer repudiated such claim. According to him, the rate at which the assessee had supplied the surplus electricity to the State Electricity Board i.e., Rs. 2.32 per unit, should be the market value of electricity. Assessee cannot claim two rates for the same good i.e., electricity. When it supplies electricity to the State Electricity Board at the rate of Rs. 2.32 per unit, it cannot claim Rs. 3.72 per unit for supplying the same electricity to its sister concern i.e., the industrial units. This view of the assessing officer was confirmed by the CIT (A). 21. We have noticed that the Tribunal had rejected such contention of the revenue which has been affirmed by the High Court. In this proceeding, we are called upon to decide as to which of the two views is the correct one. 22. Reverting back to sub-section (8) of Section 80-IA, it is seen that if the assessing officer disputes the consideration for supply of any goods by the assessee as recorded in the accounts of the eligible business on the ground that it does not correspond to the market value of such goods as on the date of the transfer, then for the purpose of deduction under section 80-IA, the profits and gains of such eligible business shall be computed by adopting arm's length pricing. In other words, if the assessing officer rejects the price as not corresponding to the market value of such good, then he has to 15 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. compute the sale price of the good at the market value as per his determination. The explanation below the proviso defines market value in relation to any goods to mean the price that such goods would ordinarily fetch on sale in the open market. Thus, as per this definition, the market value of any goods would mean the price that such goods would ordinarily fetch on sale in the open market. 23. This brings to the fore as to what do we mean by the expression "open market" which is not a defined expression. 24. Black's Law Dictionary, 10th Edition, defines the expression "open market" to mean a market in which any buyer or seller may trade and in which prices and product availability are determined by free competition. P. Ramanatha Aiyer's Advanced Law Lexicon has also defined the expression "open market" to mean a market in which goods are available to be bought and sold by anyone who cares to. Prices in an open market are determined by the laws of supply and demand. 25. Therefore, the expression "market value" in relation to any goods as defined by the explanation below the proviso to sub-section (8) of Section 80-IA would mean the price of such goods determined in an environment of free trade or competition. "Market value" is an expression which denotes the price of a good arrived at between a buyer and a seller in the open market i.e., where the transaction takes place in the normal course of trading. Such pricing is unfettered by any control or regulation; rather, it is determined by the economics of demand and supply. 26. Under the electricity regime in force, an industrial consumer could purchase electricity from the State Electricity Board or avail electricity produced by its own captive power generating unit. No other entity could supply electricity to any consumer. A private person could set up a power generating unit having restrictions on the use of power generated and at the same time, the tariff at which the said power plant could supply surplus power to the State Electricity Board was also liable to be determined in accordance with the statutory requirements. In the present case, as the electricity from the State Electricity Board was inadequate to meet power requirements of the industrial units of the assessee, it set up captive power plants to supply electricity to its industrial units. However, the captive power plants of the assessee could sell or supply the surplus electricity (after supplying electricity to its industrial units) to the State Electricity Board only and not to any other authority or person. Therefore, the surplus electricity had to be compulsorily supplied by the assessee to the State Electricity Board and in terms of Sections 43 and 43A of the 1948 Act, a contract was entered into between the assessee and the State Electricity Board for supply of the surplus electricity by the former to the latter. The price for supply of such electricity by the assessee to the State Electricity Board was fixed at Rs. 2.32 per unit as per the contract. This price is, therefore, a contracted price. Further, there was no room or any elbow space for negotiation on the part of the assessee. Under the statutory regime in place, the assessee had no other alternative but to sell or supply the surplus electricity to the State Electricity Board. Being in a dominant position, the State Electricity Board could fix the price to which the 16 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. assessee really had little or no scope to either oppose or negotiate. Therefore, it is evident that determination of tariff between the assessee and the State Electricity Board cannot be said to be an exercise between a buyer and a seller in a competitive environment or in the ordinary course of trade and business i.e., in the open market. Such a price cannot be said to be the price which is determined in the normal course of trade and competition. 27. Another way of looking at the issue is, if the industrial units of the assessee did not have the option of obtaining power from the captive power plants of the assessee, then in that case it would have had to purchase electricity from the State Electricity Board. In such a scenario, the industrial units of the assessee would have had to purchase power from the State Electricity Board at the same rate at which the State Electricity Board supplied to the industrial consumers i.e., Rs. 3.72 per unit. 28. Thus, market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market and not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board as this was not the rate at which an industrial consumer could have purchased power in the open market. It is clear that the rate at which power was supplied to a supplier could not be the market rate of electricity purchased by a consumer in the open market. On the contrary, the rate at which the State Electricity Board supplied power to the industrial consumers has to be taken as the market value for computing deduction under section 80-IA of the Act. 29. Section 43A of the 1948 Act lays down the terms and conditions for determining the tariff for supply of electricity. The said provision makes it clear that tariff is determined on the basis of various parameters. That apart, it is only upon granting of specific consent that a private entity could set up a power generating unit. However, such a unit would have restrictions not only on the use of the power generated but also regarding determination of tariff at which the power generating unit could supply surplus power to the concerned State Electricity Board. Thus, determination of tariff of the surplus electricity between a power generating company and the State Electricity Board cannot be said to be an exercise between a buyer and a seller under a competitive environment or a transaction carried out in the ordinary course of trade and commerce. It is determined in an environment where one of the players has the compulsive legislative mandate not only in the realm of enforcing buying but also to set the buying tariff in terms of the extant statutory guidelines. Therefore, the price determined in such a scenario cannot be equated with a situation where the price is determined in the normal course of trade and competition. Consequently, the price determined as per the power purchase agreement cannot be equated with the market value of power as understood in the common parlance. The price at which the surplus power supplied by the assessee to the State Electricity Board was determined entirely by the State Electricity Board in terms of the statutory regulations and the contract. Such a price cannot be equated with the market value as is understood for the purpose of Section 80IA (8). On the contrary, the rate at which State Electricity Board 17 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. supplied electricity to the industrial consumers would have to be taken as the market value for computing deduction under section 80-IA of the Act. 30. Thus on a careful consideration, we are of the view that the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board's rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under section 80-IA of the Act. 31. That being the position, we hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue. 32. Revenue has relied upon the decision of the Calcutta High Court in ITC Ltd. (supra). In that case, the High Court rejected the first contention of the revenue that the assessee therein was not entitled to the benefit under section 80-IA of the Act because the power generated was consumed at home or by other business of the assessee. After holding so, the High Court however, answered the question on the point of computation of profits and gains of the eligible business against the assessee. On going through the judgment, we find that facts of that case are clearly distinguishable from the facts of the present batch of appeals. It is noticeable that though an opportunity was granted by the assessing officer to the assessee to adduce evidence to justify the price of electricity sold by it to its paper unit, the same could not be availed of by the assessee. The electricity generated was sold by the assessee entirely to its paper unit. There was no surplus electricity to be supplied to the State Electricity Board and consequently, there was no contract between the assessee and the State Electricity Board determining the rate of tariff for the electricity supplied by the assessee to the State Electricity Board. On the other hand, it was noticed that the Electricity Act, 2003 had come into force whereby and whereunder, the rate at which electricity could be supplied is determined, notably by Sections 21 and 22 thereof. That apart, there is the tariff regulatory commission which has the mandate for fixing the rates for sale and purchase of electricity by the distribution licensee. Thus it was noted that there is an inbuilt mechanism to ensure permissible profit both to the generating companies and to the distribution licensees. Therefore, it was held by the High Court that the assessee's generating unit could not claim any benefit under section 80-IA of the Act computing the profits and gains on the basis of the rate chargeable by the distribution licensee from the consumer and that the benefit could only be claimed on the basis of the rates fixed by the tariff regulatory commission for sale of electricity by the generating company. Facts being clearly distinguishable, this decision can be of no assistance to the revenue. 18 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 33. Before parting with this issue, we may mention that reliance placed by Mr. Rupesh Kumar, learned counsel for the revenue on the definition of the expression "market value" as defined in the explanation below sub-section (6) of section 80 A of the Act is totally misplaced inasmuch as sub-section (6) was inserted in the statute with effect from 1-4-2009 whereas in the present case we are dealing with the assessment year 2001-2002 when this provision was note even borne. 34. That being the position, we have no hesitation in answering this issue in favour of the assessee and against the revenue. EXERCISE OF OPTION TO ADOPT WRITTEN DOWN VALUE METHOD. 35. We may now take up the first of the three additional issues. As we have noted at the very outset, the issue is or the question raised by the revenue is whether the Tribunal could ignore compliance to the statutory provisions relating to exercise of option to adopt Written Down Value (WDV) method in place of the straight line method while computing depreciation on the assets used for power generation. This issue has been raised by the revenue in Civil Appeal No. 13771/2015 (CIT v. Jindal Steel & Power Ltd.) in the following manner: Whether on the facts and in the circumstances of the case, the High Court was justified in upholding the order of the Tribunal that compliance to statutory in place of straight line method prescribed under the statutory provision on the assets used for power generation can be waved in the case of the assessee? 36. This issue arises in the case of the respondent-assessee M/s Jindal Steel and Power Ltd., Hisar for the assessment year 2001-2002. While dealing with the core issue, we have already made a brief description of the status of the assessee. It is, therefore, not necessary for a repetition of the same. What is however discernible from the assessment order dated 26-3-2004 passed under section 143(3) of the Act is that the assessee had purchased twenty five MV turbines on and around 8-7-1998 for the purpose of its eligible business. Assessee claimed depreciation on the said turbines at the rate of 25% on WDV basis. On perusal of the materials on record, assessing officer held that in view of the change in the law with regard to allowance of depreciation on the assets of the power generating unit w.e.f. 1-4-1997, the assessee would be entitled to depreciation on straight line method in respect of assets acquired on or after 1-4-1997 as per the specified percentage in terms of Rule 5 (1A) of the Income-tax Rules, 1962. Assessing officer however noted that the assessee did not exercise the option of claiming depreciation on WDV basis. Therefore, it would be entitled to depreciation on straight line method. 36.1 After obtaining the clarification of the assessee, assessing officer held that since the assessee did not exercise the option of adopting WDV method, therefore, in view of the provision of Rule 5 (1A) of the Income-tax Rules, 1962 (briefly 'the Rules' hereinafter), it would be entitled to depreciation on the straight line method. On that basis, as against the depreciation claim of the assessee of Rs. 2,85,37,634.00, the assessing officer allowed depreciation to the extent of Rs. 1,59,10,047.00. 19 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 37. In the appeal before the CIT (A), the assessee contended that the assessing officer had erred in limiting the allowance of depreciation on the turbines to Rs. 1,59,10,047.00 as against the claim of Rs. 2,85,37,634.00. However, vide the appellate order dated 16-5-2005, CIT (A) confirmed the disallowance of depreciation made by the assessing officer. 38. On further appeal by the assessee before the Tribunal, vide the order dated 7-6- 2007, the Tribunal on the basis of its previous decision in the case of the assessee itself for the assessment year 2000-2001 answered this question in favour of the assessee. 39. When the matter came up before the High Court in appeal by the revenue under section 260A of the Act, the High Court referred to the proviso to sub-rule (1A) of Rule 5 of the Rules and affirmed the view taken by the Tribunal. The High Court held that there was no perversity in the reasoning of the Tribunal and therefore, the question raised by the revenue could not be said to be a substantial question of law. 40. Rule 5 provides for the method of calculation of depreciation allowed under section 32 (1) of the Act. It says that such depreciation of any block of assets shall be allowed, subject to provisions of sub-rule (2), as per the specified percentage mentioned in the second column of the table in Appendix-I to the Rules on the WDV of such block of assets as are used for the purposes of the business or profession of the assessee during the relevant previous year. In so far the present case is concerned, it is not in dispute that sub-rule (2) has no application. We may, therefore, refer to sub- rule (1A) along with the provisos thereto which read as under: "(1A) The allowance under clause (i) of sub-section (1) of section 32 of the Act in respect of depreciation of assets acquired on or after 1st day of April, 1997 shall be calculated at the percentage specified in the second column of the Table in Appendix IA of these rules on the actual cost thereof to the assessee as are used for the purposes of the business of the assessee at any time during the previous year: Provided that the aggregate depreciation allowed in respect of any asset for different assessment years shall not exceed the actual cost of the said asset: Provided further that the undertaking specified in clause (i) of sub-section (1) of section 32 of the Act may, instead of the depreciation specified in Appendix IA, at its option, be allowed depreciation under sub-rule (1) read with Appendix I, if such option is exercised before the due date for furnishing the return of incomes under sub- section (1) of section 139 of the Act, (a) for the assessment year 1998-99, in the case of an undertaking which began to generate power to prior 1st day of April, 1997; and (b) for the assessment year relevant to the previous year in which it begins to generate power, in case of any other undertaking : Provided also that any such option once exercised shall be final and shall apply to all the subsequent assessment years." 20 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 40.1 Thus, what is noticeable is that as per sub-rule (1A), the allowance under clause (i) of sub-section (1) of Section 32 of the Act in respect of depreciation of assets acquired on or after the 1st day of April, 1997 shall be calculated at the percentage specified in the second column of the table in Appendix-IA to the Rules. As per the first proviso, the aggregate depreciation of any asset should not exceed the actual cost of that asset. The second proviso says that the undertaking specified in clause (i) of sub-section (1) of Section 32 of the Act may instead of the depreciation specified in Appendix-IA may opt for depreciation under sub-rule (1) read with Appendix-I but such option should be exercised before the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act. The last proviso clarifies that any such option once exercised shall be final and shall apply to all the subsequent assessment years. 41. Before we proceed further, we may briefly refer to the relevant Appendix-1 which was applicable for assessment years 1988-1989 to 2002-2003 as well as to Appendix- 1A. Appendix-1 provides for a table of rates at which depreciation is admissible. While the first column refers to the block of assets, such as, tangible assets, including buildings, furniture and fittings, machinery and plant etc., and intangible assets, the second column mentions the relatable depreciation allowance as per percentage of WDV. On the other hand, Appendix-1A has been inserted by the Income-tax (Twelfth Amendment) Rules, 1997 with retrospective effect from 2-4-1997. While column one of Appendix-1A mentions about the class of assets, column two provides for the relatable depreciation allowance of such class of assets as per the percentage of actual cost. From a comparison of the two appendixes, it is evident that the depreciation allowance as per percentage of WDV in Appendix-1 is higher than the depreciation allowance as per percentage of actual cost under Appendix-1A. 42. From a conjoint reading of Rules 5(1) and (1A) of the Rules read with Appendix-1 and Appendix-1A, it is evident that while sub-rule (1) provides for allowance of depreciation in respect of any block of assets in terms of the second column of the table in Appendix 1, sub-rule (1A) enables an assessee to seek allowance of depreciation of assets acquired on or after the 1st day of April, 1997 as per the percentage specified in the second column of the table in Appendix-1A on actual cost basis. However, the second proviso to sub-rule (1A) clarifies that an assessee may opt for depreciation under Appendix-1 instead of Appendix-1A but such option has to be exercised before the due date for furnishing the return of income under sub-section (1) of Section 139 of the Act. 43. In the instant case, there is no dispute that the assessee had claimed depreciation in accordance with sub-rule (1) read with Appendix-I before the due date of furnishing the return of income. The view taken by the assessing officer as affirmed by the first appellate authority that the assessee should opt for one of the two methods is not a statutory requirement. Therefore, the revenue was not justified in reducing the claim of depreciation of the assessee on the ground that the assessee had not specifically opted for the WDV method. 21 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 44. A similar issue was examined by this Court in CIT v. G.R. Govindarajulu [2016] 16 SCC 335/[2015] 61 taxmann.com 400/235 Taxman 199/378 ITR 1 (SC), wherein it has been held that the law does not mention any specific mode of exercising such an option. The only requirement is that the option has to be exercised before filing of the return. In that case, assessee had set apart a sum of Rs. 32 lakhs to be spent for charitable purposes in the following year and claimed deduction of the entire amount under section 11 of the Act which deals with income from property held for charitable or religious purposes. This claim of the assessee was denied by the assessing officer on the ground that no option for this purpose was exercised by the assessee before filing of the return. Though the assessee had stated so in the return itself, that was not treated as exercising the option in a valid manner. All the appellate authorities answered this issue in favour of the assessee. When the revenue approached this Court by way of civil appeal, this Court opined that the law does not mention any specific mode of exercising the option. The only requirement is that the option has to be exercised before filing of the return. This Court held that if the option is exercised when the return is filed, that would be treated as in conformity with the requirement of section 11 of the Act. 45. Applying the aforesaid principle to the facts of the present case, we are in agreement with the view expressed by the Tribunal and the High Court that there is no requirement under the second proviso to sub-rule (1A) of Rule 5 of the Rules that any particular mode of computing the claim of depreciation has to be opted for before the due date of filing of the return. All that is required is that the assessee has to opt before filing of the return or at the time of filing the return that it seeks to avail the depreciation provided in Section 32 (1) under sub- rule (1) of Rule 5 read with Appendix-I instead of the depreciation specified in Appendix-1A in terms of sub-rule (1A) of Rule 5 which the assessee has done. If that be the position, we find no merit in the question proposed by the revenue. The same is therefore answered in favour of the assessee and against the revenue. DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT MADE BY THE ASSESSEE TO SHRI S.K. GUPTA AND HIS GROUP OF COMPANIES. 46. This brings us to the second of the additional issues which is the deletion of the addition of Rs. 3,39,95,000.00 made by the assessing officer on account of payment made by the assessee to Shri SK Gupta and his group of companies. This issue has been raised by the revenue in Civil Appeal No. 7425/2019 (CIT v. M/s Reliance Industries Ltd.). 47. Respondent assessee in this case is M/s Reliance Industries Ltd. and the assessment year under consideration is 2006-2007. Assessee claimed allowance of expenditure of about Rs. 3.39 crores on account of payments made to one Shri SK Gupta and his group of companies. The assessing officer vide the assessment order dated 19-3-2008 passed under section 143 (3) of the Act, referred to the statement of Shri S.K. Gupta recorded during the search operations and held that the said person had not rendered any service to the assessee so as to receive such payments. 22 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. Therefore, the assessing officer disallowed such claim of expenditure of the assessee and added the same to the income of the assessee. 48. On an appeal by the assessee, CIT(A) vide the order dated 27-1-2009 confirmed the disallowance of professional fee paid by the assessee to Shri S.K. Gupta and his group of companies. 49. On further appeal by the revenue, Tribunal vide the order dated 29-5-2015 set aside the view taken by CIT (A). Tribunal on perusal of the materials on record, noted that Shri S.K. Gupta had retracted his statement within a short time by filing an affidavit. He thereafter got his further statement recorded where he reiterated his stand taken in the affidavit. In view of the above, Tribunal set aside the order of the assessing officer as affirmed by the CIT (A) and allowed the claim of the assessee. 50. Revenue preferred appeal before the High Court of Bombay under section 260A of the Act raising the above issue along with another issue. The High Court vide the order dated 30-1-2019 answered the above issue in favour of the assessee and against the revenue by holding that no substantial question of law arose from the decision of the Tribunal. 51. From the materials on record, we find that the assessing officer had solely relied upon the statements made by Shri S.K. Gupta on 12-12-2006 and 23-12-2006 during the course of the search. However, the assessing officer overlooked the fact that within a short span of time, Shri S.K. Gupta had retracted from the said statements by filing an affidavit on 5-2-2007. Thereafter, he reiterated the statements made by him in the affidavit dated 5-2-2007 in a statement recorded on 8-2-2007. We find that in the later statements, Shri S.K. Gupta had categorically stated that he had rendered services to the assessee. He also mentioned that the name of the assessee was not referred to as one of the beneficiaries of the accommodation bills in his earlier statement. He had categorically stated that he had rendered service to the assessee and that the assessee had not obtained any bogus accommodation bills from him. Assessing officer had dis-believed the affidavit as well as the subsequent statement of Shri S.K. Gupta without any justifiable and cogent reason. That apart when the revenue had relied upon the retracted statement of Shri S.K. Gupta, it ought to have provided an opportunity to the assessee to cross-examine Shri S.K. Gupta which was however denied. Thus, revenue was not justified in disallowing the claim of professional expenses of the assessee on account of payment to Shri S.K. Gupta and his group of companies. 52. Therefore, we agree with the view taken by the High Court. As noted by the High Court, the entire issue is based on appreciation of the materials on record. Tribunal had scrutinized the materials on record and thereafter had recorded a finding of fact that there were sufficient evidence to justify payment made by the assessee to Shri SK Gupta, a consultant of the assessee, and that the assessing officer had wholly relied upon the statement of Shri Gupta recorded during the search operation which was retracted by him within a reasonable period. In these circumstances, we are of the 23 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. view that there is no admissible material to deny the claim of expenditure made by the assessee. Accordingly, this issue is answered in favour of the assessee and against the revenue. WHETHER CARBON CREDIT IS CAPITAL OR REVENUE RECEIPT. 53. This brings us to the last of the three additional issues i.e., whether carbon credit is capital or revenue receipt. This additional issue has been raised by the revenue in Civil Appeal No. 9917/2017 (ACIT v. Godawari Power and Ispat (P.) Ltd.) and in Civil Appeal No. 8983/2017 (ACIT v. M/s Godawari Power and Ispat Pvt. Ltd.). In the two appeals, revenue has raised the question as to whether receipts on sale of carbon credit is a capital receipt whereafter assessee is not liable to pay any tax. 54. We may mention that before the Tribunal in Civil Appeal No. 9917/2017, the assessee had questioned amongst others the finding of CIT (A) confirming the decision of the assessing officer that an amount of Rs. 4,47,75,122.00 realised on account of carbon credit had no direct and immediate nexus with the income of the power division and hence did not qualify for deduction under section 80-IA (4) (iv) of the Act. On due consideration, Tribunal vide the order dated 31-3-2016 held that carbon credit is generated under the Kyoto Protocol and because of international commitments. Carbon credit emanates out of such technology and plant and machinery which contribute to reduction of greenhouse gases. That apart, carbon credits are also meant to promote environmentally sound investments which are admittedly capital in nature. Therefore, Tribunal held that carbon credit is a capital receipt. 55. Against the aforesaid decision of the Tribunal, revenue preferred appeal before the High Court of Chhattisgarh under section 260A of the Act. From a reading of the High Court order dated 15-11-2016, we find that the only issue raised by the revenue before the High Court was relating to disallowance of deduction by the assessing officer under section 80-IA (4) (iv) of the Act. Question of carbon credit being capital receipt or not was not raised. In other words, revenue had accepted the decision of the Tribunal as regards carbon credit and did not challenge the said decision before the High Court. In fact, in the proceedings dated 11-9-2009 it was agreed by both the sides (including the revenue) that the only question which arose for consideration of this Court was as regards interpretation of Section 80-IA of the Act. Therefore, the issue relating to carbon credit was not raised or urged by the revenue. If that be the position, revenue would be estopped from raising the said issue before this Court at the stage of final hearing. That apart, there is no decision of the High Court on this issue against which the revenue can be said to be aggrieved and which can be assailed. In the circumstances, we decline to answer this question raised by the revenue and leave the question open to be decided in an appropriate proceeding. 56. For the aforesaid reasons, the civil appeals are hereby dismissed. However, there shall be no order as to cost.” 24 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. Considering the facts of the assessee in the light of the aforesaid decision we are of the considered opinion that the case of the assessee is squarely covered by the decision of the Hon’ble Apex Court and therefore we are inclined to dismiss the appeal of the revenue by upholding the order of ld CIT(A) on this issue. IT(SS)A No. 79/Kol/2023for AY 2018-19(M/s Shyam Sel & Power Ltd.). 23. Issue raised in ground no. 1 is against the confirmation of disallowance by Ld. CIT(A) as made by the AO by rejecting the claim of the assessee u/s 80JJAA amounting to Rs. 36,07,374/- on the ground that the same was not claimed in the return filed u/s 139(1) of the Act. 24. During the course of hearing, the Ld. Counsel for the assessee submitted that the total claim of the assessee u/s 80JJAA of the Act was Rs. 64,87,488/- being 30% of the additional employee cost which was inclusive of Rs. 52,98,149/- being 30% additional employee cost of Rs. 1,76,60,497/- of the current financial year in respect of newly recruited employees during the year as well as Rs. 11,89,339/- being 30% of additional employee cost of Rs. 39,64,465/- of employees newly recruited in FY 2016-17. According to the assessee, it was eligible for deduction of additional employees cost for three assessment year including the assessment year relevant to the previous year in which such employment was provided. However inadvertently the assessee has claimed deduction of Rs. 36,07,374/- u/s 80JJAA of the Act which according to the assessee was incorrect and in fact much lesser than the correct claim and prayed that the correct claim may be allowed. 25. We find that the issue is similar to one as decided by us in ground no. 2 in IT(SS)A No. 108/Kol/2023 for AY 2017-18 and therefore our decision would, mutatis mutandis, apply to this appeal as well. Considering the various aspects of revised claim of the assessee, we are of the view that it requires verification of facts at the level of the AO. Accordingly, we restore the issue to the file of AO with the direction 25 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. to verify and allow the correct claim. Accordingly, ground raised by the assessee is allowed for statistical purpose. 26. Issue raised in ground no. 2 raised by the assessee is against the confirmation of addition of Rs. 62,29,164/- by the Ld. CIT(A) as made by the AO on account of difference in fair market value and the market value vis-à-vis the actual cost of purchase as shown as per registered sale deeds. 27. Facts in brief are that the assessee during the year had purchased various pieces of land through separate sale deeds the details whereof are given as under for the sake of ready reference: The AO during the course of assessment proceedings found that the market value of these plots of land was higher than the valuation as shown in the sale deeds. The AO therefore called upon the assessee to explain as to why the above difference of Rs. 62,29,164/- should not be added u/s 56(2)(x) of the Act to the income of the assessee and was finally added the same to the income of the assessee. The said addition was also confirmed by the Ld. CIT(A) in the appellate order. 26 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 28. After hearing the rival contentions and perusing the material on record, we note the difference between the amounts as per sale deeds and market value of the plots/lands is apparently more than 10% of the registered value as is clear from the table supra. Therefore the provisions of Section 56(2)(x) of the Act are clearly applicable to the instant case. However, the AO was supposed to refer the matter to the DVO for valuation and only after taking into account the value as per DVO the addition could have been to be made. Moreover the Counsel for the assessee has vehemently submitted that the said plots were purchased from the local agriculturists and therefore the value of these agricultural lands and market value was also same as shown in the sale deeds. However, according to the State Government the said lands/plots were purchased by the company for non-agricultural purposes, the Market value of land automatically went up more than six times even for the purpose of stamp duty. The Ld. A.R therefore prayed that the issue may be allowed by considering this anomaly. Having examined the facts before us and after taking into account the rival contentions , we are of the opinion that the issue has to be restored and relegated to the AO so that the same is decided afresh after obtaining the valuation from the DVO. In our opinion, the assessee is free to present its arguments before the authorities below at the time of valuation as well as before the AO and also at liberty to file the necessary evidences in support of its claim. Therefore, we restore this issue to the file of AO with the direction to get the same valued from the DVO and after considering the DVO report and evidences filed by the assessee, decide the issue afresh. This ground no. 2 is allowed for statistical purposes. 29. Issue raised in ground no. 3 in the assessee’s appeal is against the order of ld CIT(A) not accepting the revised claim u/s 80IA of the Act which is similar to one as decided by us in ground no. 3 in IT(SS)A No. 108/kol/2023 for AY 2017-18 which has been restored to AO. Therefore our finding would, mutatis mutandis, apply to this ground as well. Accordingly ground no. 3 is allowed for statistical purposes. 27 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 30. Issue raised in ground no. 4 is against the order of ld CIT(A) upholding the addition of disallowance of Rs. 29,09,038/-u/s 14A of the Act to book profits as calculated u/s 115JB of the Act which is similar to one as decided by us in ground no. 4 in IT(SS)A No. 108/Kol/2023 for AY 2017-18. Therefore our finding would, mutatis mutandis, apply to this ground as well and accordingly the ground no. 4 is allowed. IT(SS)A No. 91/Kol/2023 for AY 2018-19(Revenue) 31. Issue raised by the revenue in ground no. 1 to 6 is against the order of ld CIT(A) accepting the Internal CUP method and accepting the rate of power for calculation of claim u/s 80IA which is similar to one as decided by us in IT(SS)A No. 129/Kol/2023 . Therefore our decision would, mutatis mutandis, apply to this appeal as well. Accordingly the appeal of the revenue is dismissed. IT(SS)A No. 109/Kol/2023 for AY 2019-20(M/s Shyam Sel & Power Ltd.) 32. Issue raised in ground no. 1 is against the confirmation of addition by the Ld. CIT(A) of Rs. 59,85,000/- as made by the AO u/s 69C of the Act in respect of bogus unexplained expenditure. 33. Facts in brief are that during the course of search and seizure operation u/s 132(1) of the Act on the residential and business premises of Finance Broker i.e.. Sanwaria and Kesara group on 30.11.2018 and further investigation on the subsequent dates several incriminating material documents were seized which showed details of unaccounted cash transactions. The documents also contained the name of assessee i.e. Shyam Sel Group with certain entities. Thereafter a search was conducted on the assessee and during the course of search, the documents seized during search on Kasera’s residence/office were shown to Shri Deepak Agarwal who is the director on Shyam Metalics & Energy Ltd and he was asked to explain the entries found in the 28 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. seized documents. Mr. Agarwal during the course of recording of his statement u/s 132(4) of the Act admitted that Kaseras had arranged cash loans for the assessee company. Besides, the statement of Shri Brij Bhushan Agarwal was also recorded . Accordingly, the assessee was called upon to explain the same. Thereafter the AO on the basis of said material made a tabulation at page 16 and 17 of the assessment order wherein the AO computed the cash loans taken by the assessee of Rs. 17,80,00,000/-, interest paid in cash of Rs. 49,87,500/- @ 5% p.a. for a period of 4 to 12 months and brokerage paid of Rs. 9,97,500/- @ 1% p.a for the said transactions. The said table is extracted below for the ready reference: On the basis of said documents the AO made addition on account of unexplained expenditure u/s 69C of the Act of Rs. 59,85,000/-(Rs. 49,87,500/-+Rs. 9,97,500/-) to the income of the assessee. Besides, the AO noted that the company has taken cash loans of Rs. 17,80,00,000/- from various companies/concerns during the financial year 2018-19 relevant to AY 2019-20 through finance broker Shri Anil Kasera and the said money was employed in their business activity of the assessee. The AO further 29 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. presumed that the assessee company would have generated undisclosed profit from deploying such funds in the business and estimated the profit at Rs. 1,42,40,000/- @ 8% of Rs. 17,80,00,000/- and added the same to the income of the assessee as undisclosed profit. 34. In the appellate proceedings, the Ld. CIT(A) sustained the addition made by the AO in respect of interest and brokerage charges of Rs. 49,87,500/- and Rs. 9,97,500/- respectively however the income estimated @ 8% on the total loan of Rs. 17,80,00,000/- was deleted by the Ld. CIT(A) by observing and holding as under: “I have carefully considered the findings recorded by the Ld. AO in the assessment order and the submissions put forth by the appellant. The main thrust of the appellant's argument is that the addition/s were primarily based on the statements given by the Directors which had been subsequently retracted and therefore they had lost its evidentiary value. For this, it is first relevant to examine the extant provisions of Section 132(4) of the Act which reads as follows: "(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.--For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of-1922), or under this Act.". A bare reading of the aforesaid provision it reveals that during the course of search proceedings, Section 132(4) of the Act empowers the authorized officer (of search team), to examine on oath any person who is found to be in possession or control of any books of account, documents, money etc; and such a statement made by that person may thereafter be used in evidence in any proceedings under the Act. So such a statement recorded on oath of a person found to be in possession or control of any books, document, money, valuable thing during the course of search is relevant evidence which can be used as evidence in any proceeding under the Act. So if a statement qualifies under section 132(4) of the Act, then it can be used as evidence in any proceedings of the Act. So next question is what is evidence? Evidence is a mode or means to prove a fact-in- issue. Statement is an or altestimony of relevant fact; and an admission of a fact- in-issue is an important piece of evidence provided it has been voluntarily given without any inducement, promise, threat or coercion. If it is tainted by any of these physical or mental influences, then the statement loses its probative value and it is not safe to rely solely on the basis of it. Once a statement recorded of a person who is in possession of any valuable thing or control of books found during search then it can be used as evidence in any proceedings under the Act and the presumption would be that it 30 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. has been given by that person voluntarily. The burden to prove that the statement is not voluntarily obtained, but due to threat, coercion, promise etc, is upon the maker of statement. And such a burden would be discharged, if the maker of the statement is able to create "reasonable doubt" that the admission made in respect of fact-in-issue was not voluntary, then the onus shifts on the shoulder of Revenue to prove that statement was taken voluntarily. Hence, the initial onus is on the maker of the statement u/s 132(4) of the Act to raise a reasonable doubt that the facts admitted by him was purely based on wrong assumption of facts and able to adduce evidence/material to show that he was wrong on the facts he admitted. The maker of statement can later explain the circumstance which led him to make the admission and bring out the correct facts and rebut the facts stated in the admission and in that way retract from the admission made by him u/s 132(4) of the Act. The settled position of law on this is that admission legally made by a person u/s 132(4) of the Act is relevant evidence in any proceedings of the Act and only if that person later explain the circumstances which led him to make such a statement which raises 'reasonable doubt' that the admission was based on wrong assumption of facts (and able to show/prove that assertion) then it would be unsafe to rely solely on the statement without independent corroboration. In the facts of the present case, it is noted that whether the statements of the Directors recorded in the course of search did constitute sufficient material to justify the impugned addition and whether their subsequent retractions could be entertained or not. It is not disputed by the appellant that the Director of the company, Shri Deepak Agarwal was confronted with the incriminating material/documents found from the premises of finance brokers in the course of their search conducted on 30.11.2018 and that he had explained the contents of these documents in detail in his statement recorded u/s 132(4) of the Act on 17.01.2019.Perusal of the statement reveals that it was not a bald or generic statement in which the maker of the statement simply admitted to the contents of the documents. Instead it is noted that Mr. Deepak Agarwal had explained each and every piece of document and also deciphered and explained the coded content therein, which any other independent person such as the Investigating Officer would not have been privy to. It is therefore noted that not only there were incriminating documents relating to the appellant but the same was also backed by the statement of ShriDeepak Agarwal recorded u/s 132(4) of the Act who had explained the contents thereof. I also note that the explanation given by Shri Deepak Agarwal was brought to the notice of another key person, Shri Brij Bhushan Agarwal, who also affirmed the same. On these facts, I thus note that the addition/s made by the Ld. AO was not only based on the statements of the Directors but it was indeed supported corroborative evidences against the appellant regarding the cash loans availed by it, which were found & seized from the premises of the finance brokers. Moreover, on the other hand, it is noted that the retraction affidavits filed by the Directors were bald and generic. The Directors were unable to controvert the fact-in-issue as admitted by them in their statements wherein they had explained in detail the modus operandi followed by them when dealing with these finance brokers and also contents of the documents confronted to them. For the aforesaid reasons, the retractions filed by the Directors of the appellant are held to be unreliable and therefore ignored. I gainfully rely on the decision of the Hon'ble Rajasthan High Court in the case of Bannalal Jat Constructions (P.) Ltd Vs ACIT (264 Taxman 5) wherein on similar acts and circumstances the Hon'ble High Court had upheld the addition made by the AO based on several documents which had also been admitted by the Director in his statement u/s 132(4) of the Act. In the decided case also a search was carried out at business premises of assessee- company. In course of search proceedings. statement of director of assessee-company was recorded under section 132(4)admitting certain undisclosed income which was added by the 31 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. AO. Subsequently .the director of assessee-company retracted said statement. The Hon'ble Tribunal noted that the statement had been recorded in presence of independent witness, and the mere fact that director of assessee-company retracted statement at laterpoint of time, could not make said statement unacceptable. On appeal the Hon'ble High Court held that the burden lay on assessee to show that admission made by director in his statement was wrong and such retraction had to be supported by a strong evidence showing that earlier statement was recorded under duress and. coercion. The relevant findings of the Hon'ble High Court is as follows: "19. Reverting back to the present case, the ITAT, on the basis of such statement of Shri Bannalal Jat, concluded that he was managing his business affairs of both his proprietary concern as well as appellant-company from his residence and that in the absence of individual cash-book of respective concerns and other details maintained by him, it is not possible to identify whether the cash so found belongs to the proprietary concern or to the assessee company. Subsequently, when the statement under Section 132(4) of the IT Act was recorded on 10.10.2014, which was concluded at his residence, Shri Bannalal Jat categorically admitted that the belonged company to his cash amount of Rs.1,21,43,210/-M/s. Bannalal Jat Construction Private Limited and the same was its undisclosed income. Thereafter another statement under Section 132(4) of the IT Act was recorded at his business premises on 11.10.2014. In reply to question No. 8, he was asked to explain the source of cash amounting toRs.3,380/-found at his office and Rs.1,21,43,210/- found at his residence, he submitted regarding the amount of Rs.1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that he income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his Construction Pvt. Ltd. In response to question no. 11 wherein he was asked company M/s Bannalal Jat to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrenderedRs.4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs. 1,21,43,210/- and Rs.2,50,00,000 and Rs.30,00,000/- totalling toRs.2,80,00,000 in his individual capacity. 20. Subsequently, on 04.12.2014 during the post-search proceedings, statement of Shri BannalalJat was again recorded under Section 131 of the IT Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to Rs. 1,21,43,210/- and Rs. 1,35,00,000/-. It is in this background that we have to view his reply to the show-cause notice submitted on 02.12.2016. This show-cause notice was issued to him by the assessing officer when the appellant-company offered the said undisclosed income to tax. There liability, importance and sanctity of admission made during search could be refuted only by cogent and convincing evidence. We may in this connection refer to earliest judgment of the Supreme Court in Pullangode Rubber Produce Co. Ltd., (supra) wherein it was held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is open to the person, who made admission to show that it is incorrect. The assessee should be given proper opportunity to show the correct state of affairs. The law with regard to this has developed much thereafter. There is no gainsay the fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled 32 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. However, a bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction." It is noted that the SLP preferred by the Revenue against the above judgment has since been dismissed by the Hon'ble Supreme Court which is also reported in 264Taxman 5. Useful reference may also be made to the decision of the Hon'ble Allahabad High Court in Dr. S.C. Gupta v. CIT (2001) 248 ITR 782 (All-HC) wherein also, it was held as under- "7. As regards the assessee's contention that the statement having been retracted the assessing officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullan-gode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18(SC) an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. Similarly, P.K Palwankar v CGT, (1979) 117 ITR 768 (MP-HC) and CIT v.Mrs. Doris S. Luiz, (1974) 96 ITR 646 (Ker-HC) on which also learned counsel for the assessee placed reliance are of no help to the assessee. The Tribunal's order is concluded by findings of fact and in our view no question of law arises. The applications are, accordingly, rejected." Similar view has been echoed by the Hon'ble Kerala High Court in case of CIT Vs Abdul Razak [2012] 20 taxmann.com 48 (Ker.) which held that a self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4). A statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evidence to dispell such assumption. In view of the above judicial precedents therefore, the retractions filed by the Directors of the appellant are found to be untenable, an after-thought and thus rejected. As far as the judgments relied upon by the appellant is concerned, it is noted that the facts involved in the decisions of CBI Vs V.C. Shukla (supra) and Common Cause Vs UOI (supra) 33 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. were factually distinguishable. In those cases there were no corroborative statements of the third parties affirming the contents of the dairies found from the possession of the owner. In the present case however the Directors of the appellant were confronted with the entries in the diaries/documents who not only confirmed, but explained the same as well and therefore there is sufficient independent evidence to drawn necessary inference in the hands of the appellant. With regard to the decision of Calcutta High Court in the case of G.G. Dalmia Vs UOI (supra), it is noted that this judgment is also factually distinguishable as the concerned assessee was never confronted with the documents/entries/diaries found from the premises of finance brokers and therefore the Notice issued u/s 148A was set aside. In the present case however both the DDIT as well as the Ld. AO has provided the documents to the appellant which pertained to it and therefore the ratio laid down in this judgment of Calcutta High Court is not applicable. Coming to the opportunity of affording cross-examination, it is noted that the Directors of the appellant had confirmed the statements of the finance brokers in their statements recorded u/s 132(4) of the Act dated 17.01.2019 and therefore I do not see any reason as to why the DDIT(Inv) would have had to afford the opportunity cross examine to the appellant. Here is a case where both the parties agree to their respective versions and there is no dispute or disagreement. Hence, this particular contention is not found useful in the given facts of the present case. The appellant, may yet argue that, once the retractions were brought to the notice of the Ld. AO, then he ought to have afforded opportunity to cross examine. However, as held above, the retractions were an after-thought having no evidentiary value and therefore the same cannot be of any assistance to the appellant. The appellant has further referred to the income-tax assessment for AY 2017-18wherein similar allegation regarding the loan of Rs.2 crores advanced to M/s SkipperLtd was raised by the AO and the appellant had substantiated to the Ld. AO's satisfaction that the loan was advanced in cheque to M/s Skipper Ltd and it was nota cash loan transaction. In this regard, I find that this particular instance is of no help to the appellant. Instead this particular fact fortifies that the appellant was indeed dealing through the finance brokers and had a relationship with them. It is not the case of the Revenue that all loans placed or received through finance brokers were in cash but indeed some were in cheque as well. The onus is therefore on the appellant to prove that the loan transactions reflected in these documents were conducted through regular books of accounts and by way of cheque. The very fact that one particular transaction was found in the books and other notings are not traceable lends credence to the AO's order that these loan transactions were in cash. It is also noted in particular, that Mr. Deepak Agarwal had nowhere stated in his statement that the loan given to M/s Skipper Ltd was in cash; whereas with regard to other notings, he had clearly averred that they were transacted in cash. On these facts therefore, even this particular contention of the appellant is rejected. For the above reasons therefore, I hereby uphold the findings of the Ld. AO regarding the cash loan transactions availed by the appellant through the finance brokers and hence the addition on account of unexplained expenditure u/s 69C of the Act by way of interest & brokerage of Rs.59,85,000/- as identified and computed by the Ld. AO is confirmed. As far as the estimated addition of Rs.1,42,40,000/- by way of undisclosed income isconcerned, I do not agree with the line of reasoning given by the AO. It is noted that, the AO has simply assumed that the cash loans availed by the appellant from the finance brokers would have been used as working capital in business and therefore represented turnover and hence ought to have generated profit @ 8%. This entire hypothesis of the AO is found to be based on pure guess work and there is no iota of evidence to support such a theory. It is noted 34 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. that during the course of search operations, no unrecorded sales or undisclosed business activities of the appellant was found. Similarly no documents or papers were found from appellant's premises which by any manner indicated that these cash loans were utilized for business and that it had generated profits to the appellant. The Ld. AO has therefore advocated an improbable proposition that the appellant generated profits from using these cash loans without there being any evidence to support the same. Moreover, it is noted that even the Investigating authorities did not question Shri Deepak Agarwal regarding the utilization of loans and hence there is no statement/averment of Shri Deepak Agarwal that these cash loans would have been used as working capital in business and that it represented its undisclosed turnover. The Ld. AO is thus noted to have only made sweeping remarks which were based on conjectures & suspicions. It is settled proposition of law that suspicion howsoever strong it may be cannot take the place of proof or evidence as held by the Supreme Court in Uma Charan Shaw & Bros. Vs. CIT (37 ITR 271). For the aforesaid reasons therefore, the ad hoc addition of Rs. 1,42,40,000/- by way of undisclosed income is found to be unjustified on facts and in law and is thus directed to be deleted. Hence, Ground no. 3 stands dismissed and ground no. 4 is allowed.” The assessee is in appeal against the confirmation of addition of Rs. 59,85,000/- whereas the revenue is in cross appeal challenging the deletion of Rs. 1,42,40,000/-. 35. After hearing the rival contentions and perusing the material on record, we find that though the incriminating material was found at the premise of the third party who is finance broker and the name of the assessee appeared in the said incriminating documents. We note that Shri Deepak Agarwal is a director of Shyam Metalics and Energy Ltd and not on the assessee though he had confirmed the brokers were involved in arranging finance to the assessee during the financial year as calculated above. The assessee was stated to have received of Rs. 17,84,00,000/- on the basis of said documents and accordingly based on the said table above , interest and brokerage were estimated by the AO and added to the income of the assessee. Apart from the above, it was also presumed that the said loan of Rs. 17,80,00,000/- was employed in the business of the assessee and some profits might have been earned which were not disclosed by the assessee. Accordingly the estimation of income @ 8% was made and added to the income of the assessee. After examining the records before us it is not clear whether the loans were total in cash or by cheques whereas the Ld. CIT(A) has given a clear cut finding that out of Rs. 17, 80,00,000/- , some loans were given by cheques as well. If the loans were given in cheques these were certainly recorded in the books of accounts of the assessee . Thus we note that the whole exercise is based 35 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. upon the conjecture, surmises and presumptions despite the fact that the statements by both Shri Brij Bhushan Agarwal and Deepak Agarwal of the company have been retracted by way of sworn Affidavit before the First Class Magistrate which have been filed before the DDIT(Inv). We note that both officers of the deptt i.e. the DDIT(Inv) as well as the AO ignored the retractions made by the directors of the group in which they claimed that these confessions were forced during the course of search action and hence retracted. Thus the retractions believed by the AO to make addition has no evidentiary value. Besides we note that the documents seized from third party cannot be used against the assessee unless the copies of the same were provided to the assessee. We note that copes of the said documents were never provided. Therefore the income estimated by the AO on the above said cash loans was deleted as stated hereinabove. In our opinion, the addition cannot be made on surmises and conjectures without a substantive and concrete basis. We note that in the present case, the documents were not confronted to the assessee during the course of search and it was only a statement of Sanwaria was confronted to the director of the assessee company. Moreover estimation made by the AO on the belief that loans /transactions of Rs. 17,80,00,000/- were in cash whereas the CIT(A) recording a finding of fact that out of Rs. 17,80,00,000/- the loans were by cheques also. In our opinion, the estimation of interest and brokerage on the loans which were alleged to be taken by the assessee is incorrect and cannot be sustained. Accordingly we reverse the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly ground no. 1is allowed. 36. Issue raised in ground no. 2 is against confirmation of Rs. 6,65,583/- by CIT(A) which was added by the AO on account of difference between fair market value and value as shown by the assessee in the sale deeds in respect the lands purchased which is similar to one as decided by us in ground no. 2in IT(SS)A No. 79/Kol/2023 for AY 2018-19 which has been restored to the file of the AO to decide the same after obtaining valuation from the DVO. Therefore our decision would, 36 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. mutatis mutandis, apply to this ground as well. Accordingly ground raised by the assessee is allowed. 37. Issue raised in ground no. 3 is similar to one as decided by us in IT(SS)A No. 108/Kol/2023 for AY 2018-19 in ground no. 4. Where we have deleted the addition made to book profits in respect of disallowance made u/s 14A. Our finding would, mutatis mutandis, apply to this ground as well. Consequently the ground raised by the assessee is allowed for statistical purposes. IT(SS)A No. 130/Kol/2023 for AY 2019-20(Revenue). 38. Issue raised in ground nos. 1 to 4 is qua the disallowance of claim made u/s 80IA which is similar to one as decided by us in grounds no 1 to 5 in IT(SS)A No. 129/Kol/2023 for AY 2017-18 wherein we have dismissed the grounds raised by the revenue. Therefore our decision would, mutatis mutandis, apply to this as well. Consequently grounds raised by the revenue are dismissed. 39. Issue raised in ground no. 5 is against the deletion of addition of Rs. 2,17,44,246/- by the Ld. CIT(A) as made by the AO in respect of interest earned in cash. 40. Facts in brief are that during the course of search on the assessee at Trinity Tower, Kolkata some incriminating material/documents were extracted from email-ID “dagrawal2000yahoo.co.in” of Shri Deepak Agarwal, one of the Directors of Shyam Sel Group and printout of the same were taken and seized vide Identification Mark (IM) SME/10 page nos. 22,24,26 & 27 of seized documents SME/10 which contained evidences of loan transactions between various companies of Shyam Sel Group and various companies of Emami Group during the FY 2018-19 relevant to AY 2019-20. According to AO, the said documents clearly indicated that Shyam Sel Group of companies had provided interest bearing loans to Emami Group and received part interest in cash, over and above the regular interest paid by cheque. Out of the total 37 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. cash interest received for Rs. 12,27,87,530/- a sum of Rs. 2,17,44,246/- was received by the assessee during the FY 2018-19 relevant to AY 2019-20 and the same was added to the income of the assessee. 41. In the appellate proceedings, the Ld. CIT(A) deleted the addition on the ground that neither the director of the assessee nor accountant of the assessee admitted to have received the interest in cash. The Ld. CIT(A) noted that during the course of search it was found emails were sent to borrower but there was no acknowledgment or return confirmation from the borrower which would have suggested that they had accepted to paying interest in cash. The Ld. CIT(A) while deleting the addition by holding and observing as under: Having considered the findings recorded in the assessment order and the submissions of the appellant, it is noted that the seized documents ID Marked SME-10 Pages 22, 24, 26 & 27 were copies of emails sent by Mr. Ghanshyam Agarwal to Mr. Shantinath of Emami Group. These email correspondences contained tabulated data of loans advanced by Shyam Sel Group to Emami Group along with columns denoting interest of 8% in cheque and interest of 7.05% in cash. It is observed that although these emails were sent by Mr. Ghanshyam Agarwal to Mr. Shantinath, however there was no return confirmation or acknowledgement of the same received back from Emami Group. Hence, it is noted that these mails were only sent by the lender to the borrower tabulating the details of loan, and interest thereon. However, there is no email or correspondence or any document found in the course of search which suggests that the borrower had agreed to the terms of interest set out in these emails. It is noted that these emails were confronted to Mr. Deepak Agarwal, who was the person marked on this mail by Mr. Ghanshyam Agarwal, in the course of search. Perusal of his statement recorded u/s 132(4) of the Act on 17.01.2019 shows that he had explained these emails as follows: “Q.43 I am now showing, you the records of your emails, taken from d- agrawal2000yahoo.co.in arid marked as SME/10Page 22 and 24, being produced hereunder: - Please confirm the same and also explain the contents of the page Ans. Sir, I confirm that the said pages i.e. pages-22 and 24 of the seized documents SME/10, as produced above, are taken from my mail back of my email id: d- [e-mail]. The said mail was sent by SriGhanshyam Das Agarwal to Sri Santinath of Emami Group and a copy was marked to me. This mail is about some loan transaction given by our group companies viz Subham Capital Pvt Ltd, Shyam Sel & Power Ltd, Narantak Dealcomm Ltd, Dorite Tracon Pvt. Ltd., Toplight Mercantiles Pvt Ltd to Emam Realty Ltd. However, Sri Ghanshyam Agarwal, accountant of M/s Shyam Sele Power Ltd can better explain it." 38 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. From the above statement, which had also been reproduced by the AO at Para 5.01of the assessment order, it is observed that nowhere has Mr. Deepak Agarwal either admitted or confirmed that the appellant had received any interest in cash. He hadonly stated that this mail was regarding loan transaction given to Emami Groupwhich was sent by Mr. Ghanshyam Agarwal, who would be in a better position to explain the same. I therefore note that there is nothing adverse contained in the statement of Mr. Deepak Agarwal which could lead a prudent person to form a belief that he had admitted to receipt of any interest in cash. It is noted that this answer of Shri Deepak Agarwal was confronted to Mr. Ghanshyam Agarwal in the course of assessment proceedings who, in his statement recorded u/s 131 of the Act stated as follows: "Q.10. Please elaborate on the contents of the mail you had sent. Ans. Mail was rough working of the interest to be claimed from Emami group for the loans given to Emami group from our group companies. It contained details of loans given date- wise with names of the particulars company of our group as well as their group. Rate of interest was also mentioned there. The loans were given by cheque. There is noting of interest receivable @8% in cheque and @7.05% in cash. However, the entire working was a propose stage. It was prepared by me at the direction of my management and sent to Emami group. Although we had sent the proposal, the same was not accepted by Emami group and they only agreed to pay interest through banking channel. They did not accept our proposal to pay any interest in cash as proposed by us. Q.12. In continuation to your reply to Q.no. 10 above, please explain as to how proposal was sent at a later date after advancing of loans, whereas on the other hand, it is obvious that all modalities regarding payment of interest would have been completed before advancing of loans. Ans. Actually this was our proposal to claim higher interest which was not accepted by Emami group." From the above it is noted that Mr. Ghanshyam Agarwal had explained that this was only a proposal sent to Emami Group at the direction of the management, in which Shyam Sel Group had proposed a higher interest rate which inter alia comprised of interest component of 7.05% in cash. However, according to Mr. Ghamshyam Agarwal, this proposal never materialised and therefore no interest was received in cash. I find that in order to examine the veracity of this statement, the AO had made enquiries u/s 133(6) from the Emami Group of Companies who had provided the loan confirmation and had clearly stated that the interest was only paid in Cheque in as much as there was no cash payment. It is also noted that, before the AO, the appellant had also filed the duly sworn affidavits of the Directors of the Emami Group of companies affirming the version of Mr. Ghanshyam Agarwal viz., no portion of interest was paid in cash. On the overall conspectus of these facts and circumstances, I therefore note that neither did the director nor the accountant of the appellant admit to receipt of interest in cash. The accountant had explained that this email was only a proposal which was never acceded to by the borrower. The AO is however noted to have simply rejected this statement of the accountant without bringing any contrary evidence on record. On the other hand it is noted that, although in the course of search, the mails sent by the lender i.e. Shyam Sel to the borrower, i.e. Emami, was found, but there was no acknowledgement or return confirmation from the borrower which would have suggested that they had acceded to paying interest in 39 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. cash. This contemporaneous facts lends credence to the statement of the accountant that thiswas only a unilateral proposal which never materialised. At this juncture it must be noted that section 132(4A) of the Act creates a presumption against the person in whose premises and in whose control certain documents or seized material or loose sheets etc are found. This resumption is however and rebuttable. This rebuttal has to come in the form of concrete evidence and/or rationale reasoning. If such a rebuttal is made by such a person along with concrete evidence/reasoning, then automatically, either of the following two options follow, viz., either the AO accepts such an explanation relying upon the evidence/reasoning so adduced, or he does not accept it. In the former case the AO has to adduce reasons for accepting the explanation of the assessee; however, in the latter case, if the AO decides that the explanation so offered is not such as would be acceptable to a prudent mind, then the onus is now upon the AO to bring on record his reasons for not accepting the said explanation. This can be done by rebutting the evidence adduce by thebe accepted by a rational mind and defied the preponderance of probabilities. It is assessee and also by showing that the explanation offered was not that which could only after the discharge of this onus that an explanation offered by an assessee can be rejected. In the present circumstances, the appellant or his agent had un deniably never accepted that this cash component of the interest was ever received by them.An explanation was offered that this was merely a proposal which was never even replied to. The appellant, by way of evidence has produced confirmations from Emami which has gone under sworn affidavit to say that such cash interest was never given by it. Incidentally, the appellant has also furnished such an affidavit. Now, if the plausible explanation, along with the said evidence in support, was not to be accepted by the AO, then it was open to him to cross-examine the deposing parties. An affidavit, creates a right to cross- examine under CRPC in favour of the person before whom the contents of such an affidavit are placed and who wishes to contest the contents thereof. This right, it has been held by judicial authorities, if not exercised, is taken to be forfeited and the contents of such considered final. In this case, it was open to the AO to cross-examine the parties that had sworn such affidavits. Merely to reject them without any investigative effort would be to negate the inherent legal value of sworn affidavits and would therefore be impermissible in law. Further, it has been posted out by the Ld AR during discussions in appeal, that it has never been the case of the department that the case of Emami was reopened for making additions in its cases, since admittedly, Emami was the other end of the transaction. He has relied upon this averment to suggest that the AO himself was not sure of the addition and made it without properly appreciating the facts before him. It is also noted that the AO did not dispute the affidavits filed by the directors of Emami Group of companies and instead accepted the same without any comment. For the reasons aforesaid, therefore, I find merit in the contention of the appellant that in absence of any corroborative evidence brought on record by the AO to counter the statement of Mr.Ghamshyam Agarwal and the affidavits filed by Emami Group, the impugned addition was impermissible both on facts and in law.” 42. The Ld. D.R vehemently submitted that though on the basis of emails sent by Shyam Sel Group to the Emami Group the transactions it appeared that the same interest proposals were made regarding cash interest however which were not confirmed by the returned email would not be taken not mean that no cash transactions have taken place in the payment of interest. The Ld. D.R has submitted that loans transactions had taken place between the assessee group and the Emami Group the 40 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. proof of which were found during the course of search and seizure operation. The Ld. D.R also stated that though the directors of the assessee company have withdrawn and retracted their their statements given during search subsequently but that did not mean that there was no onus of the assessee to discharge the burden qua the evidences found and seized during search in the form of emails/ The ld DR therefore that the ld CIT(A) has deleted the addition without any basis which may please be restored. 43. The Ld. A.R on the other hand vehemently submitted before us that the Ld. CIT(A) has rightly deleted the addition by appreciating the fact that Shri Deepak Agarwal in his statement recorded during the course of search on 17.01.2019 though has admitted under pressure but he same was retracted on 22.01.2019 through sworn affidavit before 1 st Class Magistrate which was filed before the DDIT(Inv). Shri Deepak Agarwal never admitted and accepted in his statement during the course of search and seizure operation of Shyam Sel Group that any cash was received from Emami Group. Moreover Mr. Ghanshyam Agarwal in his statement stated that cash interest was just a proposal to Emami Group which was not accepted and never materialized. Thus the Emami Group has not accepted the proposal of Shyam Sel Group to pay higher interest and paid interest only be cheques. The Ld. A.R also stated that detailed Affidavit of Emami group stating that they have not received any interest in cash from Emami Group and the same was filed before the AO which is available at page no. 161 to 168 of PB. The Ld. A.R stated that during the course of assessment proceedings, the AO issued notice u/s 133(6) of the Act to the Emami Group and they have also replied that no cash interest was paid to Shyam Sel Group or any other group entities of the said group. The Emami Group company have also made Affidavit duly sworn before the First Class Magistrate and filed before the AO along with reply to notice issued u/s 133(6) stating that the loan taken through proper banking channel, the loan has been repaid, interest has been paid after deduction of TDS through banking channel only. The Ld. A.R relied on the order of Ld. CIT(A) 41 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. heavily and submitted that the Ld. CIT(A) has passed a very speaking and reasoned order while deleting the addition and therefore the same may kindly be held. 44. After hearing the rival contentions and perusing the material on record, we find that the Ld. CIT(A) has passed a very speaking and reasoned order after taking into account the evidences and facts on record. We note that the only basis for making addition by the AO in respect of cash interest paid was emails extracted from email-ID “dagrawal2000yahoo.co.in” of Shri Deepak Agarwal, one of the Directors of Shyam Sel Group which contained evidences of loan transactions between various companies of Shyam Sel Group and various companies of Emami Group during the FY 2018-19 relevant to AY 2019-20. According to AO, the said documents clearly indicated that Shyam Sel Group of companies had provided interest bearing loans to Emami Group and received part interest in cash, over and above the regular interest paid by cheque. Whereas the assessee as well as the borrower Emami group has denied any cash transaction in paying the interest. It was also explained under what circumstances the emails were sent to borrower which never materialized. Even the Emami group through affidavit denied any payment in cash. In our opinion the addition by the AO was just made on the basis of conjecture and surmises which was rightly deleted by the ld CIT(A). Therefore , we do not find any infirmity in the finding/decision given by the Ld. CIT(A) on this issue and the same is upheld by dismissing the ground raised by the revenue. 45. Issue raised in ground no. 6 is against the deletion of addition of Rs. 1,42,40,000/- by the Ld. CIT(A) as made by the AO by estimating the income @8% of cash loan borrowed of Rs. 17,80,00,000/-by the assessee towards profits which the assessee may have earned. 46. Facts of the case has already been discussed in para 29 in revenue’s appeal in IT(SS)A No. 129/Kol/2023 and the Ld. CIT(A)’s decision were also extracted in the said ground. 42 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 47. We note that the Ld. CIT(A) has deleted the addition on the ground that no estimation of income can be made on the basis of conjecture and surmises as the AO had presumed that the assessee might have employed the cash amount in his business and generated income out of that which was the sole basis for making this addition. We note that the Ld. CIT(A) has passed a very speaking and reasoned order while deleting this addition by recording a finding that there was no evidence or basis for the AO’s theory and conclusion and therefore addition made on the basis of estimation, conjecture and surmises could not be sustained. Thus we do not find any infirmity in the appellate order and accordingly are inclined to uphold the same on this issue by dismissing the ground raised by the revenue. IT(SS)A No. 106/Kol/2023 for AY 2017-18(M/s Shyam Metalics and Energy Ltd.) 48. Issue raised in ground no. 1 is not pressed at the time of hearing. Accordingly the same is dismissed as not pressed. 49. Issue raised in ground no. 2 is against the confirmation of addition/disallowance by ld CIT(A) of Rs. 38,73,638/- as made by the AO to book profits u/s 115JB which is similar to one as decided by us in ground no. 2 in IT(SS)A No. 79/Kol/2023 which has been allowed by us. Our decision would, mutatis mutandis, apply to this ground as well. Consequently the ground raised by the assessee is allowed. IT(SS)A No. 127/Kol/2023 for 2017-18(Revenue). 50. Issue raised in ground nos. 1 to 4 is qua the allowing the claim made u/s 80IA which is similar to one as decided by us in grounds no 1 to 5 in IT(SS)A No. 129/Kol/2023 for AY 2017-18 wherein we have dismissed the grounds raised by the revenue. Therefore our decision would, mutatis mutandis, apply to this as well. Consequently grounds raised by the revenue are dismissed. 43 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. 51. Issue raised in ground no. 5 is against the confirmation of addition of Rs. 1,75,000/- as made by the AO as unexplained expenditure. 51. The AO during the course of assessment proceedings added Rs. 1,75,000/- on the basis of incriminating material seized during the course of search marked as SME/1 page 2 which contained the details of cash expenses (cash account of Mr. Ganesh Iyer) after issuing show cause notice to the assessee which was replied before the AO. It was stated that the same was relating to trading activities of M/s Kalpataru Housefin & Trading Pvt. Ltd. and is part of their application of funds and that concern had also made disclosure in its search covering all the anomalies. The AO noted that no such cash expense has been accounted for in the disclosure petition of that entity. Accordingly same was added as unexplained expenditure u/s 69C of the Act to the income of the assessee. 52. The Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: "I have considered the submissions of the appellant, the findings of the AO and the relevant supporting documents placed at Pages 207-220 of the paperbook. It is noted that M/s KTPL vide their letter dated 26.04,2021 had furnished a disclosure petition before the Ld. AQT, 00- 1(1), Kokata in connection with A Ys 2013-14 to 2019-20. In the said petition, it was inter alia explained that the search and seizure operation which was conducted upon the Shyam Sel Group (to which the appellant belong), several documents containing notings of sales/receipts and expenses/payments were found which were not forming part of the .books of accounts of the Group. KTPL had explained that these documents and information related to them and formed part of their undisclosed trading activities of coal and shares. The working of sales and income offered to tax shows that for AY 2017-18, KTPL had identified undisclosed sales of Rs,61,04,487/- and had offered to tax embedded profit of Rs.3,05,224/- (5% of sales). From the assessment order dated 29.06.2021 passed by the Ld. ACIT, CC-l(1), Kolkata, it is noted that the Ld. AO had accepted the disclosure petition filed by KTPL and its contention that the unrecorded transactions/notings found in several documents/chats/hard disksrelated to its undisclosed trading activities. The Ld. AO is noted to have only disagreed with the profit percentage of 5% applied by KTPL. Instead, according to the Ld. AO the profit should be 8% and therefore reworked the undisclosed income to Rs.4,88,359/-. Having regard to': the foregoing, it is noted that admittedly KTPL had undisclosed sales of Rs.61,04,487/- out of which profit of Rs.4,88,359/- had been assessed to tax and therefore KTPL had sufficient sum of Rs. $6,16,128/- (61,04,487 - 4,88,359) to telescope any cash expenses/payments found in the seized documents against this unrecorded sales and its embedded profit. On these given facts therefore, I note that the cash expense of Rs.1/75,000/- found in the name of Mr. Ganesh Iyer relating to AY 2017-18 can be easily telescoped and be considered to be a part of the 44 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. undisclosed trading business of KTPL which has already been considered and assessed to tax in its income tax assessment dated 29.06.2021. It is also not the case of the Ld. AO that the notings found on this Page 2, SME/1 contained the name of the appellant or that the same in any manner denoted that this cash expense belonged to the appellant. Hence, I find sufficient force in the contention of the appellant that when all the stray notings/unrecorded documents had already been considered cumulatively in the hands of KTPL as its unaccounted business activity, there was no reason for the AO to separately hold and assess this one noting of Rs.1,75,000/- in the hands of the appellant I thus find myself in agreement with the Ld. AR that this particular noting of Rs.1,75,000/- stands indeed telescoped and considered in the undisclosed trading activity of KTPL and therefore the impugned addition made in the hands of the appellant is held to be unsustainable. The Ld. AO is accordingly directed to delete the same. This ground therefore stands allowed." 53. After hearing the rival contentions and perusing the appellate order, we find that the Ld. CIT(A) has recorded a very detailed finding that the said company has offered to tax its income on the basis of rate of profit on sales, therefore, the said expenses were irrelevant and could not be an application of funds out of income. The Ld. CIT(A) noted that the said payment being in the nature of payment against purchase /expenses was the application of sales and not application out of income. We also note that the assessments in the case of M/s Kalpataru Housefin & Trading Pvt. Ltd. have been accepted by the AO for all the assessment years including AY 2017-18 and the AO has accepted the said trading activity and even the application of 8% rate profit in place of 5% offered by the assessee. Considering these facts, we are of the view that the order passed by the Ld. CIT(A) does not warrant any interference at our end as the same is very reasoned and speaking one. Accordingly ground raised by the revenue is dismissed. IT(SS)A No. 107/Kol/2023 for AY 2018-19(M/s Shyam Metalics and Energy Ltd.) 54. Issue raised in ground no. 1 is against the confirmation of addition/disallowance by ld CIT(A) of Rs. 24,48,916/- as made by the AO to book profits u/s 115JB which is similar to one as decided by us in ground no. 4 in IT(SS)A No. 108/Kol/2023 which has been allowed by us. Our decision would, mutatis mutandis, apply to this ground as well. Consequently the ground raised by the assessee is allowed. 45 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. IT(SS)A No. 128/Kol/2023 for AY 2018-19(Revenue). 55. Issue raised in ground nos. 1 to 4 is qua the allowing the claim made u/s 80IA which is similar to one as decided by us in grounds no 1 to 5 in IT(SS)A No. 129/Kol/2023 for AY 2017-18 wherein we have dismissed the grounds raised by the revenue. Therefore our decision would, mutatis mutandis, apply to these grounds as well. Consequently grounds raised by the revenue are dismissed. 56. Issue raised in ground no. 5 is against the deletion of Rs. 86,500/- by ld CIT(A) as made by the AO on account of unexplained expenditure u/s 69C which is similar to one as decided by us in ground no. 5 in IT(SS)A No. 127/Kol/2023. Therefore our decision would, mutatis mutandis, apply to this ground as well. Accordingly the ground no. 5 raised by the revenue is dismissed. 57. In the result, appeals in ITA Nos. 108, 79 & 109/Kol/2023 for AY 2017-18 to 2019-20 are partly allowed for statistical purposes and ITA No. 107/Kol/2023 for AY 2018-19 is allowed and ITA No. 106/Kol/2023 for AY 2017-18 is partly allowed and all the revenue’s appeal are dismissed. Order is pronounced in the open court on 12 th August, 2024. Sd/- Sd/ Sd/-/- (Rajpal Yadav /राजपाल यादव) (Rajesh Kumar/राजेश क ु मार) Vice-President/उपाÚय¢ Accountant Member/लेखा सदèय Dated: 12 th August, 2024 SM, Sr. PS 46 I.T.(SS)A. Nos. 108,79, 109 & 106-107 & 129,91, 130 & 127-128/Kol/2023 Assessment Years: 2017-18, 2018-19 & 2019-20 M/s Shyam Sel & Power Ltd. M/s Shyam Metalics and Energy Ltd. Copy of the order forwarded to: 1. Appellant- i) M/s Shyam Sel & Power Ltd.,, 5, S.S. Chamber, 2 nd Floor, Princep Street, C.R. Avenue, Kolkata-700072 ii) M/s Shyam Metalics and Energy Ltd., Trinity Tower, 83, Topsia Road, Kolkata-700046. 2. Respondent – ACIT, CC-1(1), Kolkata DCIT, CC-1(1), Kolkata 3. Ld. CIT(A)- 22, Kolkata 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata 1. Date of Dictation.............................................. 2. Date on which the typed order is placed before the dictating Member and other Member..................................................... 3. Date of which the order came back to Sr. PS.......................................... 4. Date of which the file goes to the Bench Clerk............................... 5. Date of which the file goes to the O.S....................................... 6. Date of dispatch of the order.............................................