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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM
PER PRASHANT MAHARISHI, AM:
ITA No. 1465/Mum/2019 A.Y. 2007-08 01. This appeal is filed by assessee against the order passed by the Commissioner of Income-tax (Appeals)-15, Mumbai
“1. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of passing the assessment order by invoking the provisions of section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings.
On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of making the estimated addition of Rs. 22.34.11.367/- on account of alleged bogus purchases.
On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of making the estimation of alleged bogus purchases of Rs. 22,34,11,367/- despite the fact that no incriminating material relating to these bogus purchases were found during the course of search and no assessment or reassessment was pending as on the date of search.”
The brief facts of the case shows that assessee is a company incorporated in joint collaboration with the German Principal Enercon GmbH holding 56% of shares and Mehra family holding 44% share. Earlier it was known as Enercon India limited Group and is engaged in the business of manufacturing of Wind Mill accessories, parts and also in maintenance of Wind Mill. For the year of consideration, assessee filed return of income on 28th
Meanwhile, assessee filed an application for settlement of cases under Section 243C of the Act on 5th December, 2014 for A.Y. 2007-08 to 2014-15. This petition was rejected under Section 245D (4) of the Act on 30 January 2016 and therefore, the assessment proceedings were
He further corroborated the same with the invoices of the transports and also analysis the consumption of steel and cement and same were consumed much higher than the Bill of Materials (BOM). Thereafter, he corroborated the statement of Mr. Siddhartha Mehra and Mr. Yogesh Mehra and found that the assessee has paid speed money also. The learned Assessing Officer reached at a conclusion that the books of accounts are fabricated creating dummy quotes without actual purchases and delivery of goods. Therefore, he tabulated the year-wise books purchased from A.Ys. 2007-08 to 2013-14 totaling in all to ₹362,25,04,658/-. The Assessing Officer held that assessee has failed to show the genuineness of purchases and therefore, he disallowed ₹22,90,37,426/- and passed an assessment order under Section 153A of the Act. He further made an addition of unaccounted cash expenses of
The assessee preferred an appeal before the learned CIT (A) challenging the order passed by the learned Assessing Officer and the validity of the assessment order passed under Section 144 of the Act, which was dismissed. The assessee also challenged the error in taking the original assessed income, which was wrongly made by the learned Assessing Officer and rectified by the learned CIT (A). The assessee also challenged the addition on account of bogus purchases. The learned CIT (A) after considering the explanation of the assessee estimated the ratio of bogus purchases to the turnover at 1.04% and upheld the addition of ₹62.76 crores. He further upheld the addition of ₹24,30,000/- on account of speed money to various government agencies. He rectified the amount taken by the learned Assessing Officer of ₹31,32,458/- to ₹24,30,000/-. The assessee also challenged that both the amount of bogus purchases and expenditure on account of speed money both cannot be made and therefore, he deleted the addition of speed money over and above the bogus purchases. Accordingly, the appeal of the assessee was allowed partly.
Despite issued notices for hearing to the assessee on 8th 07. November, 2021, 6th January, 2022, 5th April, 2022 and 31st May, 2022, none appeared on behalf of the assessee.
Therefore, the appeals of the assessee are decided on merits of the case as per information available on record.
The learned Departmental Representative vehemently supported the order of the learned Assessing Officer and the learned CIT (A).
We have carefully considered the rival contentions and perused the orders of the lower authorities. Facts stated above are also perused.
The first ground of appeal is against the action of the learned Assessing Officer in passing order under Section 144 of the Act. In paragraph no. 5 of the order of learned CIT (A), it was categorically held that all the submissions produced before the learned Assessing Officer was considered. Further, in response to notice under Section 153A of the Act, the assessee did not care to file even the return of income. Therefore, we find that no force in the ground no.1 of the appeal. Hence, dismiss.
Coming to the ground no. 2 of the appeal with respect to the addition sustained by the learned CIT (A) of ₹22,34,11,367/- as well as the issue of making addition
“In ground Nos. 3 to 7 of the appeal, the assessee has disputed (1) the addition made by the AO of Rs. 28,46,859/- related to hawala /bogus purchases identified by the Sales Tax Department, (ii) the addition made of Rs. 27,79,200/ related to purchases from certain bogus suppliers identified during the search action and (i) the addition of the estimated amount of Rs. 22,34,11,367/- out of the total purchases by applying the average ratio of the bogus purchases to the turnover for the years relevant to AYs 2010-11 to 2012-13. Since all the said 5 grounds relate to the issue of additions made by the AO on account of bogus purchases, they are being taken up together for the sake of convenience.
7.1 It is noted that in course of the assessment proceedings, the AO observed that for the relevant year, the assessee has claimed purchases from alleged hawala/ bogus suppliers identified by the Sales Tax Department viz. M/s Pooja Enterprises (Rs 9,72,399/-), M/s RJ Corporation (Rs 7,22,637/-) and M/s Siddhivinayak Trading Company (Rs 11,51,823/-) totally aggregating to Rs 28,46,859/-. The AO proceeded to disallow the entire amount of purchases of Rs. 28,46,859/- related to the hawala/ bogus suppliers.
7.2 Further, in course of the search action, an exhaustive exercise was carried out to identify those parties/suppliers wherein the SOP was not followed. After this exercise, a list of certain 41 parties were
7.3 Further, in course of the search action, the assessee was not able to produce the books of accounts prior to 18.10.2008. It was explained by the assessee that due to some dispute with their principals, M/s. Enercon Gmbh, the SAP server which was installed at Germany was disconnected on 18.10.2008 and therefore the accounts prior to this date are not in its possession. It was observed at the time of the search action that for the period prior to 18.10.2008, the assessee had booked purchases from 6 suppliers identified by the Sales Tax Department as hawala/suspicious dealers for an aggregate amount of Rs. 7,36,90,974/-. Also for the year relevant to A.Y. 2006-07, the assessee was not in possession of bills and other supporting for purchases to the tune of Rs. 5.92 crores. Therefore there was no doubt that the assessee had also indulged in bogus purchases for period prior to 18.10.2008. However, in absence of the books of accounts for the period prior to18.10.2008, the bogus purchases for the period which is relevant to A.Ys. 2007-08 to 2009-10 could not be exactly quantified and had to be estimated. It
7.4 It is noted that in course of the search action, it was observed that the Books of accounts of the assessee are maintained on SAP accounting system and the regular purchases/expenses are booked by the relevant Heads of the Departments as per the Standard Operating Procedure (SOP) followed by the assessee company. The detailed SOP and documentation followed by the assessee company for the purchases of material as well as for booking of expenses was explained by Mr. Biju Thomas,
7.5 The procurement cell related to manufacture/assembly of the windmill machines places orders with the identified vendors for the material required. The delivery of the material by the vendors is accompanied by invoice, delivery challan, lorry receipt, quality control report etc. The material is then tested by the quality control department. On confirmation of the quality, the material is transferred to the regular godown and a GRN is prepared. After
7.6 In course of the search action, an exhaustive exercise was carried out to identify those parties/suppliers wherein the SOP was not followed. After this exercise, a list of certain 41 parties were identified where the SOP was not being followed. In respect of the said 41 parties even the sites where the material procured from them was actually consumed, could not be identified. The total purchases/expenses booked by the assessee from these 41 parties in the years relevant to A.Ys. 2007- 08 to 2013-14 was of Rs. 266.54 crores and the amount related to one of the said 41 suppliers from the relevant year was of Rs 27,79,200/-. It was admitted by Shri Biju Thomas. Accounts Manager, in his statement on oath recorded at the time of the search action that as per the direct instructions of the used dummy codes for booking the bogus
7.7 Further, at the time of the search action, parallel exercise and investigations were carried out to find out the actual consumption of the major raw materials of cement and steel as per the standard norms vis-a-vis the consumption shown in the regular books of accounts. This analysis revealed that for the years relevant to A.Ys. 2010-11 to 2012-13, the excess consumption of cement is in the range of 24.35% to 57.31% and the excess consumption of steel is in the range of 17.98% to 42.76%. Also, at the time of the search action, incriminating documents were found which showed that the assessee has incurred substantial expenditure by way of speed money. These facts about excess consumption and incurring of speed money expenses corroborated the findings in respect of the bogus purchases. Moreover, these facts also showed that the material in respect of the bogus purchases has not at all been consumed.
7.8 When confronted with the various discrepancies noted at the time of the search action as well as the statements on oath of the said 2 employees of the Accounts Department, Shri Yogesh Mehra, Director admitted that the purchases made from 32 out of the said 41 parties for the years relevant to AYS 2007-08 to 2013-14 for an aggregate amount of Rs. 129.06 crores, is boqus/unverifiable.
7.9 Further, as noted above in course of the search action, the assessee was able to produce the books of
7.11 In course of the proceedings before the Hon'ble Settlement Commission, to support its claim of purchases in respect of the said 41 parties, the assessee had submitted purchase invoices, delivery challans, lorry receipts, confirmations etc. However, a number of discrepancies were noted by the Hon'ble Settlement Commission in these evidences submitted which included (i) improbably lesser time period claimed in transportation of material over large distances, (ii) lorry receipts for different financial years apparently being made by the same person on a single date, (iii) absence of delivery challans, insurance documents, weighment slips, quality
7.12 On rejection of the assessee's application before the Hon'ble Settlement Commission, the assessment proceedings initiated u/s. 153A were revived by the AO. In course of the assessment proceedings, the assessee furnished the same supporting evidences in respect of the said 41 parties which were placed before the Hon'ble Settlement Commission. However, on the basis of the said various discrepancies noted by the Hon'ble Settlement Commission in the proceedings before them, the AO held that the said evidences are unreliable and cannot be accepted. The AO relied upon the statement on oath of Shri Yogesh Mehra, Managing Director, recorded at the time of search action admitting that bogus purchases have been made for an aggregate amount of Rs. 170 crores for the year relevant to AYS 2007-08 to 2013- 14 which included an amount of Rs 41 crores related to AY 2007-08 to 2009-10 for which books of accounts were not avaialble. The AO further relied upon the statements of the employees of the Accounts department in respect of the dummy codes created for booking bogus purchases, the admission
7.13 As noted above, during the relevant year, the assessee had also made purchases of Rs. 28,46,859/- from hawala/bogus parties identified by the Sales Tax Department, the entire amount of which was disallowed by the AO. Moreover, again as noted above, since the books of account for the years relevant to AYS 2007-08 to 2009-10 were not available, the bogus purchases for the said 3 year period was estimated at Rs 60.76 crores by applying the average ratio of the bogus purchases to the turnover of 1.04% of the years relevant to AYS 2007- 08 to 2009-10. The amount estimated for the relevant year was of Rs 22,34,11,367/- which was also added by the AO to the total income of the assessee.
7.15 The contentions of the assessee have been duly considered. One of the contentions of the assessee is that in course of the search action, no incriminating evidences were found and the relevant year was a non-abated assessment, therefore as per the decision of the Hon'ble Jurisdictional High Court in the case of All Cargo Global Logistics (374 ITR 645), no additions could have been made. The Hon'ble Supreme Court in the case of P.R. Metrani v. CIT [2006] 287 ITR 209/157 Taxman 325 (SC) has explained the scope of section 132. It has been explained by the Hon'ble Supreme Court that the books of accounts, documents, money, bullion, jewellery or other valuable article or thing and any statements recorded of the persons searched may be used as evidence for any proceedings under the Act. Also, the statement on oath recorded in course of the search action u/s 132(4) has been held to be of evidentiary value by the Hon'ble Delhi High Court in the case of Dhingra Metal Works (328 ITR 384) and the Hon'ble Kerala
7.16 Further, as noted above, in course of the search action, a number of discrepancies were noted which showed that the purchases/expenses claimed by the assessee in respect of the said 41 parties was bogus. The said discrepancies noted at the time of the search action are summarized as under:
(ii) In course of the search action, blank transport lorry receipt books and blank transport invoice books of a number of transporters were found which clearly showed that the assessee was fraudulently utilising these blank transport invoices and blank transport lorry receipts for its claim of bogus purchases. The misuse of blank transport invoices and blank lorry receipts was also accepted by Shri Shankar Shivaji Kanase, Asstt Manager in his statement on oath recorded on 15.03.2013.
(iii) In respect of the purchases from the said 41 parties wherein SOP was not being followed, the assessee was not in possession of evidences in the form of lorry receipts, weighment slips, delivery/issue challans, test report, cheque payment details, inward and outward despatch stamps, insurance documents, etc. Moreover, other discrepancies like a) bills / invoices, lorry receipts, etc being in mint condition, b) improbably lesser time period claimed in transportation of material over large distances, (c) lorry receipts for different financial years apparently being made by the same person on
(iv) The actual consumption of major raw materials as per the Standard Norms vi-a-vis the consumption shown by the assessee in the regular books was found to be at major variance in the examination carried out during the search action. The excess consumption of cement for the years relevant to AYS 2010-11 to 2012 13 was found to be in the range of 24.35% to 57.31% and the excess consumption of steel was found to be in the range of 17.98% to 42.76%.
(v) In course of the search action, it was observed that the assessee was incurring substantial expenditure by way of speed money and it was also admitted that the evidences of speed money are regularly being destroyed, which was also confirmed by Shri Siddharth Mehra, Director.
7.20 The assessee submitted that 80% of the cement & steel is utilised in installation of Wind Mills and the balance 20% is utilised for the other activities like construction of culverts, small bridges, roads, pathways, etc at its various sites. Accordingly, the assessee contended that the excess consumption worked out at the time of the search action is not correct. This contention of the assessee is rejected because at the time of the search action, the
7.21 It was further contended by the assessee that at the time of search action neither any substantial unaccounted cash nor any substantial unaccounted jewellery / assets were found which clearly shows that the purchases claimed are genuine and have not been made to generate unaccounted funds. This contention of the assessee is also not acceptable since at the time of the search action, evidences suggesting substantial payment of speed money were found and it was also informed that these evidences are being destroyed on a regular basis. It is also not the case of the department that the said unaccounted funds have been used for the purpose of investments in undisclosed assets or hoarding of cash.
7.22 There is no dispute that in course of the search action, the assessee was not able to produce the books of accounts prior to 18.10.2008. It was observed at the time of the search action that for the period prior to 18.10.2008, the assessee had booked purchases from 6 suppliers identified by the Sales Tax Department as hawala/suspicious dealers for an aggregate amount of Rs. 7,36,90,974/-. Also for the year relevant to A.Y. 2006-07, the assessee was not in possession of bills and other supportings for purchases to the tune of Rs. 5.92 crores. Therefore
In ground No 8 of the appeal, the assessee has disputed the addition made by the AO of Rs 31,32,458/- on account of alleged unaccounted cash expenses in the form of "speed money" and in ground No 9 of the appeal, the assessee has disputed the action of the AO of not allowing telescoping of the said unaccounted cash expenses against the income determined by the AO on account of the addition of bogus purchases and bogus expenses. It is observed that the AO has quantified the unaccounted cash expenses for the relevant year at Rs 24,30,000/-, however, the addition made by him is of Rs 31,32,458/-. Therefore, the AO is directed to verify this fact and adopt the correct figure. Since both these grounds of appeal are inter related, they are taken up together for the sake of convenience.
8.1 It is noted that in course of the search action, various evidences were found in respect of payment of "speed money" to various government agencies for clearance / approvals, etc. for an aggregate amount of Rs 24,52,53,274/- for various years. The statement on oath of Shri Siddharth Mehra, General Manager was recorded at the time of the search action wherein he admitted to payment of "speed money" by the assessee company. Shri Yogesh Mehra, Managing Director was also confronted with the statement of Shri Siddharth Mehra, General Manager and he too accepted that the assessee company has made payment of "speed money" for smooth running of its business. The amount of "speed
8.3 I am of the view that the primary documents seized in the course of the search action and the statements on oath recorded at the time of the search action are most critical and carry immense evidentiary value, though the same may not be conclusive as held by the Hon'ble Supreme Court in the case of Pulangode Rubber Produce Co. Ltd. (91 ITR 18). The statements recorded at the time of the search action should be considered to be the most reliable for the reason that it was recorded on the spot and possibility of after-thought or to concoct an explanation and fabricate the evidence is minimum. In the instant case, Shri Yogesh Mehra, Managing
"Q. No 135 Please explain what is the source from with this speed money is paid?
Ans. Sir, I have identified certain purchases which are not verifiable in reply to Q No 69. The money is generated from these purchases and diverted for utilising the same in payment of speed money in the interest of the company."
8.4 From the aforesaid, it can be observed that Shri Yogesh Mehra has duly explained the source of "speed money" to be out of the unaccounted funds generated by claiming bogus purchases. In view of such a factual position, making a separate addition on account of speed money along with the said addition on account of bogus purchases will result into a double addition. Since, the AO has already made disallowance of Rs 22,90,37,426/- on account of bogus purchases and out of which an amount of Rs 22,34,11,367/- has been upheld in this appellate order, this separate addition made by the AO on account of "speed money" cannot be sustained. However, in an eventuality, if finally the entire addition made on account of bogus purchases is deleted, this addition of Rs 24,30,000/- Rs
We find that during the course of search enough evidences were found which are tabulated by the learned Assessing Officer and based on that addition has been made. Therefore, it cannot be said that there is no incriminating material found during the course of search. In the result ground number 3 of the appeal of the assessee is dismissed.
Ground number two of the appeal is with respect to the addition of ₹ 223,411,367 on account of alleged bogus purchases upheld by the learned CIT – A. We find that the learned CIT – A has considered all the explanations furnished by the assessee. He has categorically stated that the assessee had booked purchases from six suppliers identified by the sales tax Department as hawala/bogus dealers. The assessee is also not in possession of the bills and other supporting evidences for purchases to the tune of ₹ 5.92 crores. Therefore, there was no doubt that the assessee has indulged in bogus purchases for all these years. The learned and CIT – A observed that the average ratio of bogus purchases to the turnover is merely 1.04% and therefore the bogus purchases were estimated for assessment year 2007 – 08 to 2009 – 10 at ₹ 60.76 crores. When assessee was confronted with evidences, the key persons, managing director enhanced the
In the result, appeal filed by the assessee in ITA number 1465/M/2019 for assessment year 2007 – 08 is dismissed.
Assessment year 2010 – 11
Appeal number 1466/M/2019 (by assessee)
Appeal number 1352/M/2019 (by AO)
For assessment year 2010 – 11, both the parties are in appeal before us against the order passed by the Commissioner of income tax appeals – 51, Mumbai dated 26/12/2018.
Grounds in ITA No. 1352/Mum/2019 for A.Y. 10-11 in Revenue’s appeal:-
“1. Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the addition of Rs. 2,01,96,432/- made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases ?
Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the disallowance of Rs. 10,50,94,178/- made u/s 14A on the ground that no exempt income has been earned during the assessment year under consideration?"
Whether on the facts and circumstances of the case the Ld CIT(A) was justified in law in deleting the disallowance of Rs. 10,50,94,178/- on the basis of the decision of the Hon'ble Supreme Court in the case of Chettinad Logistics P Ltd (95 taxmann.com 221) as the aforesaid decision is a non-speaking order and no reason has been given for the decision and therefore, not a binding precedent under Article 141 of the Constitution?"
Whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹10,50,94,178/- ignoring the CBDT’s Circular No.5/2014 issue din exercise of powers conferred under Section 119 of the Income- tax act which provides disallowance even when no exempt income is earned?
In ITA number 1466/M/2019, assessee has raised following grounds of appeal:-
on the facts and in the circumstances of the appellant’s case and in the law the learned and CIT (A) erred in confirming AO’s action of the assessment order by invoking the provisions of Section 144 despite the fact that all relevant details were filed by the appellant during the course of assessment proceedings
on the facts and circumstances of the appellant’s case and in law the learned and CIT (A) erred in confirming the AO’s action of making the estimated addition of ₹ 506,455,949/– on account of alleged bogus purchases
on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making an addition of ₹ 36,845,487/– on account of alleged bogus purchases made from 6 parties is tabulated on page 153 of the assessment order on the ground that the names of these parties are
For this year assessee filed its original return of income on 30/9/2010 declaring a total income of ₹ 802,834,440/–. Subsequently search took place on 14/3/2013, which revealed that the assessee has made purchases from bogus parties of steel and cement, claimed bogus transportation expenditure, incurred unaccounted cash expenses on account of speed money and made payment for purchase of development rights to the related party, which is highly excessive. Consequently, notice u/s 153A was issued on 28/1/2014. Assessee approached the settlement commission, which was subsequently rejected on account of non-true and full disclosure. Therefore, the assessment u/s 153A was made. The learned assessing officer made following additions:-
The assessee has claimed purchases from the bogus suppliers identified by the sales tax Department aggregating to ₹ 36,845,487/–. This entire amount was disallowed.
AO further found that assessee has claimed purchases from 11 suppliers amounting to ₹ 506,455,949/– where the standard operating procedure normally followed by the assessee was not followed and it was observed that the requisite evidences related to transportation and to its conjunctions was not available. Therefore, the AO made an addition of the above amount as bogus purchases.
AO also disallowed ₹ 105,094,178/– u/s 14 A and also disallowed interest expenditure of ₹ 20,317,621/– u/s 36 (1) (iii) on account of diversion of interest-bearing funds for the purpose of advancing interest free loans to the subsidiary companies.
Assessee was also not allowed set-off of the brought forward losses of ₹ 65,42,13,876/– on the ground that the assessee did not file the return of income in time with respect to the relevant years to which these losses pertain.
Assessee approached the learned CIT – A wherein he confirmed the disallowance of estimated addition of ₹ 506,455,949/– on account of alleged bogus purchases and a further addition of ₹ 36,845,487/– a on account of alleged bogus purchases made from is 6 different parties who are bogus suppliers. However the learned CIT – A deleted the addition of ₹ 20,196,432/– made on account of unaccounted cash expenses in the form of speed money by allowing telescoping in respect of bogus purchases. He deleted the disallowance u/s 14 A on account of that that assessee did not earn any exempt income during the year. Further he deleted the disallowance of interest expenditure
Coming to the ground number 1 – 3 of the appeal of the assessee, the learned departmental representative confirmed that they are identical to the appeal of the assessee for assessment year 2007 – 08.
On careful consideration of the facts and orders of the lower authorities, we find that the learned CIT – A has confirmed the addition of ₹ 506,455,959 on account of bogus purchases from 41 parties identified at the time of search action and assessee has not been a in a position to provide the requisite documents especially related to transportation and the consumption of the above material. The learned CIT – A has given the similar findings as has been given by him for assessment year 2007 – 08. We have already upheld the addition for that assessment year. Therefore, following our own order in assessee's case for assessment year 2007 – 08 we do not find any infirmity in the order of the learned CIT – A in confirmation of the addition of ₹ 506,455,949/– as assessee has failed to show that the material has been purchased with respect to the details of transportation as well as consumption of the material purchased. Accordingly, ground number 2 of the appeal is dismissed.
Ground number 3 is with respect to the addition of bogus purchases to the extent of ₹ 36,845,487/– from 6 different parties being suspicious suppliers, the facts relating to this are also identical to ground number 2 of the appeal of the
In the result, appeal filed by the assessee for assessment year 2010 – 11 in ITA number 1466/M/2019 is dismissed.
Now coming to the appeal of the learned that AO for the same assessment year, the ground number 1 relates to the disallowance on account of speed money of Rs 2,0 1,96,432/–. The fact shows that during the course of search action various evidences were found in respect of payment of speed money to various government agencies for clearances/approval amounting to ₹ 245,253,274/– for various years. The statement of general manager was recorded at the time of search action wherein he admitted to the payment of speed money. The managing director also accepted the same. The learned and CIT – A confirmed the addition however he telescope the same in view of the addition confirmed by him on account of bogus purchases for the reason that in answer to question number 135 the managing director of the company has stated that the source of the above speed money paid is on account of bogus purchases. Therefore we do not find any infirmity in the order of the learned CIT – A in allowing the telescoping of the above disallowance with respect to the addition confirmed by him on account of bogus purchases. Accordingly, ground numbers 1 – 2 of the appeal of the AO are dismissed.
The ground number three is with respect to the disallowance u/s 14 A of ₹ 105,094,178/–, deleted by the learned CIT – A on the argument that there is no exempt
Ground number 6 is with respect to the disallowance of interest expenditure of ₹ 20,317,621/– made by the learned assessing officer out of interest expenditure under the tax that assessee has advanced interest free loans and advances to its subsidiaries. The learned CIT – A has
In the result, appeal filed by the learned AO in ITA number 1352/M/2019 for assessment year 2010 – 11 is partly allowed.
AY 2011-12
ITA number 1467/M/2019 (by assessee)
ITA number 1353/M/2019 (by AO)
these are the cross appeals filed by both the parties for assessment year 2011 – 12 against the order passed by the Commissioner of income tax (appeals) – 51, Mumbai dated 26/12/2018.
In ITA number 1467/M/2019 filed by the assessee following grounds of appeal are raised:-
on the facts and the circumstances of the appellant’s case and in law the learned CIT (A) order in confirming the AO’s action of disallowing deduction u/s 80 IA amounting to ₹ 80,876,601/–
on the facts and circumstances of the appellant’s case and in law the learned CIT (A) order in confirming the AO’s action in making the addition of ₹ 557,079,690/– on account of alleged bogus purchases
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 291,00,00,000/– on account of purchase of development rights of fully developed wind power site acquired from Messer’s Vish wind infrastructure LLP by invoking the provisions of Section 40 A (2) (b)/37 (1)
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing
in ITA number 1353/M/2019 the learned assessing officer has raised the following grounds of appeal:-
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of ₹ 33,912,150/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of ₹ 33,912,150/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the case generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in form of speed money.
Whether on the facts and the circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 121,013,188/– made u/s 14 A on the ground that no exempt income has been earned during the assessment year Under consideration
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 121,013,188/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned
whether on the facts and circumstances of the case, the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 34,358,442/– made by the AO u/s 36(1)(iii) four interest free loans and advances to its subsidiary is on account of sufficient availability of interest free funds in view of the decision of the honourable Supreme Court in the case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of funds was upheld.
Briefly stated, the fact shows that assessee filed its return of income on 29/11/2011 declaring a total income of ₹ 1,994,294,530/–. The facts stated in earlier year that assessee approached settlement commission wherein the
During the course of assessment proceedings, the AO observed that assessee has claimed purchases from 21 suppliers where no standard operating procedure normally followed by the assessee in respect of its genuine purchases has not been followed and assessee failed to show the transportation detail for the material purchased as well as its consumption at the various sites. Accordingly, the assessing officer made an addition of ₹ 557,079,690/– treating the said purchases is bogus. The assessee was also found to be having incurred speed money expenditure and accordingly such unaccounted cash expenses of ₹ 33,912,150/– was added. During the year, assessee has claimed expenditure of ₹ 291 crores in purchase of site development rights in the nature of approvals and allotments of windmill project from Vish wind infrastructure LLP. During the course of search, it revealed that the above party did not have any technical knowhow, the technical manpower, or the sophisticated infrastructure in respect of acquisition of the site development rights. On the other hand, all these expertise were available with the assessee. It was also admitted by the managing director that knowhow, manpower, and infrastructure has been provided by the assessee to the above party for the acquisition of site development rights. Assessee has not received any amount for the said services rendered. Even the proceedings before the settlement commission also
Assessee approached the learned CIT – A in appeal. The learned CIT – A confirmed all other additions except the disallowance on account of speed money of ₹ 33,912,150/– granting telescoping to the assessee he deleted the same, he also deleted the disallowance u/s 14 A of the act of ₹ 121,013,188/– as assessee did not on any exempt income. He also deleted the disallowance on account of interest of ₹ 34,358,442/– as assessee was
Coming to the appeal of the learned AO, ground number 1 – 2 of the appeal has already been decided by us in the appeal of the AO for assessment year 2010 – 11 wherein we upheld the action of the learned CIT – A in deleting the separate addition on account of speed money paid because of the reason that assessee has stated that amount earned out of bogus purchases have been used for spending on speed money. Therefore for the similar reasons, in absence of any change in the facts and circumstances of the case, we confirm the action of the learned CIT – A and ground number 1 and 2 of the appeal is dismissed.
Ground number 3 – 6 is identical to ground number 3 – 6 of the appeal of the AO for assessment year 2011 – 12 wherein we have set-aside the whole issue back to the file of the learned assessing officer in view of the amendment in the income tax act by Finance act 2022, for the similar reasons we also set-aside these three grounds back to the file of the AO to decide in accordance with the law. Accordingly, these grounds are allowed.
Ground number seven of the appeal is with respect to the deletion of the interest disallowance amounting to ₹ 34,358,442/–. This is identical to the ground number 7 of the appeal of the learned assessing officer for assessment year 2011 – 12 wherein we have upheld the action of the
Accordingly, appeal of the learned assessing officer is partly allowed.
Now we come to the ground of appeal of appeal filed by the assessee. Ground number 1 is with respect to the assessment-framed u/s 144 of the act. This is identical to ground number 1 of the appeal of the assessee for assessment year 2011 – 12 wherein we have confirmed the action of the learned assessing officer. Accordingly, we do not find any merit in the ground number 1 of the appeal and hence dismissed.
Ground number 3 is with respect to the addition on account of bogus purchases of ₹ 557,079,690 on account of alleged bogus purchases. This ground is identical to ground number 2 – 3 in the appeal of the assessee for assessment year 2011 – 12. There are no changes in the facts and circumstances of the case. For that year we have already confirmed the action of the learned CIT – A. Accordingly we also confirm the action of the learned CIT – A in confirming the disallowance/addition of ₹ 557,079,690/– on account of alleged bogus purchases accordingly ground number 3 of the appeal is dismissed.
Ground number 4 is with respect to the disallowance of a sum of Rs 291,00,00,000/-on account of purchases of development rights of fully developed when the power site acquired from Vish wind infrastructure LLP[ LLP] . We find that this issue has been considered by the learned CIT – A as per paragraph number 9 of the appeal order. The facts relating to the above addition shows that during the course of search it was found that LLP had hardly carried out any business activities, which showed sale of
Ground number five is with respect to the confirmation of disallowance of ₹ 60 crores u/s 37 (1) of the act. This offer was made by the assessee before the settlement commission. This addition was on account of the provisions of Section 43B of the act since the above sum is not paid before the end of relevant year. During the course of assessment proceedings, also assessee did not object to the same. Before the learned CIT – A also no evidences were produced. There are no evidences that the above sum has been paid even before the due date of filing of the return of income. Therefore, we do not have any other alternative but to confirm the action of the learned CIT – A in confirming the above disallowance of ₹
Accordingly, appeal filed by the assessee in ITA number 1467/M/2019 four assessment year 2011 – 12 is dismissed.
AY 2012-13
ITA number 1468/M/2019 (by assessee)
ITA number 1354/M/2019 (by AO)
These are the cross appeals filed by the both the parties against the order of the learned CIT – A – 51, Mumbai dated 26/12/2018.
ITA number 1468/M/2019 is filed by the assessee raising following grounds of appeal:-
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of passing the assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings.
On the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making the addition of ₹ 803,285,982/– on account of alleged bogus purchases
on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 390 crores on
In ITA number 1354/M/2019, the learned AO has raised the following grounds of appeal:-
whether on the facts in the circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs 1, 30,76,850/– made on account of unaccounted cash expenses in form of speed money by allowing telescoping as the additions have been confirmed in respect of bogus purchases without appreciating that the assessee has contested the additions made on account of bogus purchases
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the addition of Rs 1 30,76,850/– made on account of unaccounted cash expenditure in the form of speed money by allowing telescoping as the country addition is been confirmed in respect of bogus purchases without appreciating that the assessee has failed to substantiate that the cash generated from debit of bogus purchases has been utilized for making unaccounted cash expenses in the form of speed money
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 69,451,510/– made u/s 43B
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– made u/s 14 A on the ground that no exempt income was earned during the assessment year Under consideration
whether on the facts in the circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– on the basis of the decision of the honourable Supreme Court in the case of Chettinand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore not a binding precedent Under article 141 of the Constitution
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 188,365,527/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned
whether on the facts and circumstances of the case the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 34,358,442/– made by the AO u/s 36 (1) (iii) for interest free loans and
The learned departmental representative submitted that above all grounds in the appeal of the assessee as well as of the learned AO are covered by appeal of the assessee and AO for assessment year 2011 – 12.
We first deal with the appeal of the assessee. We find that the ground number one of the appeal is identical to ground number one of the appeal of assessment year 2011 – 12. We have already dismissed that ground of appeal for assessment year 2011 – 12 hence, on the similar reasons, we also dismiss ground number one.
Ground number 2 of the appeal is with respect to the confirmation of the addition of bogus purchase of ₹ 803,285,982/–. This ground is similar to ground number three of the appeal of the assessee for assessment year 2011 – 12. While deciding that appeal, we have already confirmed the action of the learned CIT – A. Therefore, for the similar reasons we also confirmed the action of the learned CIT appeal in confirming the disallowance of the above sum on account of alleged bogus purchases accordingly ground number 2 of the appeal is dismissed.
Ground number three of the appeal is with respect to the confirmation of disallowance of ₹ 390 crores on account of
In the result ITA number 1468/M/2019 filed by the assessee for assessment year 2012 – 13 is dismissed.
Now we come to the appeal filed by the learned assessing officer we find that ground number 1 – 2 of the appeal is with respect to the telescoping of disallowance on account of speed money paid with unaccounted income of bogus purchases. This ground is identical to ground number 1 – 2 of the appeal of the AO for assessment year 2011 – 12. We have confirmed the action of the learned CIT – A for that year. Accordingly for the similar reasons we also dismiss ground number one and two and confirmed the action of the learned CIT – A in allowing telescoping of the above disallowance
ground number 4 – 6 of the appeal is with respect to the disallowance u/s 14 A which is similar to the ground number 4 – 5 of the appeal of the AO for assessment year 2011 – 12 which has been set-aside back to the file of the learned assessing officer in view of the amendment u/s 14 A of the act by the finance act 2022. For the similar reasons we also set-aside these grounds of appeal to the
Ground number 7 is with respect to the deletion of the disallowance of interest expenditure in view of the fact that assessee has sufficient availability of interest free funds. This ground is similar to ground number six of the appeal of the AO for assessment year 2011 – 12. We have confirmed the order of the learned CIT – A in deleting the above disallowance. For the similar reasons we also confirmed the order of the learned CIT – A for this year. Accordingly, ground number 7 is dismissed.
Ground number three of the appeal is with respect to the disallowance deleted by the learned CIT – A of ₹ 6,9451,510 u/s 43B of the act. We find that this issue has been set-aside by the learned CIT – A to the file of the learned AO with a direction to examine the nature of the expenditure whether it falls within the ambit of the provisions of Section 43B of the act or not and whether the actual payment of the above sum has been made during the relevant year before allowing the claim of the assessee. We find that the learned CIT – A has given a direction to the AO and there should not be any grievance to the assessing officer against the direction. The learned and CIT – A has not allowed the deduction. In view of this, we do not find any merit in the ground number 3 of the appeal, hence dismissed.
In the result ITA number 1354/M/2019 filed by the learned assessing officer for assessment year 2012 – 13 is partly allowed.
ITA number 1355/M/2019 (by AO)
ITA number 1469/M/2019 (by assessee)
ITA number 1355/M/2019 is filed by the learned assessing officer for assessment year 2013-14 against the order passed by the learned CIT – A dated 26/12/2018.
As per ground number 1 – 2 of the appeal, AO is aggrieved with the direction of the learned CIT – A granting telescoping of the disallowance confirmed of ₹ 153,943,689/– made on account of speed money. We find that identical ground has been raised by the learned assessing officer in earlier years also. There is no change in the facts and circumstances of the case. As for the assessment year 2011 – 12 and 2012 – 13, identical ground has been dismissed, therefore for the similar reasons we dismiss ground number 1 and 2 of the appeal of the AO.
Ground number 3 is with respect to the deletion of disallowance of Rs 4.50 crores u/s 43B of the act. This ground is identical to ground number three of the appeal of the AO for assessment year 2012 – 13 wherein the issue has been set-aside to the file of the learned assessing officer for the purpose of verification. Therefore, according to us the assessing officer cannot be said to be aggrieved by that order. In view of this, we dismiss ground number 3 of the appeal.
Ground number 7 of the appeal is with respect to the deletion of the disallowance of interest expenditure of ₹ 79,399,439/–. The facts and circumstances of the disallowances identical to the ground number 7 of the appeal of the AO for assessment year 2012 – 13. The learned and CIT – capital has deleted the disallowance holding that assessee has sufficient interest free funds available then the amount of advances given interest free to its subsidiary companies. We do not find any infirmity in the order of the learned CIT – A. In view of this following our own decision for ground number seven in appeal of the AO for assessment year 2012 – 13 we dismiss this ground.
Accordingly ITA number 1355/M/2019 filed by the learned assessing officer is partly allowed.
Coming to appeal of the assessee wherein the first ground is against the action of the learned assessing officer
Ground number 2 is with respect to the disallowance of deduction u/s 80 IA of ₹ 160,761,237/–. This ground is identical to ground number two of the appeal of the assessee for assessment year 2011 – 12. This ground of appeal has been decided by us confirming the action of the learned CIT – A in disallowing the above deduction as assessee has failed to show that any report in form number 10 CCB is filed. In view of this, for similar reasons we also dismiss ground number 2 of the appeal.
Ground number three is with respect to the confirmation of disallowance of ₹ 473,502,577/– on account of alleged bogus purchases. This ground is identical to ground number 3 of the appeal of the assessee for assessment year 2011 – 12. We have confirmed the action of the learned CIT – A in confirming the above disallowance for that year. Therefore, for the similar reasons we confirm the order of the learned CIT – A accordingly ground number 3 is dismissed.
Ground number 4 is against the confirmation of the disallowance of ₹ 27.58 crores on account of alleged bogus transportation charges. This ground relates to the bogus purchases. The learned CIT – A has confirmed the same
Ground number 5 of the appeal is with respect to the disallowance of a sum of ₹ 102 crores on account of purchase of development rights. This ground is identical to the appeal of the assessee for assessment year 2012 – 13 and 2011 – 12. In those appeals we have confirmed the action of the learned CIT – A. Therefore for the similar reasons we also confirmed the action of the learned CIT – A in confirming the above disallowance. Accordingly, ground number 5 of the appeal is dismissed.
Ay 2014-15
ITA number 1470/M/2019 (by assessee)
ITA number 1910/M/2019 (by AO)
Both these above cross appeals have been filed by the parties against the order of the Commissioner of income tax appeals – 51, Mumbai dated 31/1/2019.
We first take up the appeal of the learned assessing officer in ITA number 1910/M/2019. The AO has raised following grounds of appeal:-
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in allowing
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– made u/s 14 A ground that no exempt income has been earned during the assessment year Under consideration
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– on the basis of the decision of the honourable Supreme Court in case of Chittanand logistics private limited (95 taxmann.com 221) as the aforesaid decision is a nonspeaking order and no reason has been given for the decision and therefore not a binding precedent Under article 141 of the Constitution
whether on the facts and circumstances of the case the learned CIT (A) was justified in law in deleting the disallowance of ₹ 541,007,860/– ignoring the CBDT circular number 5/2014 issued in exercise of powers conferred u/s 119 of the income tax act which provides disallowance even when no exempt income is earned
whether on the facts and circumstances of the case the learned CIT (A) was correct in law in deleting the disallowance of interest of ₹ 53,671,455/– made by the AO u/s 36 (1) (iii) four interest free loans and advances to its subsidiary is on account of sufficient availability of interest free funds in view of the decision of the honourable Supreme Court in case of Avon cycles Ltd (civil appeal number 1423 of 2015) wherein the proportionate disallowance of interest in case of mixed use of funds was upheld
whether on the facts and circumstances of the case the learned CIT (A) was correct in law in allowing the relief of ₹ 178,300,823/– and Rs 471,91,192/– in respect of 10% disallowances Under the heads employees benefit and legal and professional charges and security charges when the assessee failed to produce any villains in support of the claim
whether on the facts in the circumstances of the case the learned CIT (A) was correct in law in restricting the disallowance of ₹ 132,141,405/– being 1.04% of
in ITA number 1470/M/2019 the assessee has raised the following grounds of appeal:-
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of passing the assessment order by invoking the provisions of Section 144 despite the fact that all the relevant details were filed by the appellant during the course of assessment proceedings
on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of making an addition/disallowance of ₹ 182,785,086/– by invoking the provisions of Section 43B
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing set-off of brought forward loss of ₹ 336,508,609/–
on the facts and circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing deduction u/s 80 IA amounting to ₹ 146,249,255/–
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing liquidated damages amounting to ₹ 53,075,465/–
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO’s action of disallowing a sum of ₹ 97,934,695/– claimed u/s 37 (1) on estimated basis
on the facts in the circumstances of the appellant’s case and in law the learned CIT (A) erred in confirming the AO action of making addition of ₹ 132,141,405/– on account of alleged bogus purchases on estimated basis.
We first deal with the appeal of the learned assessing officer. Ground number 2 – 4 of the appeal is with respect to the disallowance deleted by the learned CIT – A u/s 14 A of the act amounting to ₹ 541,007,860/– as the assessee has not earned any exempt income during the year. The identical issue has been dealt with by us in the appeal of the assessee for earlier years where the assessing officer has challenged the action of the learned CIT – A. We have set-aside those grounds back to the file of the learned assessing officer to decide the same in accordance with the law in view of the amendment made
Ground number 5 of the appeal is with respect to the granting of telescoping adjustment on expenditure related to unaccounted cash expenses in the form of speed money against the addition of bogus purchases. This ground is also similar to the ground of appeal decided in the case of the appeal filed by the assessing officer for earlier years. We find that the learned CIT – A while upholding the disallowance of bogus purchases has granted the telescoping as in the statement made by the assessee it has been confirmed that these expenses are incurred out of the money generated out of the bogus purchases. In view of this we do not find any infirmity in the order of the learned CIT – A in granting telescoping of the above two different additions. Accordingly, ground number 5 of the appeal is dismissed.
ground number 6 is with respect to the disallowance of interest expenditure of ₹ 53,671,455/– which has been deleted by the learned CIT – A holding that assessee is having more interest free loans and advances compared to amount advanced to the subsidiary companies without charging interest. Identical issue arose in the case of the assessee from assessment year 2011 – 12 to assessment year 2013 – 14 wherein we have upheld the order of the learned CIT – A deleted the about disallowance. Therefore, for the similar reasons, we confirm the order of the
Ground number 1 of the appeal of the AO is against the deletion of disallowance to the extent of ₹ 31,119,000/– on account of liquidated damages of ₹ 84,194,465/–. The facts relating to the above disallowance made by the assessing officer is reproduced in paragraph number 16 of the assessment order. The assessee has claimed liquidated damages amounting to ₹ 84,194,465 in the profit and loss account. The assessee was asked to furnish the details the before the assessing officer assessee could not furnish any detail and therefore the learned assessing officer disallowed the above sum. The matter reached before the learned CIT – A who dealt with this issue in paragraph number 10 of his order. Before the assessing officer, it was submitted that assessee has entered into a memorandum of understanding on 26/2/2013 with one party for supply and commissioning of 20 MW wind power project in Rajasthan for a total contract amount of ₹ 1,037,300,000. As per the agreement, the project was to be commissioned on or before 31/3/2013, however it could not be commissioned within the stipulated time. For this project, that party has availed loan is and paid interest for an aggregate amount of ₹ 53,075,465, which was paid by the assessee. As per the MOU that party raised debit note of ₹ 31,119,000/– being 3% of the contract value towards liquidated damages for the delay in commissioning of the project. Therefore, assessee claimed deduction of the above sum amounting in all to ₹ 84,194,465 on account of liquidated damages. Assessee
On careful consideration of the findings of the lower authorities, it is apparent that assessee has incurred a liability of ₹ 31,119,000/– which is supported by the memorandum of understanding for delay in commissioning of the project. In view of this we do not find any infirmity in the order of the learned CIT – A in allowing the above deduction to the assessee. The assessee has challenged the confirmation of disallowance of ₹ 53,075,465/– as per ground number six of the appeal of the assessee. In view of this, we uphold the order of the learned CIT – A in allowing the claim of ₹ 31,119,000 which is supported by the debit note and the clauses of the agreement of memorandum of understanding and confirmation of disallowance of ₹ 5,30,75,465 which is not supported by any agreement. Accordingly ground number one of the
Ground number 7 and 8 of the appeal of the AO as well as ground number 7 and 8 of the appeal of the assessee are with respect to the disallowance of certain expenditure confirmed by the learned CIT – A. The facts relating to the above ground is that assessee has claimed certain expenditure Under the head employee’s benefit, repairs and maintenance, other manufacturing expenses, commission and discount on sales and legal and professional fees as well as security service charges. Before the assessing officer, no further submissions were made and therefore the learned AO made an ad hoc disallowance of 10% of the above aggregate expenditure. Such disallowance was amounting to ₹ 333,689,904/–. The assessee contested before the learned CIT – A the submissions made by the assessee were not considered. The remand report was called for where the assessee only filed copies of the Ledger account of the said expenses and simple copies of the bills and invoices. In rejoinder assessee submitted that its registered office, factory is situated at a different place and records are lying under lockout and no employees are there to take care of. Therefore, it was stated that it is practically impossible to comply with the requirement of the AO. Assessee also stated that regular assessment u/s 143 (3) of assessment year 2008 – 09 has taken in place and no disallowance has been made and in that the head of these expenditure assessee also submitted a comparative chart of expenses to state that there is no abnormal increase in the
This leaves us with some of the grounds in the appeal of the assessee.
Ground number 1 is identical to the ground of appeal of assessee in earlier years wherein we have dismissed the same ground. For the similar reasons we uphold the action of the learned assessing officer in applying the provisions of Section 144 in making the assessment. Accordingly, ground number 1 is dismissed.
Ground number 2 is with respect to the confirmation of disallowance of ₹ 182,785,086/– u/s 43B of the act. The learned CIT – A has dealt with this issue in paragraph number 6 of the appeal. He has decided this issue after obtaining the remand report of the learned assessing Officer and rejoinder to the remand report of the assessee. The issue is 18.27 crores of service tax, which has been paid by the assessee on 18/9/2013 under the protest he held that, assessee, can claim the same as bad debt if the same is not received from the client but it is not allowable u/s 43B of the act. We do not find any infirmity in the order of the learned CIT – A in making the about disallowance invoking the provisions of Section 43B of the act as it did not satisfy the requisite criteria. In the result ground number 2 of the appeal is dismissed.
Ground number 3 is with respect to the not allowing set of brought forward losses of ₹ 336,508,609. This amount is
Ground number 4 is with respect to the disallowance of deduction u/s 80 IA amounting to ₹ 146,249,255/-we find that identical issue arose in the case of the assessee in earlier assessment year where the assessee has not furnished form number 10CCB. On this identical ground, we have already confirmed disallowance of deduction u/s 80 IA in earlier years. There is no change in the facts and circumstances of the case and therefore we confirm the action of the learned CIT – A – ground number 4 of the appeal.
Ground number 5 of the appeal is against the disallowance of the bad debts amounting to ₹ 2,007,599/– this disallowance was confirmed by the learned CIT – A for the reason that before the assessing officer, in the remand proceedings, before the learned CIT – A assessee did not produce any of the details. In view of this, we do not have any reason to deviate from the orders of the lower authorities. Accordingly, ground number 5 of the appeal is dismissed.
In the result, appeal filed by the assessee in ITA number 1470/M/2019 for assessment year 2014 – 15 is dismissed.
Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 24.06.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT DR, ITAT, Mumbai 5. 6. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai