DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, GUWAHATI vs. ABCI INFRASTRUCTURES PRIVATE LIMITED, KOLKATA

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Appearances by: Sh. S.K. Tulsiyan, Adv., appeared on behalf of the Assessee. Sh. N. T. Sherpa, JCIT, appeared on behalf of the Revenue. Date of concluding the hearing : January 30th, 2023 Date of pronouncing the order : April 5th, 2023 ORDER

Per Manish Borad, Accountant Member:

2. As the issues raised in these appeals are common and the facts are identical, therefore, as agreed by both the parties, they are heard together and disposed off by way of this common order for the sake of convenience and brevity. 3. First, we take up the cross appeals in ITA No. 43/GTY/2022 and ITA No. 2/GTY/2023 for AY 2014-15. 4. The assessee is in appeal before this Tribunal in ITA No. 43/GTY/2022 raising the following grounds:

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. “1. That on the facts and in the circumstances of the cases, the Ld. C.I.T. (A) acted illegally in disallowing and adding back to the total income of the appellant, the cost of material consumed on estimate basis amounting to Rs. 2,15,53,154/- being 0.64% of the Gross receipts of the appellant for the AY 2014-15 of Rs 3,36,76,80,365/- 2. That the Ld. CIT(A) wholly erred in appreciating the fact that the accounts of the appellant have been duly audited by a qualified auditor u/s 44AB of the Act and therefore the disallowance made amounting to Rs. 2,15,53,154/- on estimate basis without specifying the exact bills is totally incorrect and uncalled for.

3. That the Ld. CIT (A) wholly erred in appreciating the fact that the appellant year after year, assessed under section 143(3) of the Act and no such additions (estimated addition) was made in the case of the appellant for any of the preceding or subsequent assessment year.

4. That the appellant craves leaves to amend, alter, modify, add to, abridge and/or rescind any or all of the above grounds in future.”

4. The Revenue is in appeal before this Tribunal in raising the following grounds:

“1. “That on the fact of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance out of the expenses towards cost of material consumed to only @0.64% which works out to Rs. 2,15,53,154/- out of the disallowance made by the AO @ 5% which works out to Rs. 9,58,27,184/-.

2. That on the facts of the case and in law, the Ld. CIT (A) has erred in deleting the addition to the tune of Rs. 84, 89,467/- and Rs. 1, 86, 95,467/- under the head of Vehicle Running Expenses and Repairs & Maintenance respectively by not taking consideration of expenses having some head is appearing more than once in the details of expenses and just to create a sub –head to claim exaggerated expenses as no proper base of claiming these expenditures.

3. That on the facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition to the tune of Rs. 3,23,72,494/- under the head of excess depreciation by not taking consideration of plant and machinery disclosed under the Block 30% without providing any I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. documentary evidence, it is found that those are falling under Block of 15%.

4. That on the facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition to the tune of Rs.3,05,471/- under the head of disallowances u/s. 14A read with Rule 8D by not taking into consideration the fact that the assessee is not maintaining any separate books of accounts for accounting expenses incurred in relation to income not includible in its total income and the amount of expenses actually incurred cannot be ascertained from the assessee’s books of accounts satisfactorily.

5. The appellant craves leave to add/modify/alter any or all the grounds during the course of hearing/pendency of appeal.”

5. Brief facts of the case are that the assessee is a private limited company engaged in the business of Civil Construction. The assessee filed its Return of Income for AY 2014-15 u/s 139(1) of the Act on 28.09.2014 declaring an income of Rs. 17,03,97,730/- . Case selected for limited scrutiny through CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. Relevant details were called for by the assessee and in response to the notices, assessee-company submitted audited accounts and copies of relevant documents as called for during the course of assessment proceedings. Assessment was completed vide order u/s 143(3) of the Act dated 30.12.2016 and Income assessed by the ld. AO at Rs. 33,38,89,830/- inter alia making following additions:

1. Cost of material consumed @ 5% of Rs. 1,91,65,43,6828/- Rs. 9,58,27,184/- 2. Vehicle running expense: Rs. 84,89,594/- 3. Repair and Maintenance Rs. 1,79,36,625/- 4. Additional depreciation amounting to Rs. 3,23,72,494/- 5. Deduction amounting to Rs. 78,01,892/- I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 6. Disallowance u/s 14A Rs. 3,05,471/- 6. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. Ld. CIT(A) granted part relief by partly sustaining the disallowance of cost of material consumed at Rs. 2,15,53,154/- and deleted the following additions made by the ld. AO: Vehicle running expense: Rs. 84,89,594/- Repair and Maintenance Rs. 1,79,36,625/- Additional depreciation amounting to Rs. 3,23,72,494/- Deduction amounting to Rs. 78,01,892/- Disallowance u/s 14A Rs. 3,05,471/- 7. Being aggrieved, both the assessee and the revenue are now in appeal before the Tribunal. Ld. Counsel for the assessee referred to the detailed written submission and placed reliance on judgment’s mentioned therein and also stated that books of accounts have not been rejected and disallowance has been made merely on estimate basis disregarding the nature of business, operation work carried out at multiple location, voluminous records of bills and vouchers. 8. On the other hand, ld. D/R vehemently argued supporting the order of ld. AO. 9. We have heard rival contentions and perused the records placed before us. Ground no. 1 raised by the assessee as well as Revenue relates to the addition made on estimate basis. Ld. AO in the assessment order had disallowed a sum of Rs. 9,58,27,184/- I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on estimate basis at the rate of 5% of Rs. 1,91,65,43,682/- on account of material consumed. Ld. CIT(A) vide order dated 30.08.2022 partly allowed the ground of the assessee and sustained an addition to the tune of Rs. 2,15,53,154/- (being 0.64% of gross receipts Rs. 3,36,76,80,365/-) and now the Revenue and the assessee have challenged the finding of ld. CIT(A).

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

12. Ld. Counsel for the assessee submitted that the assessee was conducting its business at more than 25 sites and multiple branch offices and the vouchers and bills were kept at different sites and branch offices where the relevant expenses were incurred and the assessee’s books and records are very voluminous in nature and bills and vouchers are more than lakhs in number. The assessee year after year is assessed u/s 143(3) of the Act and such type of additions of disallowing expenses on estimated basis was never made in the case of the assessee for any of the preceding or subsequent assessment year. The books of accounts of the assessee are regularly audited under the provisions of the Companies Act, 2013 and tax audit has also been carried out in accordance with the provisions contained u/s 44AB of the Act. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as asked by ld. AO during the course of assessment proceedings. The impugned disallowance is purely on guess work and first ld. AO has to reject the books of accounts and then can compute disallowance on estimate basis. Further, there is no material on record that the assessee had claimed any unreasonable expenses.

13. Further on perusal of the Profit and Loss accounts of the assessee company, we observe that gross receipts of the assessee for AY 2014-15 is Rs. 3,36,76,80,365/- and against the said gross receipts, the assessee claimed "Other expenses" aggregating to Rs. 2,73,21,11,988/- in its Return of Income and the breakup of the said other expenses is as under:

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Large Other Expenses Sl. No. Particulars Amount 1 Cost of materials consumed 1,91,65,43,682.00 2. Contract operation & Execution exp 69,62,07,198.00 3 Work Contract Tax & Other Taxes 7,79,36,144.00 4 Bank Guarantee Commission 1,39,22,307.00 5 Vehicle Running Expenses 84,89,594.00 6 Security Guard Expenses 69,08,928.00 7 Other Misc. Expenses 60,15,615.00 8 Sundry Balance Written Off 33,92,115.00 9 Loan Processing Fees 8,20,778.00 10 Retainership Fees 7,20,000.00 11 Tender Expenses 5,47,266.00 12 Bank Charges 5,25,309.00 13 Interest on TDS 68,275.00 14 Interest on Service Tax 14,355.00 15 Interest on Paid (Others) 390.00 16 Interest on P.Tax 32.00 Total 2,73,21,11,988.00 14. Ld. Counsel for the assessee submitted that the assessee had made due compliances to all the notices and provided the required details. As regards the cost of materials consumed amounting to Rs.1,91,65,43,682/-, the breakup of the same is as under:

Particulars Amount (Rs.) Opening stock 14,33,30,441.40 Less: Purchases (as per tally) 1,73,44,011.87 Less: Discount Received 20,62,941.40 Activity at site 1,91,86,06,623.29 Closing stock 12,59,86,429.53 Total 1,91,65,43,681.89 15. In regard to the above, ld. Counsel for the assessee submitted that the assessee is engaged in the construction business undertaking infrastructure projects on turnkey basis from Govt. Department/Govt. Agencies. The nature of business is quite different from trading concern and manufacturing concern. The cost centres are defined as activities of the projects on the basis of Page 8 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. BOQ provided by the principles. The materials are issued to such activities from purchase and the activities are debited with the cost of materials. The sub-contractor's bills for providing services for such activities are also debited to respective activities. The closing stock is valued on the basis of inventories maintained. The company has been following this practice consistently. During the course of assessment proceedings, ld. AO stated that the material consumed amounting to Rs. 191,65,43,682/- (sub-head of "other expenses") constituted 70.14% of the "other expenses". Further, the assessee provided the details of sub-head under "Material Consumed" and the same is as under:

Large other Expenses Sl. No. Particulars Amount 1 Road construction and repairing expenses 70,34,65,146.00 2 Tunnelling Work 46,64,31,697.00 3 Sub Contract Expenses 18,25,36,116.00 4 Bridge Expenses 17,69,56,347.00 5 Earthwork Expenses 10,04,03,520.00 6 Fabrication and Erection Expenses 2,66,95,843.00 7 Pile Casting 2,49,85,313.00 8 Retaining Work and Culvert Expenses 1,90,70,003.00 9 Supply of Materials 1,55,95,404.00 10 WBM Expenses 1,54,08,401.00 11 GSB Expenses 1,12,86,445.00 Total 1,74,28,34,235.00 16. The assessee had submitted all the details such as ledgers, party-wise and site-wise details of the expenses as asked by ld. AO during the course of assessment proceedings. Further, it is noted that ld. AO had averred that the assessee had made some payments to Mizo Tribals without deducting any tax at source (TDS) but no addresses were given for verification of the I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. genuineness of those payments. In this regard, from a very perusal of the aforesaid observation of ld. AO, it is clear that the assessee has made payments to Tribal workers. Being tribal worker, it is obvious that the income of such tribal people would have been exempt by virtue of the provisions of Section 10(26) of the Act and thus, in the absence of any tax liability of such Tribal People, it would be a fruitless exercise to first deduct TDS on payments to such Tribal People and thereafter requiring these Persons to furnish their Returns of Income to claim refund of the TDS.

17. We also take note that ld. CIT(A) has recorded the following finding in the impugned order partly sustaining the estimated disallowances: “It is yet further noted that the Assessing Officer had also averred that the Appellant had not furnished party-wise details and their addresses (of the parties to whom payments claimed under the expense head “Other Expenses” were made), as a result of which the genuineness and reasonableness of the claim of expense could not be established. In this regard, it is noted from a perusal of the impugned Assessment Order that the AO had himself averred as under: “On 27.12.2016, just before 3 days to limitation of this time-barred assessment, assessee furnished names of some persons without their addresses.” From a perusal of the above observation of the Assessing Officer, it is evident that details of the parties were already placed on records and instead of making an ad-hoc disallowance, the Assessing Officer ought to have referred the names of the specific parties and the corresponding amounts in the impugned Assessment Order. Unfortunately, the same has not been done. In-fact the Assessing Officer had chosen a relatively easier way of making an estimated disallowance without even referring the aggregate of the expense claimed by the Appellant in respect of the parties whose addresses were not furnished. In the factual matrix, it is further noted that the Page 10 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Appellant had repetitively stated before the Assessing Officer that the Books of Accounts of the Appellant were voluminous, bulky and were based on various Projects/ Sites/ Activities etc. Even presuming that the Appellant was not complying with the Notices of the Assessing Officer, it is incomprehensible as to why the Assessing Officer did not resort to the provisions of Section 142(2A) of the Act. Thus, it is palpable that the Assessing Officer has not fulfilled his responsibility of identifying the specific instances of the expenses claimed sans proper address of the corresponding parties as well as that of resorting to the other provisions of the Act. In the instant Ground of Appeal, it is evident that the Assessing Officer had neither referred to the past history nor even to the comparative Net Profit Rate of the Appellant nor even has placed on record any comparative case of any other assessee who is geographically situated similar to the Appellant and is engaged in the business akin to that of the Appellant The Assessing Officer, instead of making specific disallowances, merely made an ad-hoc and general disallowance by resorting to estimation without rejection of the Books of Accounts of the Appellant. In the result, the Appellant has been fastened with a disallowance of a magnitude which the Appellant had not faced in any of the earlier assessments completed in the case of the Appellant for any of the earlier assessment years wherein the assessments have been completed under Section 143(3) of the Act, year after year. In the instant case, without rejection of the Books of Accounts, without identification of any specific defects, without placing on record facts of any other comparable case, it is not proper to make an estimated disallowance. It is noted from a perusal of the impugned Assessment Order as well as from the Submissions of the Appellant that the corresponding ledger accounts of all the above expenses were furnished by the Appellant during the course of assessment proceedings. It is further noted that Books of Accounts of the Appellant have been audited by a Chartered Accountant under the Companies Act, 2013 as well as under the provisions of Section 44AB of the Income Tax Act, 1961. It is an admitted fact that the Assessing Officer has not pointed out any specific discrepancies in the audited Books of Accounts of the Appellant and disallowed the above expenses merely on the basis of conjectures and surmises. It is further noted that the above disallowance is more on the basis of suspicion i.e. purported attempt of the Appellant to suppress its profit than on the basis of any tangible evidence or purported deficiency. It Page 11 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. is noted that the Assessing Officer has not averred that these expenses were not incurred for the purpose of business of the Appellant. Further, these expenses have been disallowed on estimated basis only. The Law is trite that any disallowance which is based on estimate and without pointing out any specific discrepancies or infirmities in the audited Books of Accounts is liable to be deleted.” In support of the aforesaid view laid down by the CIT(A), reliance was placed on several decisions: i. Dhirajlal Girdharilal vs. Commissioner of Income-Tax, Bombay [1954 (10) TMI 8 - Supreme Court; Other Citation: (1954) 26 ITR 736, 1955 AIR 271], ii. Dhakeswari Cotton Mills Limited vs. Commissioner of Income-Tax, West Bengal [1954 (10) TMI 12 - Supreme Court; Other Citation: (1954) 26 ITR 775, 1955 AIR 65, 1955 (1) SCR 941] iii. Omar Salay Mohamed Sait vs. Commissioner of Income-Tax, Madras [1959 (3) TMI 2 - Supreme Court; Other Citation: (1959) 37 ITR 151, 1959 AIR 1238] iv. Umacharan Shaw and Brothers vs. Commissioner of Income-Tax, West Bengal [1959 (5) TMI 11 - Supreme Court; Other Citation: (1959) 37 ITR 271], v. LalchandBhagatAmbica Ram vs. Commissioner of Income-Tax, Bihar and Orissa [1959 (5) TMI 12 - Supreme Court; Other Citation: (1959) 37 ITR 288], vi. New Ambadi Estates (Private) Limited vs. State Of Tamil Nadu [1991 (3) TMI 10 - Madras High Court; Other Citation: (1993) 200 ITR 64], vii. Sayaji Iron and Engg. Co. vs. Commissioner of Income Tax [2001 (7) TMI 70 - Gujarat High Court; Other Citation: (2002) 253 ITR 749, 172 CTR 339, 121 TAXMANN 43, (2002) 108 COMP. CAS. 675 (GUJ.)] and others “In the background of the aforesaid discussion and Judicial Pronouncements cited above, considering the averments of the AO, it is evident that the reasons stated by the Assessing Officer while I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. making the impugned disallowance are merely general in nature without any evidence to prove the disallowance. The Appellant has been regularly following the same method of accounting and the Accounts of the Appellant have been duly audited by a qualified Auditor under Section 44AB of the Act. Hence, in my considered opinion, in this situation, no addition can be made without specifying the exact bills or vouchers which, in the opinion of the Ld. AO, were not proper or which were defective. In the presence of audited Books of Accounts, the Ld. Assessing Officer cannot estimate the profits of the Appellant without rejecting the Books of Accounts. For these reasons alone the impugned disallowance warrants deletion.”

18. After going through the finding of ld. CIT(A) and examining the facts of the case we found that the only reason for disallowance is that the reasonableness and genuineness of the expenses could not be ascertained due to non-submission of party wise details and their addresses. Ld. AO has neither rejected books of accounts, nor has recorded any valid reasons for alleging that the expenses are not reasonable and genuine. The books of accounts of the assessee are audited under Companies Act and Income Tax Audit and all books of accounts and all supporting documents are subject to test check. It has been consisted held by Hon’ble Courts that assessment cannot be made simply on the guesswork. Reliance in this regard is placed on the decision of Calcutta High Court in the case of Chevoit Co. Ltd. vs. Commissioner of Income-tax, West Bengal-VI, Calcutta [[2011] 11 taxmann.com 276 (Calcutta)[25-04- 2011]].

19. We also notice that the ld. Counsel for the assessee during the course of argument has contended that ld. CIT(A) has also not found any defect in the books of accounts of the assessee. In fact, I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on one hand, he himself has held that the disallowance cannot be made on the basis of surmise and suspicion and also held that where no defect is found in books and the books are not rejected then estimated disallowance cannot be made. However, after giving such finding and relying on several case laws he himself has made disallowance on estimate basis which is not permissible as per law.

20. We find force in the submission of ld. Counsel for the assessee. Ld. CIT(A) has not provided any opportunity to offer any explanation in relation of the low profit margin as compared to earlier years. Further, on perusal of comparative data at page 66 of the order of ld. CIT(A), we observe that the profit margin in the case of the assessee is fluctuating year-wise. The said profit margin has increased from 6.10 to 6.37 and then again reduced from 6.37 to 5.54. No such adjustment was made for increase or decrease in the profit margin in earlier years. Further ld. CIT(A), in spite of his own finding that where no defect is found in books of accounts and the same are not rejected by ld. AO, the estimate disallowance cannot be made, has made estimated disallowance of 0.64% of the sales revenue which is again on estimate basis and, therefore, the finding of ld. CIT(A) sustaining estimated disallowance cannot be accepted. We find support from the following decisions: “1. In case of Mysore Fertiliser Co. v. CIT [1966] 59 ITR 268 (Mad.) it was held that the ITO shall make the assessment to the best of his Judgement; it means that he must make it according to the rules of reason and justice, not according to private opinion, but according to law and not humour, and the assessment is to be not arbitrary, vague and fanciful, but legal and regular.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

2. It was held in case of CIT v. Surjit Singh Mahesh Kumar [1994] 210 ITR 83 (All.) that so long as the Best Judgement has nexus to material on record and the discretion in that behalf has not been exercised arbitrarily or capriciously, it is not open to scrutiny in reference proceedings to give rise to a question of law or to a mixed question of law and fact.

3. In case of CIT v. Eastern Commercial Enterprises [1994] 210 ITR 103 (Cal.) it was held that where the assessee has given a comparative instance of gross profit rate, it is necessary for the department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit.

4. It was observed by Hon’ble Court in case of Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Guwahati) that additions to the profits of the assessee made solely on the ground that it was low without giving a specific finding that the accounts of the assessee were not correct and complete, or that the income could not be properly determined and deduced from the accounting method employed by the assessee, is not justified. The mere fact that there was a less rate of gross profit declared by an assessee as compared to the previous year would not by itself be sufficient to justify the addition.

5. In case of Income-tax Officer v. Oswal Emporium [1989] 30 ITD 241 (Delhi) (TM)/[1989] 35 TTJ 225 (Delhi) (TM)[03-05-1989], the Delhi Tribunal held that addition made on account of profit margin because assessee’s gross profits in relevant assessment year were marginally less as compared to its profits in preceding assessment year or to profits shown by another assessee is not justified.

6. In the case of Ms. Nirmal Rani vs ACIT, [2016] 66 taxmann.com 40 (Chandigarh - Trib.)[26-11-2015], the ITAT Chandigarh Benches held that mere low profit could not justify an addition to profit shown where assessing authority had not found any discrepancy in audited books of account regularly maintained by assessee.”

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. AO nor ld. CIT(A) had pointed out any specific discrepancy in the audited books of accounts of the assessee nor books of accounts are rejected and disallowance of some portion of cost of material consumed expenses is merely on the basis of conjectures and surmises which cannot be held justified and since ld. D/R has failed to place any contrary material to doubt the book results, therefore, the estimate disallowance made by ld. AO as well as ld. CIT(A) cannot be accepted. Hence, the impugned disallowance made by ld. AO @ 5% of material consumed at Rs. 9,58,27,184/- is deleted. Accordingly, the ground no.1 raised by the assessee is allowed and that of the Revenue is dismissed. Now, we take the remaining grounds of appeal of the revenue for AY 2014-15:

22. Ground no. 2 of the Revenue is on account of addition of Rs. 84, 89,467/- and Rs. 1, 86, 95,467/- under the head of Vehicle Running Expenses and Repairs & Maintenance. Brief facts relating to this issue are that during the course of assessment proceedings, the assessee was required to furnish detailed breakup of the expenses aggregating to Rs. 69,62,07,198/- claimed under the expense head “Contract operation and Execution Expenses”. In response to the same, the assessee furnished detailed breakup of the aforesaid expense accounts. However, ld. AO had averred that the aforesaid expense head was designed by the assessee just to create a sub-head to claim exaggerated expense as there was no proper base of claiming such expenditure when all expenses were already covered under materials consumed. Ld. AO had referred to Page 16 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. some purported discrepancies being attributable to some expenses which were claimed purportedly by the assessee twice. These details are at Page 101, Para 4 of the impugned Assessment Order of which is reproduced hereunder for reference: “There are discrepancies which are claimed twice or shown differently, as below a. Vehicle running expenses – Rs. 84, 89,594 and Rs. 1, 79, 36,625. b. Machinery repair and maintenance – Rs. 5,71,21,796 and 1,86,95,467 c. Sub- contract expenses Rs. 44,38,17,132 and Rs. 18,25,36,116/- d. Contract Operation and Execution Expenses – Rs. 69, 62, 07,198/- and again claimed under different heads in the name of the projects under ‘Material Consumed’. As these expenses are not found to be reasonable, the assessee was asked to show cause as to why a considerable amount should not be added back to its income as unexplained expenditure.”

23. In this regard, during the course of the assessment proceedings, the assessee had furnished the copies of the corresponding ledger accounts. The assessee had also explained to ld. AO that, owing to multiple sites especially in remote areas of North-Eastern India and owing to lack of competent staff at such sites, there is no uniformity in various accounting heads. The assessee had further explained that owing to the aforesaid reasons, some accounting heads for similar expenses are appearing at more than one place with different name or are appearing as similar transactions under different group of ledgers. It was also stated that the assessee’s project sites are various in numbers and are located at remote areas in North-Eastern India I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. has got factual and credible legs. However, ld. AO was not satisfied and made the alleged disallowance and the same when challenged by the assessee before ld. CIT(A) was deleted and now Revenue is in appeal before this Tribunal.

24. Ld. D/R vehemently argued supporting the order of ld. AO and ld. Counsel for the assessee relied on the finding of ld. CIT(A) and written submissions placed on record.

26. Out of the aforesaid expenses, ld. AO disallowed Rs. 84,89,594/- on account of vehicle expenses and Rs. 1,86,95,467/- on account of Machinery repair and maintenance alleging that the said expenses were claimed twice by the assessee.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

28. On perusal of the assessment order we observe that ld. AO has not pointed out any instance of claim of expense twice. Ld. AO has also not given any proper finding in respect of the claim made by the assessee on this account. The assessee has duly furnished ledger copies of the aforesaid expenses before him and also explained with the reason why such expenses were appearing twice in the accounts. However, no such finding is on record which could adduce the claim of the Revenue that any of the transaction in respect of the aforesaid expenses in the books of accounts are recorded twice by the assessee.

29. We also note that ld. AO has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Page 19 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Running & Maintenance Expense of Rs. 84,89,594/- & of Rs. 1,79,36,625/- and pertaining to the Machinery Repair & Maintenance Expense of Rs. 5,71,21,796/- & of Rs. 1,86,95,467/- ) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Ld. AO failed to consider the fact that the Books of Accounts of the assessee are duly audited not only under the Companies Act, 2013 but are also subject to tax audit in accordance with provisions of Section 44AB of the Act and there is no contrary observation of the Statutory Auditor (i.e. under The Companies Act, 2013) or of the Tax Auditor (i.e. under the Income Tax Act, 1961) of the assessee in this regard. In fact, without first bringing on record any material to disprove the explanation adduced by the assessee, the observations of ld. AO that “the Assessee had designed the sub-head to claim exaggerated expense”, OR “these expenses are found to be not reasonable” are more in the nature of suspicion, conjectures and surmises. It is also surprising to note that ld. AO had used the expression “exaggerated expenses”. The expression, “exaggerated expense” has not been defined anywhere in the entire Income Tax Act, 1961 and therefore, it would be relevant here to refer to the common meaning of the expression “exaggerate”. As per common parlance, the expression “exaggerated” means “beyond normal proportions or unreasonable or enlarged”. Therefore, in order to observe any particular expense as exaggerated expense, it would be relevant to firstly adduce some material which could point out to as to what is a normal / reasonable expense and secondly, to compare the normal / reasonable expense with the actual expense Page 20 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. and then arrive at the conclusion. In the instant appeal, ld. AO has not brought on record any material or evidence which could even remotely suggest as to what was the normal / reasonable expense. Further, the assessment order is completely silent as to any comparison of the actual expense incurred by the assessee vis-à- vis any past assessment records or business ratios of the business of the assessee itself or the comparison of the business results of the assessee with that of any other assessee in such similar business having similar factual matrix and operating in the same geographical location in which the assessee had carried out its business during the above assessment year.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

Summary Chart Showing the Assessment Year wise Disallowance on account of Excess Depreciation and the subsequent Adjudication of this issue by the First Appellate Authorities. Relevan t para Whether of the Date the Date in Assess Section Amount on Designatio Disallow which ment under of which n of the ance of the Order which the Excess the CIT (A) Excess Assess wherei Rema AY Assessme Depreci Order who had Depreci ment n the rks nt Order ation was passed the ation order Excess was disallo passed Appeal was was Depreci passed wed by CIT Order deleted passed ation (A) by the was CIT (A) Disallo wed 2005 30-06- 143(3)/14 16,46,1 30-05- CIT(A)- 3.3 Yes (**) -06 2014 7/263 06 2019 8,Kolkata 2006 30-06- 143(3)/14 13,01,8 24-02- CIT(A)- 3.3 Yes (**) -07 2014 7/263 77 2020 8,Kolkata Allow 2007 30-06- 143(3)/14 33,46,5 20-07- CIT(A)- ed on 3.3 Yes -08 2014 7/263 88 2016 16,Kolkata Merit s 2008 30-03- 143(3)/14 20,24,6 27.07. CIT(A), Allow 4 Guwahati Yes -09 2016 7 80 2022 ed Allow 2009 30-06- 143(3)/26 21,73,2 20-07- CIT(A)- ed on 3.3 Yes -10 2014 3 14 2016 16,Kolkata Merit s Allow 2010 27-12- 143(3)/14 85,17,9 03-11- CIT(A)- ed on 3 Yes -11 2016 7 66 2017 8,Kolkata Merit s I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Allow 2011 27-12- 143(3)/14 1,44,44 14-03- CIT(A)- ed on 3 Yes -12 2016 7 ,778 2018 5,Kolkata Merit s Relie d on CIT(A 2012 31-03- 84,86,8 27-02- CIT(A)- ) 143(3) 2.2 Yes -13 2015 09 2018 3,Kolkata order s for other AY's 2013 30-03- 60,96,1 143(3) 4 -14 2016 28 2013 18-12- 143(3)/14 71,40,5 3 27.07.2022 CIT(A), Guwahati -14 2017 7 99 40. From a perusal of the above chart, it is evident that the ld. CIT(A)s vide their different orders passed in the case of the assessee for various assessment years have, on the similar issue, allowed the claim of Excess Depreciation and have accordingly, vide their respective Appellate Orders, deleted the disallowance of Excess Depreciation. As against the order of ld. CIT(A), the Department filed an appeal before the Coordinate Kolkata Bench in all the aforesaid years mentioned. As against the same, the Kolkata ITAT granted relief to the assessee by deleting the additions made by ld. AO and year-wise position of the same is as under:

SL.NO Date of Order disallowance on account of of ITAT excess depreciation deleted by the Hon’ble Tribunal 2005- 24.12.2019 1991/Kol/2019 Since tax effect in Revenue Appeal is less 06 than Rs. 50 lakhs so appeal was dismissed 2007- 03.08.2018 1787/Kol/2016 Since tax effect in Revenue Appeal is less 08 than Rs. 50 lakhs so appeal was dismissed 2009- 31.08.2018 1788/kol/2016 Since tax effect in Revenue Appeal is less 10 than Rs. 50 lakhs so appeal was dismissed 2010- 29.03.2019 269/Kol/2018 Excess Depreciation deleted 11 2011- 28.08.2019 1333/Kol/2018 Since tax effect in Revenue Appeal is less 12 than Rs. 50 lakhs so appeal was dismissed I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 2012- 10.01.2020 1084/kol/2018 Excess depreciation deleted. 13 41. Thus, from the aforesaid table, it is seen that in all the aforesaid years the Department filed an appeal before Coordinate Bench, Kolkata against the relief granted by ld. CIT(A) on account of excess depreciation allowed. Except for AYs. 2010-11 and 2012- 13, in all the years appeal was dismissed by the Tribunal as the tax effect of appeal in all the years was below limit. The finding of the Tribunal adjudicating the issue of excess depreciation in the case of the assessee in ITA No. 269/Kol/2018 dated 29.03.2019 (order enclosed at page 1143 to 1151 of the paperbook) is reproduced below:

“i) Ground No. 1: The ld. CIT(A) erred in deleting the disallowance of depreciation of Rs. 85,17,966/-(being the difference of depreciation claimed by assessee @30% and allowance of depreciation by the Assessing Officer @ 15% on the vehicles).

3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs. 85,17,966/-.

5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had stated that the assessee being civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country. Assessee also maintained various kinds of motor vehicles to carry workers to the sites and for the use of the officials/directors. In its return of income, the asessee is found to have shown 30% on the WDV of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.l,70,28,233/- @ 30%. The allowable depreciation rate as per assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) Page 29 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs. 3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/- is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over-claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO noted that in course of the assessment proceedings, the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its claim of excess depreciation.

8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A).

9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee is entitled to depreciation at higher rate of 30% for tippers against the normal rate of depreciation @ 15%. It is not disputed, that tippers are vehicles and are registered under the Motor Vehicle Act,1988. The Assessing Officer had disallowed depreciation claimed @ 30% and restricted depreciation to 15% and disallowed Rs. 85,17,966/- as excess depreciation. The main reason given by the Assessing Officer in his assessment order u/s 143(3) of the Act, was that the explanation given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases.

10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in difficult areas including North East. The assessee had made the same claim in assessment year 2009-10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has submitted before us that the Assessing Officer had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The Counsel of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the A.O. This method of accounting has been followed by the Assessing Officer in previous year and no doubt were raised by the A.O. even in scrutiny assessments. Therefore, a method followed by the Assessing Officer in previous year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income `tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee - we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of lncome-tax in the earlier proceedings, a different and contradictory stand should have been taken." We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration.

11. We note that the A.O. could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. received, is not supported by facts. The tippers used by theassessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision of the Punjab & Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P&H). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs. 85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the order of Id. CIT (A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal

of the Revenue is dismissed.” Furthermore, on this issue, the Departmental Appeal filed in the case of the Assessee before the Hon’ble Jurisdictional ITAT Kolkata Bench for the Assessment Year 2012-13 was dismissed by the Hon’ble ITAT vide their order dated 10/01/2020 passed in ITA 1084/Kol/2018. In the aforesaid order, the Hon’ble ITAT has held/averred, as follows: “This Revenue's appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)-3, Kolkata's order dated 27.02.2018 passed in case No.140/CIT(A)-3/R.-8/15-16/Kol involving proceedings u/s 143(3)) of the Income Tax Act, 1961; in short 'the Act'. Heard both the parties. Case file(s) perused.

2. For the reasons stated Revenue's petition 21.05.2017 seeking condonation of thirteen days' delay and assessee's no objection thereto, we condone the impugned delay attributable to various procedural formalities and compilation of records. The case is now taken up for adjudication on merits.

3. The Revenue's first substantive grievance reads that the CIT(A) has erred in law and on facts in deleting depreciation disallowance of ₹84,86,809/- made by the Assessing Officer in assessment order dated 31.03.2015. The assessee's depreciation claim was on its commercial depreciation @ 30% on hire and other vehicles which stood Page 33 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. restricted to 15% only during the course of assessment. The CIT(A)'s detailed discussion deleting the impugned depreciation disallowance reads as under:- "Ground No.3 is regarding disallowance of depreciation at the rate of 30% to the extent of Rs.8486809/- claimed by the assessee. The basic facts are that the assessee is carrying on the business of civil construction in the North Eastern region. The assessee is using vehicles like Tippers, Tractor etc. For construction work. The assessee has been using the tippers both for own work and for hire. On such vehicles the company has charged depreciation at the rate of 30%. However the Assessing Officer has allowed depreciation at the rate of 15% only. it has been argued that the issue is covered by the orders of my predecessors in AY 2007-08 and AY 2010-11. In the AY 2007- 08 in appeal No.754/CIT(A)-16/Kol/2014-15/C- 15(1)/Kol order dated 20/07/2016 it has been held as under:- 'I have gone through the submissions of the AR I find that the AO is not justified in not allowing excess depreciation, while the AR has made the case that the tipprs are used for the transportation of goods, although the hire charges are received directly. Reliance has been made by the AR on the decision of Bombay High Court in the case of CIT vs. S.C. Thakur 322 ITR 463. This case of Bombay High Court is identical to the case of the assessee. Reliance has been made on the CBDT's Circular No. 609 dt. 29/07/1991. This circular talks about the higher depreciation on motor lorries used in the assessee's business of transportation of goods on hire. The AR has made out the case that the decisions cited and CBDT's circular help the cases of the assessee in charging higher depreciation. I concur with the submission of the AR. Hence, the addition worth Rs.33,46,588/;- is deleted, and the ground of the assessee is allowed.' Similarly in AY 2010-11 in appeal No.319/CIT(A)-5/WWd-15(1)/16- 17 dated 03/11/2017 it has been held as under: 'The contention of the assessee that the explanation given by the assessee is an afterthought is not support by facts. The assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed Page 34 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. in difficult areas including North East. The assessee had made the same claim in assessment year 2009-10 which was disallowed by the AO. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rat. This clearly show that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The that explanation given is an afterthought, which is offered only after discovery of express depreciation by the department, is not correct, and not supported by the facts. Secondly, regarding hire charges, the A/R of the assessee has submitted that the AO had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The A/R of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the AO. This method of accounting has been followed by the AO in previous year and no doubt were raised by the AO even in scrutiny assessment. In this connection reference may be made to the decision of the Apex Court in CIT vs. Excel Industries 358 ITR 295, where the court reiterated that the principal of consistency should be followed. The AO could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle tougher rate of depreciation. The Assessing Officer's contention, that the explanation given by the A/R of the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views find support in the decision of the Punjab and Haryana High Court in the case of CIT vs. Rakesh Jain (2013) 350 ITR 230.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. After a careful consideration of the submission of the assessee and relevant assessment records, the addition of Rs.85,17,966/- on account of additional depreciation claim on higher rate is allowed. This ground of appeal is succeeds, and therefore, allowed.' It is therefore seen that the issue has already been decided in favour of the assessee by my predecessors and additional depreciation claim in this case has been allowed. Accordingly the claim of the assessee company for depreciation of Rs.8486809/- in the impugned year is hereby allowed."

5. Suffice to say, learned departmental representative fails to dispute that this first issue between the parties is no more res integra since the assessee has already succeeded in assessment years 2007-08 and 2010-11 (supra). The Revenue had also filed in assessment year 2010-11 challenging correctness of the CIT(A)'s identical findings. Learned co-ordinate bench's order has rejected the same as under:- "3. Now we shall take issue no. 1 raised by the Revenue which relates to disallowance of depreciation of Rs.85,17,966/-.

5. The brief facts qua the issue are that the during the assessment proceedings, AO had disallowed Rs.85,17,966/- on account of additional depreciation claimed by the assessee. The AO in his assessment order had stated that the assessee being a civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country. Assessee also maintained various kinds of motor vehicles to carry workers to the sites and for the use of the officials/directors. In its return of income, the assessee is found to have shown 30% on the WDV of vehicles used for its own business in the relevant year under consideration and thereby claimed depreciation of Rs.1,70,28,233/- @ 30%. The allowable depreciation rate as per assessing officer was @ 15%. It is worthwhile to mention that on verification of 'Schedule DPM' (Depreciation on Plant and Machinery) of the return filed by the assessee, wherein it is found that in column of 30% Block of Plant and Machinery that WDV as on 01.04.2009 is declared to be Rs.3,25,93,616/- with additions for a period of 180 days or more to the tune of Rs.32,78,346/- and deletion Page 36 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of Rs.2,50,000/-. Apart from this, an amount of Rs.4,22,77,628/ is declared as additions to the block for a period less than 180 days. In serial No. 12 and 13 of that Schedule, assessee clearly declared 'Additional depreciation', if any as Nil. Therefore, AO was of the view that that the assessee willfully misled the department by over- claiming depreciation for the plant and machinery for which it is eligible to claim at the rate of 15%, depreciation only. In an exceptional nature of usage, it should mention the claim on the return itself by showing the amount of additional depreciation. The AO noted that in course of the assessment proceedings, the assessee came up with new claim of partial usage to show a part of its motor vehicles for hiring purpose to justify its claim of excess depreciation.

6. In response, the assessee submitted the written reply to the assessing officer as follows: "........ the assessee company is carrying on business of civil construction and manufacturing of construction material. It is doing civil construction in various places in India particularly in North Eastern Region. The company has purchased various light and heavy vehicles for its civil construction work and other official work such as trucks, tippers, tractor, car motor cycle etc. The assessee company has claimed depreciation on such vehicles at 30%. All the heavy vehicles are not used by the assessee company for substantial part of the year and therefore, it gives such vehicles on hire to other contractors carrying construction work in nearby places to earn more income. Some of the heavy vehicles including tippers are exclusively given on hire." However, the Assessing Officer rejected the contention of the assessee and made the addition to the tune of Rs. 85,17,966/- being the difference between 30% and 15% of depreciation rates.

7. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us.

8. Before us, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. On the Page 37 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. other hand, the ld. Counsel for the assessee defended the order passed by the ld. CIT(A).

9. We have heard both the parties and perused the material available on record. We note that only the point of dispute is that whether the assessee is entitled to depreciation at higher rate of 30% for tippers against the normal rate of depreciation @ 15%. It is not disputed, that tippers are vehicles and are registered under the Motor Vehicle Act, 1988. The Assessing Officer had disallowed depreciation claimed @ 30% and restricted depreciation to 15% and disallowed Rs. 85,17,966/- as excess depreciation. The main reason given by the Assessing Officer in his assessment order u/s 143(3) of the Act, was that the explanation given by the assessee that his vehicles were deployed in difficult areas particularly in the North Eastern Region and therefore, entitled higher depreciation, is an afterthought, which is offered only after the discovery of excess depreciation by the department. Secondly, the claim of the assessee that some vehicles were given on hire cannot be accepted, as no specific income has been declared from hiring purchases.

10. We note that the assessee as per assessment records have been claiming depreciation @ 30% on vehicles used in their business on the grounds of them been deployed in areas including North East. The assessee had made the same claim in assessment year 2009- 10, which was disallowed by the A.O. The CIT(A)-16, Kolkata had deleted the addition and allowed depreciation at higher rate in A.Y.2009-10. Thus, clearly shows that the assessee in past assessment orders, have also been claimed depreciation at higher rate. The contention of the A.O., that explanation given is an afterthought, which is offered only after discovery of excess depreciation by the department, is not correct, and not supported by the facts. Regarding hire charges, the Counsel for the assessee has submitted before us that the Assessing Officer had not asked for details of hire charges received against the tippers given on hire. Such details could have been provided if asked for. The Counsel of the assessee also submitted that the vehicles were given on hiring to person against whom the assessee received services in the form of goods, labour supply etc. The hiring charges receivable are adjusted against payments to be made to these persons. These facts have been submitted to the A.O. This method of accounting has been followed by the Assessing Officer in previous year and no doubt were raised by the A.O. even in scrutiny Page 38 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessments. Therefore, a method followed by the Assessing Officer in previous year should not be changed unless there is a change in facts and law. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee - we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken." We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration.

11. We note that the A.O. could not bring any material on record, to dispute the assessee's claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O's contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. stationery and permanently installed machinery. These views, find support in the decision of the Punjab & Haryana High Court in the case of CIT vs. Rakesh Jain [2013] 350 ITR 230 (P&J). Therefore, taking into account the submission of the Counsel and relevant assessment records, the addition of Rs.85,17,966/-, made by AO, on account of additional depreciation claim on higher rate, should be deleted. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal

of the Revenue is dismissed.”

42. We find that ld. CIT(A) has correctly appreciated the facts of the case of the assessee and stated that “Therefore, for above reasons, being bound by decision of Hon’ble ITAT Kolkata, in view of the Principles of Consistency (per supra), in the absence of any adverse material on record and considering the fact that the reasons based on which the impugned disallowance was made are incorrect and legally unsustainable, the disallowance of Rs. 3,23,72,494/- which is impugned in the instant Ground of Appeal, is being, hereby, deleted. The instant Ground of Appeal is, accordingly, allowed.”

43. Thus, since the issue of excess depreciation is squarely covered against the Revenue by the decision of Coordinate Kolkata Bench extracted (supra), and since ld. D/R failed to put forth any binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A) deleting the disallowance of excess depreciation of Rs. 3,23,72,494/-. Accordingly, Ground No. 3 raised by the Revenue is dismissed.

44. Ground no. 4 raised by the Revenue is on account of disallowance of Rs. 3,05,471/- u/s 14A of the Act r.w.r 8D of the Income Tax Rules, 1962. Ld. Counsel for the assessee submitted Page 40 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. that the assessee during the year had earned dividend of Rs. 11,600/-. The assessee has suo moto disallowed a sum of Rs. 11,600/- u/s 14A of the Act. Ld. AO applied the provisions of Section 14A of the Act read with rule 8D of the Income Tax Rules, 1962 and computed the expenditure relatable to the aforesaid tax- exempt dividend income at Rs. 3,05,471/-.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 50. Now, we take up the appeals of the Revenue in to 39/GTY/2022 for the Assessment Years 2017-18, 2018-19 & 2019-20.

1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 but which claim has been made in the return for assessment of search case furnished consequent to notice u/s 153A, thus thereby arriving at paradoxical result that being a search case the assessee had derived more benefit which was not claimed in the original return furnished u/s 139. 2) The Ld. CIT(A) erred in procedural law when the assessee did not furnish requisite audit report and particulars for the claim for deduction u/s 80IA within the specified time. 3) The Ld. CIT(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA. 4) The appellant craves to add, alter, amend any further ground

(i) Notices u/s 153A dated 04.02.2021 for A.Ys 2014-15 to 2019-20 (i.e., six A.Ys preceding the A.Y relevant to the P.Y in which the search was conducted). (ii) Notice u/s 143(2) dated 28.06.2021 for A.Y. 2020-21 (i.e., the A.Y relevant to the P.Y in which the search was conducted).

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

AY As per the Return filed under Section 139(1) / 153A of the Income Tax Act, 1961 Gross Total Deduction Whether any Returned Section Date of filing Income Claimed under Deduction Total Income under the Return of Chapter VI-A claimed under which the Income Section 80IA Return of of the Act? income was filed 2017- 25,98,02,835 4,34,49,829 Yes 21,63,53,010 153A 13/02/2021 18 2018- 35,57,91,069 35,44,33,862 Yes 13,57,210 153A 13/02/2021 19 2019- 1,03,35,25,768 33,92,20,310 Yes 69,43,05,460 153A 13/02/2021 20 55. While making fresh claims for deduction u/s 80IA(4) of the Act in the Returns of Income filed in compliance to notices issued u/s 153A of the Act in respect of the impugned A.Ys, the assessee filed the corresponding forms (being Report of Audit of the Eligible I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Undertaking from an Accountant) in Form 10CCB [as required u/s 80IA(7)] electronically on 12.02.2021 i.e., within the time permitted as per Notices issued u/s 153A of the Act (i.e., before 15.02.2021). In course of the search assessment proceedings, ld. AO raised various issues regarding the fresh claim of deduction made by the assessee u/s 80IA(4)(i) of the Act in the Returns of Income filed in compliance to Notices issued u/s 153A of the Act and finally passed the impugned Assessment Orders dated 29.09.2021 u/s 153A/143(3) of the Act disallowing the assessee’s claim u/s 80IA(4)(i) of the Act. [as per the details in Table 3 (supra)] for each of the impugned assessment years. The reasons cited in the Assessment Orders u/s 153A/143(3) of the Act for disallowing the assessee’s claim of deduction u/s 80IA(4)(i) of the Act can be broadly categorized as under:

That, having not claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Actor by way of a Revised Return, the Assessee was not entitled to claim the deduction u/s 80IA(4)(i) of the Actin in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. That, the Audit Reports in Form-10CCB [as referred to u/s 80IA(7) of the Act] were not furnished by the Assessee within the time limit as referred to u/s 139(1) of the Act and, therefore, in the absence of the Audit Report (Form-10CCB) being filed by the Assessee within the time limit as referred to u/s 139(1), the Assessee could not claim the deduction u/s 80IA(4)(i) of the Act. That, for the purposes of Section 80IA, the Assessee was a Works Contractor" and NOT a "Developer of Infrastructure".

“(i) Firstly, a Return of Income furnished in compliance with a notice issued u/s 153A of the Income Tax Act, 1961 substitutes the Original / Earlier Return of Income furnished (prior to the Date of the Search) u/s 139(1) of the Act. (ii) Secondly, since a Return of Income furnished in compliance with a notice issued u/s 153A of the Act substitutes the Original / Earlier Return of Income furnished (prior to the date of the Search) u/s 139(1) of the Act, the Audit Reports in Form-10CCB (as referred under Section 80IA(7) of the Act) were furnished by the Assessee within the time limit as provided by the A.O in the Notices issued by him u/s 153A of the Act. Thus, it was contended that there was no delay in filing of the Audit Reports in Form 10CCB. (iii) Thirdly, the Assessee was not merely a “Works Contractor” but a “Developer of Infrastructural Facilities” and the Assessee had developed Infrastructure like Roads, Railway Bridges, Railway Tunnels etc. The Assessee also placed reliance on the Orders of Hon’ble ITAT Kolkata passed in the case of the Assessee for the AY 2003-04 to AY 2006-07 as well as on the other Orders passed by the Hon’ble ITAT Kolkata and the Hon’ble Courts and other Hon’ble Benches of the ITAT. The Assessee also referred to the Contract Agreements filed by the Assessee before the A.O and stated that merely because TDS was being deducted in respect of the Contract Revenue received by the Assessee, the Assessee could not be treated I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. as a “Works Contractor”. Detailed explanations in this regard were filed by the Assessee along with supporting case laws on the subject.”

(i) That, in respect of an assessment year whose proceedings had abated, a Return of Income filed in compliance to the Notice issued u/s 153A of the Act, substitutes the prior/earlier original Return of Income filed u/s 139(1) of the Act and, hence, the Returns of Income filed by the Assessee, in compliance to the Notice issued u/s Section 153A of the Act for the AY 2017-18, AY 2018-19 and AY 2019-20, shall be treated as the Returns of Income filed u/s 139(1). (ii) That, the Audit Reports in Form-10CCB [as referred u/s Section 80-IA(7) of the Act] which were furnished by the Assessee within the time limit as given in the Notice u/s 153A of the Act, on an harmonious interpretation and reading together of various provisions of Law for the purposes of the special provisions of Section 153A of the Act, shall be treated as having been filed within the time limit as referred to u/s Section 139(1) of the Act. In view of Paras (i) & (ii) supra, even though, not having claimed the deduction in the Original Income Tax Return filed u/s 139(1) of the Act or by way of a Revised Return, the Assessee was still entitled to claim the deduction u/s 80IA(4)(i) of the Act in the Returns filed by the Assessee in compliance to the Notice issued u/s 153A of the Act. (iii) That, for the purposes of Section 80IA, the Assessee shall be treated as a “Developer of Infrastructure Facilities and not a “Works Contractor” as concluded by the A.O.”

(i) That the Ld. CIT(A) erred in accepting the fresh claims of deduction u/s 80IA(4) made in Returns of Income furnished by the Assessee in response to Notice u/s 153A although such claim had not been made in original Return of Income furnished u/s 139 – resulting in paradoxical situation whereby being a search case, the Assessee had derived more benefit which was not claimed in the original return u/s Page 49 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 139 – more so, given that the Assessee never furnished revised return to the original return so as to claim deduction u/s 80 IA of the Act [Ground Nos. 1 & 3 of the Department’s Appeal] (ii) That the Ld. CIT(A) erred in procedural law in not holding that the Assessee did not furnish the requisite Audit Report and particulars of claim for deduction u/s 80IA within the specified time limit [Ground No. 2 of the Department’s Appeal]

61. The finding of ld. CIT(A) to the effect that for the purposes of Section 80IA of the Act, the assessee shall be treated as a “Developer of Infrastructure Facilities” and not a “Works Contractor” has not been contested/challenged by the Department in the appeals before us and has thus reached finality. Since the said issue does not constitute subject matter of appeals before us, the same is not required to be adjudicated by us.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

64. Ground nos. 1 & 3 of the departmental appeal challenges the deletion of disallowance of fresh deductions claimed by the assessee u/s 80IA of the Act in returns filed pursuant to notice issued u/s 153A of the Act.

65. The relevant grounds are reiterated hereunder:

“1) On the facts and in the circumstances of the case the Ld. CIT(A) has erred in accepting the claim of deduction u/s 80IA which had not been made in the original return of income that was furnished u/s 139 but which claim has been made in the return for assessment of search case furnished consequent to notice u/s 153A, thus thereby arriving at paradoxical result that being a search case the assessee had derived more benefit which was not claimed in the original return furnished u/s 139.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 3) The Ld. CIT(A) also erred in that the assessee never furnished revised return to the original return so as to claim for the deduction u/s 80IA.”

“(i) That, returns e-filed u/s 153A of the Act were in consequence of action taken u/s 132 of the Act and thus, couldn’t be advantageous to the Assessee since the object of the legislation was to assess undisclosed income. If new claims of deduction or exemption were allowed to searched persons, then the same would be discriminatory to the other regular assessees who had lost a right as such to claim the deduction by efflux of time. (ii) That fresh claim of deduction u/s 80-IA in return u/s 153A, almost one and a half years after the search was conducted on the Assessee was an after thought and mischief on the part of the Assessee to take wrongful advantage of opportunity to e-file return u/s 153A. (iii) That, if the Assessee was allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier in the original return, then it would mean that even in cases where the appeal arising out of the completed assessment had been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O. would have the power to undo what had been concluded up to the High Court. (iv) That, the decisions of the Hon’ble Kolkata ITAT in the Assessee’s own case for AYs 2005-06 and 2006-07 were based on significantly different facts inasmuch as in those cases, the Assessee had claimed deduction u/s 80-IA in the original return of income whereas, in the present case for the impugned years, the Assessee had not claimed deduction u/s 80-IA in its original return of income.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (v) That, for the A.Y. 2017-18, the Assessee e-filed the original return of income on 31.10.2017. The ITAT order in respect of A.Ys 2005-06 and 2006-07 were passed during December 2017 and January 2018. Thus, assuming that the Assessee was entitled to any such deduction, it still had time to e-file a revised return of income for A.Y. 2017-18 claiming such deduction, which was not done. (vi) That, notice u/s 143(2) of the Act for selecting the case of the Assessee in scrutiny for A.Y. 2017-18 was issued on 24.09.2018 whereas the search was conducted in the case of the Assessee only on 20.09.2019, which was almost one year after the notice u/s 143(2) was issued and served on the Assessee. During one year of pending scrutiny assessment proceedings before it was abated, no claim regarding deduction u/s 80-IA was made by the Assessee in any submission before the A.O. The original assessment was to get time barred on 31.12.2019. The Form 10CCB in the case of the Assessee was issued by the auditor on 12.02.2021. Thus, the Assessee could not claim that it had planned to claim any deduction u/s 80-IA before the A.O during the original assessment proceedings. Thus, the claim of the Assessee that the pending assessment proceedings for A.Y. 2017-18 was abated, provided no valid ground to the Assessee to claim in return u/s 153A a deduction which was not claimed in the original return of income.”

“Assessment in case of search or requisition. 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years] : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years] : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. section 132 or making of requisition under section 132A, as the case may be, shall abate. Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso) specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years. [Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.— For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.—For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (2) If any proceedings initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceedings, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner. Provided that such revival shall cease to have effect if such order of annulment is set aside. Explanation- For removal of doubts, it is hereby declared that – (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”

(i) That, in case of a search or requisition, in terms of section 153A of the Act, the A.O is compulsorily required to issue notices u/s 153A and the searched person is compulsorily required to file Returns of income afresh u/s 153A (and not u/s 139(1) or any other section) for each of the prescribed assessment years [i.e., six A.Ys immediately preceding the A.Y relevant to the P.Y. in which such search is conducted or requisition is made and for the relevant A.Y(s) defined under Explanation 1 to section 153A(2)] (ii) That, the assessment or reassessment, if any, related to any of the prescribed assessment years, which is pending on the date of search or requisition and which is done on the basis of any earlier Return filed u/s 139(1) stands statutorily abated.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iii) That, after filing of the Return u/s 153A, the earlier Return filed u/s 139(1) of the Act does not remain in existence, and thus cannot be used for the purpose of making the assessment or reassessment u/s 153A. (iv) That, the Return filed u/s 153A is the only Return which is filed by the Assessee u/s 153A and which contains the details of the heads of income of the Assessee (including the additional income disclosed) by the Assessee after the search. (v) That, the assessment or reassessment for each of the prescribed A.Ys is to be compulsorily made afresh by the A.O. u/s 153A of the Act only on the basis of the Return filed u/s 153A and not on the basis of Return filed u/s 139(1) or any other section. (vi) That, the Return filed u/s 153A is not an addendum or an Annexure of the earlier Return filed u/s 139(1) and the proceedings u/s 153A are not an extension of the earlier proceedings which has either abated or remains unabated. (vii) That, for one assessment, for the purpose of making an assessment, there can only be one return. After the search or requisition, for the purpose of making assessment or reassessment u/s 153A, details filed in both Returns [i.e., u/s 153A and u/s 139(1)] cannot be used by the A.O at his whims and fancies i.e., he cannot choose Return filed u/s 153A for the purpose of collecting taxes on additional income disclosed during the search and cannot rely on earlier Return u/s 139(1) for denying the benefit of deduction. The A.O cannot approbate and reprobate simultaneously. (viii) That, while completing assessment u/s 153A, ALL provisions (including provisions of Chapter VI-A etc.) of the Act, “so far as may be”, are applicable to the proceedings u/s 153A of the Act. The words “so far as may be” has been used to restrict the applicability of those provisions which are inconsistent with the provisions of section 153A. Meaning thereby that all other provisions of the Act (to the extent not inconsistent with the provisions of section 153A) will apply to a Return filed u/s 153A. (ix) That, unlike the erstwhile provisions of section 158BC which contained a clear embargo on filing the revised return, current provisions of section 153Ado not contain any specific restriction. Page 58 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Rather, the current provisions are drafted in a way so as to align with the provisions contained in section 139 provided, they are not inconsistent with the provisions of section 153A. Thus, in the absence of specific restriction u/s 153A, it will be wrong to hold that the Assessee will be barred from filing even a revised return assuming he satisfies the conditions for filing such revised returns. (x) That, from a perusal of the Explanation to Section 153A, the expression “save as otherwise provided in this Section, Section 153B and Section 153C, all other provisions of this Act shall apply to the assessment made under this section” it is evident that absence of any specific exceptions stipulated in the aforesaid sections, the provisions of all other sections of the Act will mutatis-mutandis apply to the assessment framed u/s 153A. Thus, the A.O is required to permit the legally tenable allowance, deductions, relief, rebates etc. which have been claimed in return filed u/s 153A of the Act. (xi) That, as per the Second Proviso to section 153A(1), any proceedings for assessment or reassessment of an assessee which are pending on the date of initiation of search or making a requisition will abate. Once those proceedings abate, the A.O is required to pass assessment orders for each of those years determining the total income of the assessee which will include both the income declared in the returns, if any, furnished by the Assessee as well as the undisclosed income, if any, unearthed during the search or requisition and declared by the assessee in Returns of Income filed u/s 153A of the Act. (xii) That, since the “abatement” of proceedings means termination of the proceedings, the proceedings will have to be re-started. Section 153A talks about three things, viz. (a) First, about abatement of pending proceedings which were initiated on the basis of the Return filed u/s 139 (b) Second, about filing of fresh Return of income u/s 153A of the Act, and (c) Third, about assessment to be made on the basis of such fresh Return of Income u/s 153A.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (xiii) That, no other section in the Act talks about abatement of the proceedings. Thus, once section 153A is invoked, then all other proceedings and the basis of those proceedings are extinguished. The entire process of the Return of Income and Assessment is initiated de- novo and completed afresh after section 153A is invoked for the purpose of assessment or re-assessment. (xiv) That, however, in case where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the total income, such orders will subsist at the time when a search is conducted or a requisition is made since there is no question of any abatement since no proceedings are pending. In this case, the A.O will assess or reassess the income strictly based on incriminating material found during the course of search or requisition. (xv) That, however, the total income for such AYs (i.e., where the Assessments were pending i.e. where the Assessments had abated) will have to be computed by the A.O as a fresh exercise. Thus, in abated Assessments, the A.O retains the Original Jurisdiction as well as the Jurisdiction conferred on him u/s 153A. In order words, in case of abated assessments, the jurisdiction to make the original assessment and the assessment u/s 153A merges into one.”

(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated 03/12/2014 – Gujarat High Court (ii) PCIT vs. Neeraj Jindal [Income Tax Appeal No. 463 of 2016, judgment dated 09/02/2017; 79 Taxmann.com 96] – Delhi High Court I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iii) Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] – Calcutta High Court

(i) CIT vs. B.G. Shirke Construction Technology Ltd. [395 ITR 371; Income Tax Appeal No. 1392, 1531 of 2014, judgment dated 0/03/2017] – Bombay High Court (ii) Pr. CIT vs. JSW Steel Limited [422 ITR 071; of 2017, judgment dated 05/02/2020] – Bombay High Court (iii) ACIT vs. Shantinath Detergents Pvt. Ltd. [2020 (3) TMI 964 - IT(SS) A No.27 to 32/Kol/2019, order dated 20/03/2020] – ITAT Kolkata (iv) Universal Medicare Pvt. Ltd vs. DCIT [2018 (12) TMI 406 - ITA Nos. 2967 to 2971/Mum/2016, order dated 05/12/2018]– ITAT Mumbai (v) Narendra Vegetable Products Pvt. Ltd. vs. ACIT [2015 (7) TMI 1298 - ITA 118/Nag/2013, 119/Nag/2013, 120/Nag/2013, 121/Nag/2013, 122/Nag/2013, 123/Nag/2013, 124/Nag/2013, order dated 30/07/2015]– ITAT Nagpur (vi) Bhanuben Kantibhai Savalia vs. DCIT [2019 (12) TMI 250 - IT (SS) Appeal Nos. 76 To 84 & 887 To 889 (Ahd.) Of 2015, order dated 17/09/2019] - ITAT Ahmedabad (vii) Shree Yamuna Pulses vs. ACIT [2013 (2) TMI 344 - IT(SS)A No.233, 234, 235, 236, 237, 238 and 239/Ahd/2010, order dated 07/08/2012]- ITAT Ahmedabad I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (viii) ACIT vs. Splendor Landbase Limited [2018 (6) TMI 444 - I.T.A. No.2461/DEL/2016 And C.O. NO. 215/DEL/2016, order dated 06/06/2018] - ITAT DELHI (ix) A. Srinivas Rama Raju vs. DCIT [2016 (10) TMI 174 - TA.No.975/Hyd/2015, order dated 19/08/2016] - ITAT Hyderabad

(i) PCIT vs. Vijay Infrastructure Limited [2017 (7) TMI 956 - Income Tax Appeal No. 29 of 2016, judgment dated 12/07/2017] - Allahabad High Court - SLP filed by the Department against the aforesaid Judgment of the Hon’ble Allahabad High Court was dismissed by the Hon’ble Supreme Court of India [SLP (Civil) Diary No. 10863 of 2018, order Dated 13/04/2018] (ii) DCIT vs. MBL Infrastructure Limited [2020 (1) TMI 457 - ITAT KOLKATA; IT(SS) No.77/Kol/2016 & C.O No.22/Kol/2019 & IT(SS) No.78/Kol/2016 & IT(SS) No.46/Kol/ 2016, order dated 23/12/2019]– Kolkata ITAT (iii) DCIT vs. Megha Engineering & Infrastructure Ltd. [607/Hyd/ 2016 (AY 201011), 608/Hyd/ 2016 (AY 2011-12), 609/Hyd/ 2016 (AY 2012-13), 610/Hyd/ 2016 (AY 2013-14), 1375/Hyd/ 2016 (AY 2014-15) & 1540/Hyd/ 2016 (AY 2015-16) – ITAT Hyderabad

(i) Jai Steel (India) vs. ACIT (and other connected matters) [(2013) 259 CTR (Raj) 281; judgment dated 24/05/2013] – Rajasthan HC (ii) GMR Infrastructure Limited vs. DCIT 2021 (7) TMI 527; I.T.A. NO.1036 OF 2017 dated 06/07/2021] – Karnataka High Court 79. In light of the aforesaid judgments, ld. CIT(A) has gone on to conclude as under:

“1. That, a Return of Income filed in compliance with the Notice issued under Section 153A of the Act substitutes the Original Return filed under Section 139(1) of the Act.

4. That, in respect of the Assessment Years whose assessment were pending / had abated, since the Returns of Income filed in compliance with the Notices issued under Section 153A of the Act substitute the Original/Earlier Income Tax Returns (filed prior to Search or even afterwards) under Section 139(1) of the Income Tax Act, 1961, an I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. assessee was entitled to make Fresh/ New/ Revised Claim in the aforesaid Returns (i.e. under Section 153A), notwithstanding that the aforesaid claims were not made by the assessee in earlier income tax returns filed prior to /after the Search.”

(i) Commissioner of Income-Tax vs. C. Parakh & Co. (India) Ltd. [on 2 March, 1956; Equivalent citations: AIR 1958 SC 775, 1956 29 ITR 661 SC] – Supreme Court of India (ii) Pope The King Match Factory vs. Commissioner of Income-Tax, Madras [1962 (3) TMI 81 - Madras High Court (iii) Commissioner of Income-Tax, West Bengal II vs. Royal Boot House [1969 (6) TMI 37, [1970] 25 STC 243 (Cal), [1970] 75 ITR 507] - Calcutta High Court I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. (iv) Kedarnath Jute Mfg. Co. Ltd vs Commissioner of Income Tax [On 17 August, 1971; 1971 AIR 2145; 1972 SCR (1) 277] – Supreme Court of India (v) Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. Commissioner of Income-Tax [1997 (7) TMI 4 - Supreme Court; Other Citation: [1997] 227 ITR 172 (SC) – Supreme Court of India (vi) United Commercial Bank vs. Commissioner of Income-Tax [1999 (9) TMI 4 Supreme Court; Other Citation: [1999] 240 ITR 355 (SC) – Supreme Court of India (vii) Taparia Tools Limited vs. Joint Commissioner of Income Tax [2015 (3) TMI 853 - [2015] 372 ITR 605 (SC) - Supreme Court of India (viii) Pt. Sheonath Prasad Sharma vs. CIT [(1967) 66 ITR 647 (All)] – Allahabad High Court (at page 926 of CIT(A) Order) (ix) S.R. Koshti vs. CIT [276 ITR 165] – Gujarat High Court (at page 928 of the CIT(A) Order) (x) CIT (Central) vs. Devi Films Private Limited [1981 (11) TMI 10 - [1983] 143 ITR 386 - Madras High Court (at page 928 of the CIT(A) Order) (xi) Mayank Poddar (HUF) vs. WTO [262 ITR 633] - Calcutta High Court (at page 929 of the CIT(A) Order)

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. “(i) Himachal Gramin Bank vs. DCIT [(2009) 176 Taxman 433(HP)] - Himachal Pradesh High Court (ii) V. Lakshmi Reddy vs. ITO [(2011) 196 Taxman 78 (Mad)] - Madras High Court (iii) CIT vs. Jai Parbolic Springs Ltd. [(2008) 306 ITR 42 (Del.)] -Delhi High Court (iv) CIT vs. Ramco International [221 CTR 491 (P&H)] -Punjab and Haryana High Court (v) CIT vs. Bharat Aluminium Ltd. [303 ITR 256 (Del.)] -Delhi High Court (vi) CIT vs. Jindal Saw Pipes Ltd. [(2010) 328 ITR 338 (Delhi)]- Delhi High Court (vii) Pruthvi Brokers & Shareholders Pvt. Ltd. [[(2012) 349 ITR 336 (Bom.); of 2010 decided on 21/06/2012] – Bombay High Court (referred to at page 927 of the CIT(A)’s Order) (viii) Giridharlal Parasmal v. State of Mysore [(1967) 20 STC 64 (Mys)] – Mysore High Court (at page 928 of the CIT(A)’s order)”

, ld. D/R has further stated as follows: “(i) That the Ld. CIT(A) has failed to appreciate that the A.O hasno power to entertain a claimmade by the Assessee otherwise than by filing a revised return – the Ld. DR has placed reliance on the judgment of the Hon’ble Supreme Court in Goetze (India) Ltd.Vs. CIT (2006) 284 ITR 323 (ii) That, since the Assessee had not filed the return of income within the due date prescribed/s 139(1) of the Act, the right course of action for the Assessee would be to file condonation of delay u/s 119(2)(b) & (c) of the Act with the Appropriate Authority for filing of return of income, which was not done. (iii) That the Hon’ble Jodhpur ITAT in the case of Suncity Alloys (P) Ltd. Vs. ACIT [2009] 124 TTJ 124 had held that the assessments or reassessments made pursuance to notice u/s 153A of the act were not de-novo assessments and therefore no new claim of deduction or allowance could be made by the assessee. (iv) That, in the case of Charchit Agarwal Vs. ACIT [2009]

34. SOT 348 (Del), the Hon’ble ITAT, Delhi Bench had held that since the search I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. proceedings u/s 153A were for the benefit of the Revenue, the assessee was not permitted to value the closing stock for concluded years in a different manner adopted in earlier years and claim lower income. (v) That, in the case of K.P. Varghese Vs. ITO [1981] 131 ITR 597/7Taxman 13, the Hon’ble Supreme Court held that “it is well settled recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided.” Hence, if an assessee is allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier, then it would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued u/s 153A, the A.O will have power to undo what has been concluded upto the High Court. Any interpretation which leads to such conclusion has to be repelled/avoided as held by the Hon’ble Supreme Court in K.P Varghese (supra).”

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. on 31.10.2018 was issued after the date of search i.e., on 22.09.2019. Thus, assessment proceedings were pending. (iii) A.Y. 2019-20–As on the date of search, the time limit to furnish the original Return of Income was still available. The original Return of Income was filed after the date of search i.e., on 31.10.2019. Thus, the assessment proceedings were pending.”

12. A plain reading of Section 153A would show that where notice under this Section is issued as result of any search under Section 132, assessment or reassessment if any relating to any assessment year falling within the period of six assessment years referred to under Section 153, pending on the date of initiation of search under Section 132 or requisition under Section 132A shall abate. The words, pending on the date of initiation of search under Section 132, or making of requisition under Section 132A, as the case may be, has to be assigned simple and plain meaning. Where the assessment or re- assessment is finalised, there are no pending proceedings to be abated, and restored to the file of the assessing officer. To abate means to diminish or to take away. The word 'abatement' has been defined in the Concise Law Dictionary (P. Ramanatha Aiyer) as follows:

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. "Abatement. "Abatement" means, in respect of any chargeable accounting period, ending on or before the 31st day of March, 1947 a sum which bears to a sum equal to: (a) in the case of a company, not being a company deemed for the purposesof Section 9 to be a firm, six per cent of the capital of the company on the first day of the said period computed in accordance with Schedule II, or one lakh of rupees, whichever is greater, or (b) in the case of a firm having(i) nor more than two working partners, one lakh of rupees, or (ii) three working partners, one and a half of rupees, or (iii) four or more working partners, two lakh of rupees, or (c) in the case of a Hindu undivided family, two lakhs of rupees, or (d) in any other case, one lakh of rupees, The same proportion as the said period bears to the period of one year and, in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. [Business Profits Tax Act (21 of 1947), S.2 (1)] Removal or destruction, (as) of a nuisance; failure; premature end, suspension or diminution, (as) of an action or of a legacy. The action of abating; being abated. [O.XXII, R.1, CPC (5 of 1908)]; decrease [S.12 (3) (b) (i), Specific Relief Act (47 of 1963)]. Of An Action Or Suit: In civil law an abatement of a suit is a complete termination of it. Abatement of a matter or cause is caused by the same becoming defective on account of the death of the parties materially interested. (Ency. of the Laws of England) A suspension or termination of proceedings for want of proper parties or due to some technical defect. The abatement of the main action abates proceedings ancillary or collateral to it. In Criminal Law: Abatement of proceedings connotes their termination without any decision on merits and without the assent of the prosecutor. (Ency. of the Laws of England) In Revenue Law: Abatement is a deduction from or refunding of duties on goods damaged during importation or in store." Page 76 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

(i) Kirit Dahyabhai Patel vs. ACIT [Tax Appeal No. 1181 of 2010, Tax Appeal No. 1182 to 1185 of 2010, judgment dated 03/12/2014 – The Hon’ble Gujarat High Court held as under: “13. Considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the I.T. Act, the return of income filed in response to notice under Section 153(a) of the I.T. Act is to be considered as return filed under Section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any.

(ii) Shrikant Mohta vs. CIT [ITAT No.19 & 20 of 2015, GA No.246 & 247 of 2015, judgment dated 25/06/2018] – The Hon’ble Calcutta High Court held as under: “The non obstante clause at the beginning of Section 153A (1) of the Act suspends, for the purpose and to the extent as indicated in such provision, the operation of several other provisions of the Act, including Section 139 and even Section 147 in course of any reassessment. In other words, when a search is initiated under Section 132 of the Act, the assessee is not required to file the assessee's return till such time that the assessee receives a notice under Section 153A(1)(a) thereof. Once such notice is received the liability fastens on the assessee to file the return within the reasonable time specified in the relevant notice. To boot, the second proviso to Section 153A(1) of the Act, insofar as it is material for the present purpose, mandates that any "assessment or reassessment ... relating to ... the relevant assessment year or Page 79 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. years ... pending on the date of initiation of the search under Section 132. ... shall abate". It goes without saying that since the search operations in this case were initiated on September 2, 2004, it was no longer necessary for this assessee to file his regular return by October 31, 2004 notwithstanding the mandate of Section 139(1) of the Act. The obligation to file the return remained suspended, in view of the clear opening words of Section 153A(1) of the Act, till such time that a notice was issued to him under clause (a) of such sub-section. If such is the meaning of Section 153A(1) of the Act, the operation of Section 139(3) of the Act qua the time available for filing a return in order to avail of the benefit of carrying forward any loss stands extended till a return is called for under Section 153A(1)(a) of the Act and such return is filed, provided the return is filed within the time indicated in the relevant notice under Section 153A(1)(a) of the Act. There can be no dispute to such being the effect of Section 153A(1)(a) of the Act….. The second question is answered thus: When search operations are conducted under Section 132 of the Act, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose under Section 153A(1)(a) of the Act. If the return is filed by the assessee within the reasonable time permitted by such notice under Section 153A(1)(a) of the Act, such return would then be deemed to have been filed within the time permitted under Section 139 (1) of the Act for the benefit under Section 139(3) of the Act to be availed of by the assessee.”

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

4. This new/fresh claim of assessee was disallowed by the Assessing Officer (hereinafter referred to as “AO) while finalising assessment under Section 143(3) read with Section 153A of the said Act vide the I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. order dated 25.03.2013 by considering the same as “revenue receipt” instead of “capital receipt”. The reasoning given by the AO was that the assessee had availed of sales tax deferral scheme and the State Government had permitted premature re-payment of deferred sales tax liability at the NPV basis. Therefore, according to the AO, assessee treated this as capital receipt even though the same was credited to the assessee’s profit and loss account being difference between the deferred sales tax and its NPV.

5. However, the primary question that arose before the AO was whether the claim which was not made in the earlier original return of income filed under Section 139(1) of the said Act, could be filed and considered in the subsequent return filed by the assessee in pursuance to notice under Section 153A of the said Act (which was consequent to search action conducted under Section 132 of the said Act). AO held that the assessee could not raise a new claim in the return filed under Section 153A which was not raised in the original return of income filed under Section 139(1). Thereafter, the claim was disallowed and was treated as “revenue receipt” 5.1. By order dated 15.04.2013, the first appellate authority i.e. the Commissioner of Income Tax (Appeals) (hereinafter referred to as “CIT(A)”) upheld the order passed by the A.O. In further appeal, the I.T.A.T., however, by the impugned order dated 28.09.2016, allowed the assessee’s appeal and set aside both the orders passed by the A.O. and C.I.T.(A). 5.2. Hence the appeal by the revenue. …….. 6.1. Mr. A.R.Malhotra drew our attention to the proposed question of law in the present appeal which reads thus : “Whether on the facts and in the circumstances of the case and in Law, the Hon’ble Tribunal was justified in holding that in the return of Income filed u/s. 153 A of the I.T. Act, 1961 or even during the course of assessment proceedings undertaken u/s. 153A of the I.T. Act, 1961 the assessee can lodge new claims, deduction or exemption or relief which remained to be claimed in regular return of income?” ……..

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 6.5. He, however, fairly referred to the following two cases delivered by this Hon’ble Court, viz; CIT Vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom) and DCIT Vs Eversmile Construction Co. Pvt. Ltd. 65 DTR 39 in support of the proposition that the assessee was entitled to make a fresh claim in the return filed in pursuance to initiation of proceedings under Section 153A of the Act which were referred to by the Tribunal in the impugned order. This stand of Mr. Malhotra is appreciated. …..

13. In the present case, search was conducted on the assessee on 30.11.2010. At that point of time assessment in the case of assessee for the assessment year 2008-09 was pending scrutiny since notice under Section 143(2) of the Act was issued and assessment was not completed. Therefore, in view of the second proviso to Section 153A of the said Act, once assessment got abated, it meant that it was open for both the parties, i.e. the assessee as well as revenue to make claims for allowance or to make disallowance, as the case may be, etc. That apart, assessee could lodge a new claim for deduction etc. which remained to be claimed in his earlier/ regular return of income. This is so because assessment was never made in the case of the assessee in such a situation. It is fortified that once the assessment gets abated, the original return which had been filed looses its originality and the subsequent return filed under Section 153A of the said Act (which is in consequence to the search action under Section 132) takes the place of the original return. In such a case, the return of income filed under Section 153A(1) of the said Act, would be construed to be one filed under Section 139(1) of the Act and the provisions of the said Act shall apply to the same accordingly. If that be the position, all legitimate claims would be open to the assessee to raise in the return of income filed under Section 153A(1). …….

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. Thus, as per ld. AO, the assessee’s claim of deduction u/s 80IA(4) of the Act was not allowable as the Assessee had failed to furnish the requisite audit report in Form 10CCB within the time specified u/s 80IA(7) of the Act.

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. 115. With the above observations, Ground no. 2 of the Department’s appeal is dismissed. 116. Before concluding, it will be pertinent to mention that ld. D/R, vide his written submission dated 25.01.2023 has also tried to agitate certain issues which have neither been urged in the original Grounds of Appeal filed by the Department nor challenged vide any additional/supplementary Grounds of Appeal raised before us. In a nutshell, ld. D/R has culled out details of two projects awarded by IRCON International Ltd. to the assessee viz. (i) Construction of Tunnel T 5. (between Km 11 + 604 to Km 13+697 approx) on Sivok Rangpo Rail Link Project (details compiled at page 518 of the CIT(A)’s Order) and (ii) Construction of Tunnel T74-R balance work at North Portal from Km 130/950 to Km 133/910 (Approx) on Katra-Banihal Section of Udhampur – Srinagar- Baramulla New BG Railway Line Project (Package t-74R-B(N)] (details compiled at page 495 of ld. CIT(A)’s order. Ld. D/R has relied upon Circular No. 717 dated 14.08.1995 and the provisions of section 80IA(4)(i)(c) of the Act to aver that the deduction u/s 80IA(4) of the Act should be in respect of income derived from the use of infrastructural facility whereas the above projects were still in the initial stages of construction i.e., not completed. He has thereafter gone on to allege that the Assessee was merely a ‘works contractor’ as opposed to a ‘developer’ and hence not eligible for deduction u/s 80IA(4) of the Act.

“24 ………………Moreover, as a matter of law, what the condition essentially means is that the infrastructure facility should have been operational after April 1, 1995. After section 80-IA was amended by the Finance Act of 2001, the section applies to an enterprise carrying on the business of (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining any infrastructure facility which fulfils certain conditions. Those conditions are: (i) ownership of the enterprise by a company registered in India or by a consortium; (ii) an agreement with the Central or State Government, local authority or statutory body and (iii) the start of operation and maintenance of the infrastructure facility on or after April 1, 1995. The requirement that the operation and maintenance of the infrastructure facility should commence after April 1, 1995 has to be harmoniously construed with the main provision under which a deduction is available to an assessee who develops or operates and maintains; or develops, operates and maintains an infrastructure facility. Unless both the provisions are harmoniously construed, the object and intent underlying the amendment of the provision by the Finance Act of 2001 would be defeated. A harmonious reading of the provision in its entirety would lead to the conclusion that the deduction is available to an enterprise which (i) develops; or (ii) operates and maintains; or (iii) develops, maintains and operates that infrastructure facility. However, the commencement of the operation and maintenance of the infrastructure facility should be after April 1, 1995. In the present case, the assessee clearly fulfilled this condition.

25. In the view which we have taken, all the assessment years in question to which this batch of appeals relates would be governed by the same principle. The subsequent amendment of section 80-IA(4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (ii) operating and maintaining; or (iii) developing operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field. Before the amendment that was brought about by Parliament by the Finance Act Page 108 of 114 I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. of 2001, we have already noted that the consistent line of circulars of the Board postulated the same position. The amendment made by Parliament to section 80-IA(4) of the Act set the matter beyond any controversy by stipulating that the three conditions for development, operation and maintenance were not intended to be cumulative in nature.

121. Further, apropos ld. D/R’s contention that the assessee is a ‘works contractor’ and not a ‘developer’ of infrastructural facilities, we find that the Kolkata Bench of the Tribunal has in the past allowed similar claims u/s 80IA(4)(i) of the Act of the assessee for AYs 2003-04 & 2004-05 [vide ITAT order dt. 06.08.2021 in & 279/Kol/2020], A.Y 2005-06 [vide ITAT order dt. 20.12.2017 in ITA No. 989/Kol/2013] and for A.Y. 2006-07 [vide ITAT order dt. 10.01.2018 in ITA No. 990/Kol/2013]. Thus, the fact that the assessee is a ‘developer’ of infrastructural projects and is eligible for deduction u/s 80IA(4) of the Act in respect of I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited. infrastructural facilities developed by it is no longer res integra and has been decided in assessee’s favour in its own case in the past. The department is not entitled to take inconsistent stand in respect of each assessment year on the same set of facts. This principle has been well explained by the Supreme Court in the case of M/s Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax, (1992) 1 Supreme Court Cases 659 held as under: "13. One of the contentions which the learned senior counsel for the assessee appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question. He relied upon some authorities in support of his stand. A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar & Bros. & Ors, v. Commissioner of Income-Tax, Madras, 4 ITC 226. After dealing with the con- cession the Full Bench expressed the following opinion: "The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether a certain property is trust property or not, it has nothing to do with the fluctuations in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequently agitated."

I.T.A. No.: 43/GTY/2022 I.T.A. No.: 2/GTY/2023 Assessment Year: 2014-15 I.T.A. Nos.: 37, 38 & 39/GTY/2022 AYs: 2017-18, 2018-19 & 2019-20 ABCI Infrastructure Private Limited.

16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.