DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(3), MUMBAI vs. F A CONSTRUCTION, MUMBAI

2. On the facts and circumstances of the case and in law, The Ld. 2. On the facts and circumstances of the case and in law, The Ld. 2. On the facts and circumstances of the case and in law, The Ld. CIT(A) has erred in deleting CIT(A) has erred in deleting the addition solely on the basis that the the addition solely on the basis that the withdrawals withdrawals withdrawals were were were from from from disclosed disclosed disclosed bank bank bank accounts, accounts, accounts, without without without independently verifying whether the cash was actually utilized for independently verifying whether the cash was actually utilized for independently verifying whether the cash was actually utilized for business expenditure or remained unexplained, which is a business expenditure or remained unexplained, which is a business expenditure or remained unexplained, which is a prerequisite under Section 69A of t prerequisite under Section 69A of the Act."

3.1 Subsequently, the Assessing Officer received information from Subsequently, the Assessing Officer received information from Subsequently, the Assessing Officer received information from the in-site portal, i.e., the internal databa site portal, i.e., the internal database of the Income se of the Income-tax Department, Department, Department, indicating indicating indicating that that that the the the assessee assessee assessee had had had withdrawn withdrawn withdrawn substantial cash aggregating to ₹35,87,16,800/– substantial cash aggregating to from its bank accounts during the relevant previous year. On the basis of such accounts during the relevant previous year. On the basis of such accounts during the relevant previous year. On the basis of such information, the Assessing Officer recorded reasons to believe that information, the Assessing Officer recorded reasons t information, the Assessing Officer recorded reasons t income chargeable to tax had escaped assessment and accordingly income chargeable to tax had escaped assessment and accordingly income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act. Although the assessee issued notice under section 148 of the Act. Although the assessee issued notice under section 148 of the Act. Although the assessee initially failed to comply with the said notice, it thereafter filed a initially failed to comply with the said notice, it thereafter filed a initially failed to comply with the said notice, it thereafter filed a return in response, albeit after some de return in response, albeit after some delay. The reasons recorded lay. The reasons recorded for reopening were duly furnished to the assessee, who raised for reopening were duly furnished to the assessee, who raised for reopening were duly furnished to the assessee, who raised objections to the assumption of jurisdiction under section 147 of objections to the assumption of jurisdiction under section 147 of objections to the assumption of jurisdiction under section 147 of the Act.

3.2 During the course of reassessment proceedings, the Assessing During the course of reassessment proceedings, the Assessing During the course of reassessment proceedings, the Assessing Officer called for various details, inter alia, party Officer called for various details, inter alia, party- -wise purchases and expenses, details of salary and wages paid to employees, and expenses, details of salary and wages paid to employees, and expenses, details of salary and wages paid to employees,

F A Construction to 3897/MUM/2 to 3897/MUM/2025 number of employees, labour payments, and particulars relating to number of employees, labour payments, and particulars relating to number of employees, labour payments, and particulars relating to Provident Fund (PF) and Employees’ State Insurance Corporation Provident Fund (PF) and Employees’ State Insurance Corporation Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC). However, despite issuance of statutory notices, the assessee (ESIC). However, despite issuance of statutory notices, the assessee (ESIC). However, despite issuance of statutory notices, the assessee failed to furnish the requisite information. Consequently, the failed to furnish the requisite information. Consequently, the failed to furnish the requisite information. Consequently, the Assessing Officer proceeded to frame the assessment by invoking Assessing Officer proceeded to frame the assessment by invok Assessing Officer proceeded to frame the assessment by invok the provisions of section 144 of the Act. Even the show-cause notice the provisions of section 144 of the Act. Even the show the provisions of section 144 of the Act. Even the show issued under section 144 remained uncomplied with. issued under section 144 remained uncomplied with. issued under section 144 remained uncomplied with.

3.3 The Assessing Officer observed that the assessee had failed to The Assessing Officer observed that the assessee had failed to The Assessing Officer observed that the assessee had failed to substantiate the utilisation of the cash withdrawn from the banks, substantiate the utilisation of the cash withdrawn from the banks substantiate the utilisation of the cash withdrawn from the banks either by demonstrating that the same had been expended for either by demonstrating that the same had been expended for either by demonstrating that the same had been expended for business purposes or otherwise. Holding that the source and business purposes or otherwise. Holding that the source and business purposes or otherwise. Holding that the source and utilisation of the cash withdrawals remained unexplained, the utilisation of the cash withdrawals remained unexplained, the utilisation of the cash withdrawals remained unexplained, the ₹35,87,16,800/ Assessing Assessing Officer Officer treated treated the the sum sum of of 35,87,16,800/– as unexplained money and brought the same to tax under section 69 y and brought the same to tax under section 69 y and brought the same to tax under section 69 of the Act.

3.4 The Assessing Officer further noted that the assessee did not The Assessing Officer further noted that the assessee did not The Assessing Officer further noted that the assessee did not produce any supporting evidence in respect of purchases and other produce any supporting evidence in respect of purchases and other produce any supporting evidence in respect of purchases and other expenditure aggregating to expenditure aggregating to ₹2,41,84,26,074/–, as reflected in the , as reflected in the profit and loss account. The details of such expenditure were profit and loss account. The details of such expenditure were profit and loss account. The details of such expenditure were tabulated by the Assessing Officer as under: tabulated by the Assessing Officer as under:

Sr. No. Particulars Amount in Rs. Amount in Rs. 1 Purchases 2,67,05,926 2,67,05,926 2 Direct Expenses Direct Expenses 2,48,40,14,510 2,48,40,14,510 3 Indirect Expenses Indirect Expenses 26,64,22,438 26,64,22,438 Total 2,77,71,42,874 2,77,71,42,874

F A Construction to 3897/MUM/2 to 3897/MUM/2025

4. Less: Expenses Already Discussed as Less: Expenses Already Discussed as 35,87,16,800 35,87,16,800 disallowed Balance Expenditure as per P & L Account 2,41,84,26,074 Balance Expenditure as per P & L Account 2,41,84,26,074 5 3.5 In view of the continued non In view of the continued non-compliance and failure of the compliance and failure of the assessee assessee assessee to to to furnish furnish furnish supporting supporting supporting details details details despite despite despite adequate adequate adequate opportunities, the Assessing Officer considered it reasonable to opportunities, the Assessing Officer considered it reasonable to opportunities, the Assessing Officer considered it reasonable to disallow 5% of the balance expenditure of ₹2,41,84,26,074/ disallow 5% of the balance expenditure of 2,41,84,26,074/– claimed in the profit and loss account. Accordingly, a disallowance rofit and loss account. Accordingly, a disallowance rofit and loss account. Accordingly, a disallowance of ₹12,09,21,303/– was made. was made.

4. On further appeal, the Ld. CIT(A) though upheld the validity of On further appeal, the Ld. CIT(A) though upheld the validity of On further appeal, the Ld. CIT(A) though upheld the validity of the reassessment but deleted the addition on merit. the reassessment but deleted the addition on merit. the reassessment but deleted the addition on merit.

F A Construction to 3897/MUM/2 to 3897/MUM/2025 notwithstanding the fact that the withdrawals were made from notwithstanding the fact that the withdrawals were made from notwithstanding the fact that the withdrawals were made from disclosed bank accounts. disclosed bank accounts.

7.1 Before us, the learned Departmental Representative relied s, the learned Departmental Representative relied s, the learned Departmental Representative relied upon the assessment order and contended that, despite substantial upon the assessment order and contended that, despite substantial upon the assessment order and contended that, despite substantial cash withdrawals, the assessee failed to satisfactorily explain the cash withdrawals, the assessee failed to satisfactorily explain the cash withdrawals, the assessee failed to satisfactorily explain the utilisation thereof. It was submitted that in the absence of such utilisation thereof. It was submitted that in the absence of such utilisation thereof. It was submitted that in the absence of such explanation, the Assessing Officer was justified in treating the cash ation, the Assessing Officer was justified in treating the cash ation, the Assessing Officer was justified in treating the cash withdrawals as unexplained money under section 69A of the Act. withdrawals as unexplained money under section 69A of the Act. withdrawals as unexplained money under section 69A of the Act.

7.2 Per contra, the learned counsel for the assessee submitted Per contra, the learned counsel for the assessee submitted Per contra, the learned counsel for the assessee submitted that during the appellate proceedings the assessee furnished that during the appellate proceedings the assessee furnished that during the appellate proceedings the assessee furnished complete details to explain the utilisation of the cash withdrawn ete details to explain the utilisation of the cash withdrawn ete details to explain the utilisation of the cash withdrawn from the bank, including the cash book and sample vouchers. It from the bank, including the cash book and sample vouchers. It from the bank, including the cash book and sample vouchers. It was pointed out that the matter was remanded to the Assessing was pointed out that the matter was remanded to the Assessing was pointed out that the matter was remanded to the Assessing Officer, and during the remand proceedings no defect or infirmity Officer, and during the remand proceedings no defect or infirmity Officer, and during the remand proceedings no defect or infirmity was pointed out in the documents produced. After considering the pointed out in the documents produced. After considering the pointed out in the documents produced. After considering the remand report and the rejoinder filed by the assessee, the learned remand report and the rejoinder filed by the assessee, the learned remand report and the rejoinder filed by the assessee, the learned CIT(A) rightly deleted the addition. CIT(A) rightly deleted the addition.

7.3 The learned counsel invited our attention to page 39 of the The learned counsel invited our attention to page 39 of the The learned counsel invited our attention to page 39 of the Paper Book, being a letter Paper Book, being a letter issued by the Assessing Officer during issued by the Assessing Officer during the remand proceedings, calling upon the assessee to furnish the remand proceedings, calling upon the assessee to furnish the remand proceedings, calling upon the assessee to furnish complete details with justification. In response thereto, the assessee complete details with justification. In response thereto, the assessee complete details with justification. In response thereto, the assessee explained the cash withdrawals and submitted comprehensive explained the cash withdrawals and submitted comprehensive explained the cash withdrawals and submitted comprehensive documentation, including b documentation, including bank-wise cash withdrawals, main cash wise cash withdrawals, main cash

F A Construction to 3897/MUM/2 to 3897/MUM/2025 book, site-wise petty cash books, and summaries of cash wise petty cash books, and summaries of cash wise petty cash books, and summaries of cash utilisation. The list of documents filed by the assessee, as available utilisation. The list of documents filed by the assessee, as available utilisation. The list of documents filed by the assessee, as available at page 41 of the Paper Book, included inter alia: bank-wise at page 41 of the Paper Book, included inter alia: bank at page 41 of the Paper Book, included inter alia: bank withdrawal charts, highlighted withdrawal charts, highlighted bank statements, main and petty bank statements, main and petty cash books of various project sites, site cash books of various project sites, site-wise and head wise and head-wise cash utilisation summaries, sample vouchers and bills, details of utilisation summaries, sample vouchers and bills, details of utilisation summaries, sample vouchers and bills, details of creditors, and sample RA bills pertaining to government projects. creditors, and sample RA bills pertaining to government projects. creditors, and sample RA bills pertaining to government projects.

7.4 It was further explained th It was further explained that the assessee is engaged in civil at the assessee is engaged in civil construction activities executed at multiple and often remote construction activities executed at multiple and often remote construction activities executed at multiple and often remote locations. The nature of the business necessitates engagement of locations. The nature of the business necessitates engagement of locations. The nature of the business necessitates engagement of labour from surrounding areas and distant places, including other labour from surrounding areas and distant places, including other labour from surrounding areas and distant places, including other States, where labourers fre States, where labourers frequently change and insist upon cash quently change and insist upon cash payments. Construction activity being predominantly labour- payments. Construction activity being predominantly labour payments. Construction activity being predominantly labour oriented, payment of wages in cash becomes inevitable. It was also oriented, payment of wages in cash becomes inevitable. It was also oriented, payment of wages in cash becomes inevitable. It was also submitted that urgent purchases of material and repairs to submitted that urgent purchases of material and repairs to submitted that urgent purchases of material and repairs to machinery and equipment at project machinery and equipment at project sites often require immediate sites often require immediate cash payments. These business compulsions necessitated regular cash payments. These business compulsions necessitated regular cash payments. These business compulsions necessitated regular and substantial cash withdrawals to ensure uninterrupted and substantial cash withdrawals to ensure uninterrupted and substantial cash withdrawals to ensure uninterrupted execution of projects within stipulated timelines, failing which the execution of projects within stipulated timelines, failing which the execution of projects within stipulated timelines, failing which the assessee would face penal consequence assessee would face penal consequences and risk blacklisting by s and risk blacklisting by Government and semi Government and semi-Government authorities. It was emphasised Government authorities. It was emphasised that all such cash payments were made within the permissible that all such cash payments were made within the permissible that all such cash payments were made within the permissible limits prescribed under section 40A(3) of the Act. limits prescribed under section 40A(3) of the Act. In view of above In view of above

F A Construction to 3897/MUM/2 to 3897/MUM/2025 submission, the assessee prayed that h submission, the assessee prayed that huge withdrawals were for the uge withdrawals were for the genuine utilization of the business purposes. genuine utilization of the business purposes.

7.5 It was submitted that during original assessment proceedings It was submitted that during original assessment proceedings It was submitted that during original assessment proceedings also the amount debited under the labour charges was duly verified also the amount debited under the labour charges was duly verified also the amount debited under the labour charges was duly verified and only a minor amount was disallowed on ad and only a minor amount was disallowed on ad- -hoc basis. The assessee also submitted that similar cash withdrawals had been assessee also submitted that similar cash withdrawals had been assessee also submitted that similar cash withdrawals had been examined and accepted in earlier years, including in a reopened examined and accepted in earlier years, including in a reopened examined and accepted in earlier years, including in a reopened assessment for assessment year 2010 assessment for assessment year 2010–11, without any adverse 11, without any adverse addition. Due to voluminous records and technical constraints, the addition. Due to voluminous records and technical constra addition. Due to voluminous records and technical constra assessee placed physical files containing all supporting documents assessee placed physical files containing all supporting documents assessee placed physical files containing all supporting documents before the Assessing Officer during remand proceedings. before the Assessing Officer during remand proceedings. before the Assessing Officer during remand proceedings.

7.6 After considering the submissions of both sides and the After considering the submissions of both sides and the After considering the submissions of both sides and the remand report, the learned CIT(A) deleted the addition, recording a remand report, the learned CIT(A) deleted the addition, recording a remand report, the learned CIT(A) deleted the addition, recording a detailed and reasoned finding that the cash withdrawals were duly detailed and reasoned finding that the cash withdrawals were duly detailed and reasoned finding that the cash withdrawals were duly explained, accounted for in the books, and utilised for genuine explained, accounted for in the books, and utilised for genuine explained, accounted for in the books, and utilised for genuine business purposes. The learned CIT(A) further noted that although siness purposes. The learned CIT(A) further noted that although siness purposes. The learned CIT(A) further noted that although the Assessing Officer, in the remand report, acknowledged receipt the Assessing Officer, in the remand report, acknowledged receipt the Assessing Officer, in the remand report, acknowledged receipt and examination of extensive documentary evidence, no adverse and examination of extensive documentary evidence, no adverse and examination of extensive documentary evidence, no adverse material or discrepancy was brought on record to discredit the material or discrepancy was brought on record to discredit the material or discrepancy was brought on record to discredit the assessee’s explanation. ssessee’s explanation. The relevant finding of ld CIT(A) is The relevant finding of ld CIT(A) is reproduced as under: as under: “7.4 It is found that the appellant has challenged the said It is found that the appellant has challenged the said It is found that the appellant has challenged the said addition, contending that the cash withdrawals were made from addition, contending that the cash withdrawals were made from addition, contending that the cash withdrawals were made from disclosed bank accounts for business purposes and du disclosed bank accounts for business purposes and du disclosed bank accounts for business purposes and duly accounted for in the books of accounts. It is further observed that accounted for in the books of accounts. It is further observed that accounted for in the books of accounts. It is further observed that F A Construction to 3897/MUM/2 to 3897/MUM/2025 the appellant is engaged in civil construction contracts, particularly the appellant is engaged in civil construction contracts, particularly the appellant is engaged in civil construction contracts, particularly with government and semi with government and semi-government entities. These contracts government entities. These contracts involve labour involve labour-intensive work at remote locations, where banking here banking facilities are limited. Consequently, the appellant withdraws cash facilities are limited. Consequently, the appellant withdraws cash facilities are limited. Consequently, the appellant withdraws cash from bank accounts to pay wages, procure materials and meet from bank accounts to pay wages, procure materials and meet from bank accounts to pay wages, procure materials and meet other on-site expenses. The AO initiated reassessment proceedings site expenses. The AO initiated reassessment proceedings site expenses. The AO initiated reassessment proceedings based on information regarding high based on information regarding high-value cash wit value cash withdrawals received via the INSIGHT Portal. The assessment was completed received via the INSIGHT Portal. The assessment was completed received via the INSIGHT Portal. The assessment was completed ex-parte under Section 144, treating the cash withdrawals as parte under Section 144, treating the cash withdrawals as parte under Section 144, treating the cash withdrawals as unexplained money under Section 69A, on the ground that the unexplained money under Section 69A, on the ground that the unexplained money under Section 69A, on the ground that the appellant did not furnish supporting evidence during assessment appellant did not furnish supporting evidence during assessment appellant did not furnish supporting evidence during assessment proceedings. 7.5 It is found that the appellant provided substantial evidence 7.5 It is found that the appellant provided substantial evidence 7.5 It is found that the appellant provided substantial evidence regarding cash utilization and confirmed that significant amounts regarding cash utilization and confirmed that significant amounts regarding cash utilization and confirmed that significant amounts were paid to creditors, suppliers, and labourers. However, the AO, were paid to creditors, suppliers, and labourers. However, the AO, were paid to creditors, suppliers, and labourers. However, the AO, in the remand report, expressed an inability in the remand report, expressed an inability to conduct exhaustive to conduct exhaustive verification due to constraints but did not bring any adverse verification due to constraints but did not bring any adverse verification due to constraints but did not bring any adverse material to disprove the appellant's claims. material to disprove the appellant's claims. 7.6 The addition under Section 69A of the Act is unjustified as the 7.6 The addition under Section 69A of the Act is unjustified as the 7.6 The addition under Section 69A of the Act is unjustified as the AO has treated the cash withdrawals from the appellant's AO has treated the cash withdrawals from the appellant's AO has treated the cash withdrawals from the appellant's disclosed bank accounts as unexplained money. However, the isclosed bank accounts as unexplained money. However, the isclosed bank accounts as unexplained money. However, the Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Hon'ble ITAT Raipur vide its order dated 10.01.2025 in the case of Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically Harish Pandey vs. ACIT (ITA No. 503/RPR/2024) has categorically held that, "Without making necessary inquiries, putting the entire "Without making necessary inquiries, putting the entire "Without making necessary inquiries, putting the entire amount of bank deposits under the tax net on the basis of presumption to bank deposits under the tax net on the basis of presumption to bank deposits under the tax net on the basis of presumption to treat the same as taxable income of the assessee is found to be treat the same as taxable income of the assessee is found to be treat the same as taxable income of the assessee is found to be excessive. Such exercise could have been done either by the Ld. excessive. Such exercise could have been done either by the Ld. excessive. Such exercise could have been done either by the Ld. CIT(A), may be by himself or by directing the Ld. AO, h CIT(A), may be by himself or by directing the Ld. AO, h CIT(A), may be by himself or by directing the Ld. AO, however, the First Appellate Authority, who has the powers coterminous with First Appellate Authority, who has the powers coterminous with First Appellate Authority, who has the powers coterminous with that of the Ld. AO, had not thought it fit to exercise the same." that of the Ld. AO, had not thought it fit to exercise the same." that of the Ld. AO, had not thought it fit to exercise the same." 7.7 In the present case, during the assessment proceedings, the 7.7 In the present case, during the assessment proceedings, the 7.7 In the present case, during the assessment proceedings, the AO was precluded from making a detailed inquiry due AO was precluded from making a detailed inquiry due AO was precluded from making a detailed inquiry due to the appellant's failure to submit the required documents at that stage. appellant's failure to submit the required documents at that stage. appellant's failure to submit the required documents at that stage. The assessment was consequently completed under Section 144, The assessment was consequently completed under Section 144, The assessment was consequently completed under Section 144, where the AO, in the absence of any supporting evidence from the where the AO, in the absence of any supporting evidence from the where the AO, in the absence of any supporting evidence from the appellant, made an addition under Section 69A based on appellant, made an addition under Section 69A based on appellant, made an addition under Section 69A based on high- value cash withdrawals. However, during the appellate stage, the value cash withdrawals. However, during the appellate stage, the value cash withdrawals. However, during the appellate stage, the appellant furnished extensive documentary evidence, prompting appellant furnished extensive documentary evidence, prompting appellant furnished extensive documentary evidence, prompting me to direct a remand inquiry. The AO, in the remand report, has me to direct a remand inquiry. The AO, in the remand report, has me to direct a remand inquiry. The AO, in the remand report, has now had the opportunity to peruse the material submitted b now had the opportunity to peruse the material submitted b now had the opportunity to peruse the material submitted by the appellant.

F A Construction to 3897/MUM/2 to 3897/MUM/2025

7.8 The remand report acknowledges that the appellant has 7.8 The remand report acknowledges that the appellant has 7.8 The remand report acknowledges that the appellant has provided substantial evidence to substantiate the utilization of provided substantial evidence to substantiate the utilization of provided substantial evidence to substantiate the utilization of cash withdrawals. The AO notes: cash withdrawals. The AO notes: "On perusal of submissions made by the assessee, it has been "On perusal of submissions made by the assessee, it has been "On perusal of submissions made by the assessee, it has been observed that the asses observed that the assessee has withdrawn cash totalling to Rs. see has withdrawn cash totalling to Rs. 36,01,03,995/ 36,01,03,995/- from various bank accounts during the year under from various bank accounts during the year under consideration. In support of its claim, the assessee has provided consideration. In support of its claim, the assessee has provided consideration. In support of its claim, the assessee has provided the bank statements for the relevant period of the related bank the bank statements for the relevant period of the related bank the bank statements for the relevant period of the related bank accounts. The assessee accounts. The assessee provided the main cash book along with provided the main cash book along with petty cash books of various sites. Further, the, assessee provided petty cash books of various sites. Further, the, assessee provided petty cash books of various sites. Further, the, assessee provided the site- wise and head wise and head-wise cash utilization. On perusal of the wise cash utilization. On perusal of the same, it has been observed that the assessee made utilization of same, it has been observed that the assessee made utilization of same, it has been observed that the assessee made utilization of cash for direct exp cash for direct expenses, indirect expenses, and payment to enses, indirect expenses, and payment to creditors totaling to Rs. 35,52,42,438/ creditors totaling to Rs. 35,52,42,438/- for the year under for the year under consideration. Further, the assessee has also provided the bills consideration. Further, the assessee has also provided the bills consideration. Further, the assessee has also provided the bills and vouchers for work done for various heads related to specific and vouchers for work done for various heads related to specific and vouchers for work done for various heads related to specific projects on a sample basi projects on a sample basis. The assessee also provided ledger s. The assessee also provided ledger accounts of these entities, and it is observed that payments to accounts of these entities, and it is observed that payments to accounts of these entities, and it is observed that payments to these vendors were made from the cash available as per the cash these vendors were made from the cash available as per the cash these vendors were made from the cash available as per the cash book." 7.9 Additionally, the AO in the remand report confirms that the 7.9 Additionally, the AO in the remand report confirms that the 7.9 Additionally, the AO in the remand report confirms that the appellant has submi appellant has submitted a range of supporting documents, tted a range of supporting documents, including as below: including as below: "Chart of bank "Chart of bank-wise cash wise cash withdrawals along withdrawals along with bank with bank statements, main cash book and site statements, main cash book and site-wise petty cash books, site wise petty cash books, site- wise and head wise and head-wise cash utilization details, sample bills and wise cash utilization details, sample bills and vouchers to explain vouchers to explain the nature of expenses, list of sundry creditors the nature of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with and their ledgers, and RA bills raised during the year along with and their ledgers, and RA bills raised during the year along with sample copies signed by government engineers." sample copies signed by government engineers." 7.10 Despite having reviewed these records, the AO in the remand 7.10 Despite having reviewed these records, the AO in the remand 7.10 Despite having reviewed these records, the AO in the remand report does not bring any ad report does not bring any adverse finding against the appellant's verse finding against the appellant's claim that the withdrawals were used for business purposes. The claim that the withdrawals were used for business purposes. The claim that the withdrawals were used for business purposes. The Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the Hon'ble ITAT Ahmedabad vide its order dated 10.10.2024 in the case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that case of Rajendra Gadhia vs. ITO (ITA No. 31/Ahd/2024) held that "cash withdrawal satisfactor "cash withdrawal satisfactorily explained through documents ily explained through documents cannot be added u/s. 69A of the Act." cannot be added u/s. 69A of the Act." 7.10.1 The Hon'ble ITAT has also ruled that: The Hon'ble ITAT has also ruled that: "Once cash withdrawals are demonstrated, the burden shifts to "Once cash withdrawals are demonstrated, the burden shifts to "Once cash withdrawals are demonstrated, the burden shifts to the Department to disprove their availability for subsequent the Department to disprove their availability for subsequent the Department to disprove their availability for subsequent deposits.

F A Construction to 3897/MUM/2 to 3897/MUM/2025

Further, it was held that it was held that "When the assessee has satisfactorily explained cash withdrawals "When the assessee has satisfactorily explained cash withdrawals "When the assessee has satisfactorily explained cash withdrawals through documented evidence, and the AO has not brought any through documented evidence, and the AO has not brought any through documented evidence, and the AO has not brought any adverse material on record to disprove their availability, an adverse material on record to disprove their availability, an adverse material on record to disprove their availability, an addition under Section 69A cannot be sustained." addition under Section 69A cannot be sustained." ٠٨7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, 7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, 7.11 The Hon'ble ITAT Mumbai vide its order dated 12.05.2023, in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. in the case of Ramchandra Kanu Mendadkar vs. CIT(A) (ITA No. 163/MUM/2023), clarifies that: 163/MUM/2023), clarifies that: "addition under Section 69A of the Income Tax Act can only be "addition under Section 69A of the Income Tax Act can only be "addition under Section 69A of the Income Tax Act can only be made if the assessee is found to be the made if the assessee is found to be the owner of money that is not owner of money that is not recorded in the books of account and fails to provide a satisfactory recorded in the books of account and fails to provide a satisfactory recorded in the books of account and fails to provide a satisfactory explanation regarding the source of the money." explanation regarding the source of the money." It further held that: It further held that: "on perusal of record, we noticed that the assessee had provided "on perusal of record, we noticed that the assessee had provided "on perusal of record, we noticed that the assessee had provided supporting documents such supporting documents such as the cash book, bank statement, as the cash book, bank statement, and ledger copy of professional fees to the lower authorities. and ledger copy of professional fees to the lower authorities. and ledger copy of professional fees to the lower authorities. Additionally, a detailed breakdown of cash fees received from Mr. Additionally, a detailed breakdown of cash fees received from Mr. Additionally, a detailed breakdown of cash fees received from Mr. Sagun Naik and the receipt of professional fees via cheque from Sagun Naik and the receipt of professional fees via cheque from Sagun Naik and the receipt of professional fees via cheque from Mr. Biren Limbachiya was als Mr. Biren Limbachiya was also submitted. From the plain reading of above provisions, it is clear that the From the plain reading of above provisions, it is clear that the From the plain reading of above provisions, it is clear that the addition under section 69A of the Income Tax Act could only be addition under section 69A of the Income Tax Act could only be addition under section 69A of the Income Tax Act could only be made if the assessee is found to be the owner of money that is not made if the assessee is found to be the owner of money that is not made if the assessee is found to be the owner of money that is not recorded in the books of account and the assesse recorded in the books of account and the assessee is not offering e is not offering explanation about the source of the money." explanation about the source of the money." 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in 7.12 The Hon'ble ITAT Surat vide its order dated 13.11.2023, in the case of Harishbhai G. Chovatiya vs. ITO (ITA No. the case of Harishbhai G. Chovatiya vs. ITO (ITA No. the case of Harishbhai G. Chovatiya vs. ITO (ITA No. 486/SRT/2023), further emphasized that: 486/SRT/2023), further emphasized that: "Once the assessee has explained the "Once the assessee has explained the source of cash in hand, the source of cash in hand, the assessing officer was not justified in doubting the availability of assessing officer was not justified in doubting the availability of assessing officer was not justified in doubting the availability of such cash in hand for the sole ground of long period of holding, such cash in hand for the sole ground of long period of holding, such cash in hand for the sole ground of long period of holding, without bringing rebutting such contention." without bringing rebutting such contention." The Tribunal also noted: The Tribunal also noted: "The assessing officer ha "The assessing officer has not brought any adverse material or s not brought any adverse material or evidence on record that the cash in hand was beyond the evidence on record that the cash in hand was beyond the evidence on record that the cash in hand was beyond the withdrawal from bank." withdrawal from bank."

F A Construction to 3897/MUM/2 to 3897/MUM/2025

7.13 In light of these findings, it is evident that the appellant has 7.13 In light of these findings, it is evident that the appellant has 7.13 In light of these findings, it is evident that the appellant has fully explained the source and utilization of cash withdrawals. The fully explained the source and utilization of cash withdrawals. The fully explained the source and utilization of cash withdrawals. The AO, having reviewed these documents, has not raised any specific O, having reviewed these documents, has not raised any specific O, having reviewed these documents, has not raised any specific discrepancies or contrary evidence to support the original addition discrepancies or contrary evidence to support the original addition discrepancies or contrary evidence to support the original addition under Section 69A. The appellant operates in the civil construction under Section 69A. The appellant operates in the civil construction under Section 69A. The appellant operates in the civil construction sector, undertaking government projects at remote locati sector, undertaking government projects at remote locati sector, undertaking government projects at remote locations where banking facilities are limited. It was submitted that labourers are banking facilities are limited. It was submitted that labourers are banking facilities are limited. It was submitted that labourers are paid in cash and materials are procured from suppliers who insist paid in cash and materials are procured from suppliers who insist paid in cash and materials are procured from suppliers who insist on cash payments. This business necessity justifies cash on cash payments. This business necessity justifies cash on cash payments. This business necessity justifies cash withdrawals. The Hon'ble ITAT Surat, in the case of withdrawals. The Hon'ble ITAT Surat, in the case of Harishbhai G. Chovatiya (supra), observed that: ishbhai G. Chovatiya (supra), observed that: "There is no restriction or limit for keeping cash at home (hand). "There is no restriction or limit for keeping cash at home (hand). "There is no restriction or limit for keeping cash at home (hand). The Assessing Officer has not brought any adverse material or The Assessing Officer has not brought any adverse material or The Assessing Officer has not brought any adverse material or evidence that such cash was invested anywhere else. The Ld.AR evidence that such cash was invested anywhere else. The Ld.AR evidence that such cash was invested anywhere else. The Ld.AR of the assessee sub of the assessee submits that once the closing balance cash of mits that once the closing balance cash of Rs.6,77,106/ Rs.6,77,106/- was accepted and the assessee has clearly proved was accepted and the assessee has clearly proved withdrawal from his bank account, then the lower authorities were withdrawal from his bank account, then the lower authorities were withdrawal from his bank account, then the lower authorities were not justified in treating the cash available with the assessee as not justified in treating the cash available with the assessee as not justified in treating the cash available with the assessee as unexplained." unexplained." Similarly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT larly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT larly, in the case of Rajendra Gadhia vs. ITO (supra), the ITAT noted that: "the Department has not provided contrary evidence. Therefore, "the Department has not provided contrary evidence. Therefore, "the Department has not provided contrary evidence. Therefore, the Tribunal concludes that the withdrawals from these accounts the Tribunal concludes that the withdrawals from these accounts the Tribunal concludes that the withdrawals from these accounts should be treated as the source for Rs.8,30,000/ should be treated as the source for Rs.8,30,000/- of of the deposits during demonetization. Judicial precedents, such as, judgement of during demonetization. Judicial precedents, such as, judgement of during demonetization. Judicial precedents, such as, judgement of Jurisdictional High Court in the case of Shailesh Rasiklal Mehta Jurisdictional High Court in the case of Shailesh Rasiklal Mehta Jurisdictional High Court in the case of Shailesh Rasiklal Mehta reported at (2009) 176 taxmann.com 270 (Gujarat), support this reported at (2009) 176 taxmann.com 270 (Gujarat), support this reported at (2009) 176 taxmann.com 270 (Gujarat), support this conclusion by establishing that once cash withdra conclusion by establishing that once cash withdra conclusion by establishing that once cash withdrawals are demonstrated, the burden shifts to the Department to disprove demonstrated, the burden shifts to the Department to disprove demonstrated, the burden shifts to the Department to disprove their availability for subsequent deposits." their availability for subsequent deposits." 7.14 In view of above, I am the opinion that the cash withdrawals 7.14 In view of above, I am the opinion that the cash withdrawals 7.14 In view of above, I am the opinion that the cash withdrawals were made due to genuine business requirements, the AOs action were made due to genuine business requirements, the AOs action were made due to genuine business requirements, the AOs action in treating them as unexplained cannot be sustained. The them as unexplained cannot be sustained. The them as unexplained cannot be sustained. The documents submitted include a chart of bank documents submitted include a chart of bank documents submitted include a chart of bank-wise cash withdrawals along with bank statements, main cash book and withdrawals along with bank statements, main cash book and withdrawals along with bank statements, main cash book and site-wise petty cash books, site wise petty cash books, site-wise and head wise and head-wise cash utilization details, sample bills and vo utilization details, sample bills and vouchers to explain the nature uchers to explain the nature of expenses, list of sundry creditors and their ledgers, and RA bills of expenses, list of sundry creditors and their ledgers, and RA bills of expenses, list of sundry creditors and their ledgers, and RA bills raised during the year along with sample copies signed by raised during the year along with sample copies signed by raised during the year along with sample copies signed by government engineers. government engineers.

F A Construction to 3897/MUM/2 to 3897/MUM/2025 7.15 For the reasons discussed above, the cash withdrawals were 7.15 For the reasons discussed above, the cash withdrawals were 7.15 For the reasons discussed above, the cash withdrawals were made from dis made from disclosed bank accounts and were duly recorded in the closed bank accounts and were duly recorded in the books of accounts. The assessee has furnished substantial books of accounts. The assessee has furnished substantial books of accounts. The assessee has furnished substantial documentary evidence to demonstrate the utilization of the documentary evidence to demonstrate the utilization of the documentary evidence to demonstrate the utilization of the withdrawn cash towards business expenses, including payments withdrawn cash towards business expenses, including payments withdrawn cash towards business expenses, including payments to labourers, creditors, an to labourers, creditors, and for material procurement, all of which d for material procurement, all of which are integral to the appellant's civil construction business. The AO, are integral to the appellant's civil construction business. The AO, are integral to the appellant's civil construction business. The AO, having perused these documents during the remand proceedings, having perused these documents during the remand proceedings, having perused these documents during the remand proceedings, has neither raised any adverse finding nor presented any material has neither raised any adverse finding nor presented any material has neither raised any adverse finding nor presented any material evidence to contra evidence to contradict the appellant's claims. Given the absence of dict the appellant's claims. Given the absence of any contrary evidence and the settled legal position that any contrary evidence and the settled legal position that any contrary evidence and the settled legal position that satisfactorily explained withdrawals cannot be treated as satisfactorily explained withdrawals cannot be treated as satisfactorily explained withdrawals cannot be treated as unexplained money under Section 69A, the addition of Rs. unexplained money under Section 69A, the addition of Rs. unexplained money under Section 69A, the addition of Rs. 35,87,16,800/ 35,87,16,800/- made by the AO is deleted. Accordingly, the deleted. Accordingly, the ground no. 9 of appeal is allowed. ground no. 9 of appeal is allowed.”

“[Unexplained money, etc. [Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the 69A. Where in any financial year the assessee is found to be the 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other owner of any money, bullion, jewellery or other valu valuable article and such money, bullion, jewellery or valuable article is not and such money, bullion, jewellery or valuable article is not and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, main recorded in the books of account, if any, maintained by him for tained by him for any source of income, and the assessee offers no explanation any source of income, and the assessee offers no explanation any source of income, and the assessee offers no explanation about the nature and source of acquisition of the about the nature and source of acquisition of the money, bullion, money, bullion, jewellery or other valuable article, or the explanation offered by jewellery or other valuable article, or the explanation offered by jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the him is not, in the opinion of the 52[Assessing] Officer, satisfactory, [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable the money and the value of the bullion, jewellery or other valuable the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such article may be deemed to be the income of the assessee for such article may be deemed to be the income of the assessee for such financial year.] financial year.]” 8.1 The section 69A provides that an addition can be made only The section 69A provides that an addition can be made only The section 69A provides that an addition can be made only where the assessee is found to be the owner of money not recorded where the assessee is found to be the owner of money not recorded where the assessee is found to be the owner of money not recorded in the books of account and fails to offer a in the books of account and fails to offer a satisfactory explanation satisfactory explanation regarding the nature and source thereof. On a plain reading of the regarding the nature and source thereof. On a plain reading of the regarding the nature and source thereof. On a plain reading of the F A Construction to 3897/MUM/2 to 3897/MUM/2025 statutory provision, it is evident that the primary requirement for statutory provision, it is evident that the primary requirement for statutory provision, it is evident that the primary requirement for invoking section 69A is that the source of the money should be invoking section 69A is that the source of the money should be invoking section 69A is that the source of the money should be unexplained or not recorded in th unexplained or not recorded in the books of account. In the present e books of account. In the present case, the Assessing Officer himself has acknowledged that the case, the Assessing Officer himself has acknowledged that the case, the Assessing Officer himself has acknowledged that the amounts in question were withdrawn from the assessee’s disclosed amounts in question were withdrawn from the assessee’s disclosed amounts in question were withdrawn from the assessee’s disclosed bank accounts. Thus, the source of the cash stands duly explained bank accounts. Thus, the source of the cash stands duly explained bank accounts. Thus, the source of the cash stands duly explained and is not in dispute. and is not in dispute.

8.2 Once the source of cash is established, no addition under Once the source of cash is established, no addition under Once the source of cash is established, no addition under section 69A can be sustained merely on the basis of doubt section 69A can be sustained merely on the basis of doubt section 69A can be sustained merely on the basis of doubt regarding its utilisation. If the Assessing Officer was of the view that regarding its utilisation. If the Assessing Officer was of the view that regarding its utilisation. If the Assessing Officer was of the view that any expenditure was not incurred wholly and exclusively for the any expenditure was not incurred wholly and exclusively for the any expenditure was not incurred wholly and exclusively for the purposes of business, or that vouchers were defective or poses of business, or that vouchers were defective or poses of business, or that vouchers were defective or unverifiable, the appropriate course would have been to examine unverifiable, the appropriate course would have been to examine unverifiable, the appropriate course would have been to examine such expenditure under the relevant provisions of the Act. However, such expenditure under the relevant provisions of the Act. However, such expenditure under the relevant provisions of the Act. However, the deeming provisions of section 69A cannot be invoked solely on the deeming provisions of section 69A cannot be invoked solely on the deeming provisions of section 69A cannot be invoked solely on the ground that the Assessing Officer was not satisfied about the ground that the Assessing Officer was not satisfied about the ground that the Assessing Officer was not satisfied about the utilisation of the cash, despite the source being clearly established. utilisation of the cash, despite the source being clearly established. utilisation of the cash, despite the source being clearly established.

8.3 In the present case, the assessee has produced voluminous In the present case, the assessee has produced voluminous In the present case, the assessee has produced voluminous documentary evidence, including books of account, cash books, documentary evidence, including books of account, cash books, documentary evidence, including books of account, cash books, vouchers, and site- -wise utilisation details, all of which were wise utilisation details, all of which were examined during the remand proceedings. The Assessing Officer, examined during the remand proceedings. The Assessing Officer, examined during the remand proceedings. The Assessing Officer, despite such examination, has not pointed out any specific despite such examination, has not pointed out any specific despite such examination, has not pointed out any specific discrepancy or brought any adverse material on record to rebut the discrepancy or brought any adverse material on record to rebut the discrepancy or brought any adverse material on record to rebut the assessee’s explanation. essee’s explanation.

F A Construction to 3897/MUM/2 to 3897/MUM/2025 8.4 In view of the above facts and the settled legal position, we find In view of the above facts and the settled legal position, we find In view of the above facts and the settled legal position, we find no infirmity in the order of the learned CIT(A) deleting the addition no infirmity in the order of the learned CIT(A) deleting the addition no infirmity in the order of the learned CIT(A) deleting the addition of ₹35,87,16,800/– made under section 69A of the Act. The grounds made under section 69A of the Act. The grounds made under section 69A of the Act. The grounds raised by the Revenue are raised by the Revenue are accordingly dismissed.

“8.1 I have carefully considered the facts of the case, submissions 8.1 I have carefully considered the facts of the case, submissions 8.1 I have carefully considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the of the Appellant, the observations of the AO contained in the of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. assessment order and the other materials on record on this issue. assessment order and the other materials on record on this issue. It is found that It is found that vide para 23 and 24 of assessment order the AO vide para 23 and 24 of assessment order the AO mentioned that during assessment proceedings, the appellant was mentioned that during assessment proceedings, the appellant was mentioned that during assessment proceedings, the appellant was asked to provide the details of the expenditure and substantiate to asked to provide the details of the expenditure and substantiate to asked to provide the details of the expenditure and substantiate to the claims of expenditure with necessary supporting documents. the claims of expenditure with necessary supporting documents. the claims of expenditure with necessary supporting documents. However, the a However, the appellant did not provide any details of expenditure ppellant did not provide any details of expenditure incurred before the AO. As appellant failed to comply with the incurred before the AO. As appellant failed to comply with the incurred before the AO. As appellant failed to comply with the notices issued by the AO and not provided any related documents, notices issued by the AO and not provided any related documents, notices issued by the AO and not provided any related documents, the AO disallowed Rs. 12,09,21,303/ the AO disallowed Rs. 12,09,21,303/- being 5% of the expenditure being 5% of the expenditure incurred of Rs. 241,84,26,074/ Rs. 241,84,26,074/- claimed under Profit and Loss claimed under Profit and Loss A/c. and added in the total income of the appellant. A/c. and added in the total income of the appellant. 8.2 During appellate proceedings, the appellant submitted all the 8.2 During appellate proceedings, the appellant submitted all the 8.2 During appellate proceedings, the appellant submitted all the supporting documents related to cash withdrawals from its bank supporting documents related to cash withdrawals from its bank supporting documents related to cash withdrawals from its bank accounts, Main cash boo accounts, Main cash book alongwith site wise petty cash book, k alongwith site wise petty cash book, sample bills, vouchers to explain the nature of expenditure sample bills, vouchers to explain the nature of expenditure sample bills, vouchers to explain the nature of expenditure incurred, purchase bills, ledgers of debtors and creditors. The said incurred, purchase bills, ledgers of debtors and creditors. The said incurred, purchase bills, ledgers of debtors and creditors. The said

F A Construction to 3897/MUM/2 to 3897/MUM/2025 details are forwarded to the AO and a remand report was called details are forwarded to the AO and a remand report was called details are forwarded to the AO and a remand report was called from him. The rejoinder f from him. The rejoinder from appellant was also called for against rom appellant was also called for against the remand report. the remand report. 8.3 The AO in his remand report submitted his comments wherein 8.3 The AO in his remand report submitted his comments wherein 8.3 The AO in his remand report submitted his comments wherein he stated that on perusal of audited books of accounts submitted he stated that on perusal of audited books of accounts submitted he stated that on perusal of audited books of accounts submitted by the appellant, it has been observed that total direct expenses by the appellant, it has been observed that total direct expenses by the appellant, it has been observed that total direct expenses are of Rs. 190,08,93,929/ re of Rs. 190,08,93,929/- and indirect expenses of Rs and indirect expenses of Rs 25,67,69,541/ 25,67,69,541/- (totalling to Rs. 215,76,63,470/-) during the year ) during the year under consideration. Out of these total expenses, payments made under consideration. Out of these total expenses, payments made under consideration. Out of these total expenses, payments made in cash is Rs. 11,89,77,013/ in cash is Rs. 11,89,77,013/- for direct expenses and Rs. for direct expenses and Rs. 87,38,742/- fo for indirect expenses (totalling to Rs. 12,77,15,755/ r indirect expenses (totalling to Rs. 12,77,15,755/-). 8.4 The AO further mentioned that the appellant is engaged in the 8.4 The AO further mentioned that the appellant is engaged in the 8.4 The AO further mentioned that the appellant is engaged in the business of civil construction work undertaken for Government, business of civil construction work undertaken for Government, business of civil construction work undertaken for Government, Semi-Government, and private contracts. These construction Government, and private contracts. These construction Government, and private contracts. These construction projects are spread across multiple locations and typically extend spread across multiple locations and typically extend spread across multiple locations and typically extend beyond a year for completion. Given the diverse and numerous beyond a year for completion. Given the diverse and numerous beyond a year for completion. Given the diverse and numerous project sites, labourers are assembled from nearby areas as well project sites, labourers are assembled from nearby areas as well project sites, labourers are assembled from nearby areas as well as from distant states. These labourers, primarily unskilled, need as from distant states. These labourers, primarily unskilled, need as from distant states. These labourers, primarily unskilled, need to be retained for extended periods, necessitating the provision of ained for extended periods, necessitating the provision of ained for extended periods, necessitating the provision of on-site accommodation and essential amenities. Wage payments site accommodation and essential amenities. Wage payments site accommodation and essential amenities. Wage payments to these labourers, along with related expenses, often require cash to these labourers, along with related expenses, often require cash to these labourers, along with related expenses, often require cash transactions, transactions, transactions, making making making cash cash cash withdrawals withdrawals withdrawals vals vals vals unavoidable. unavoidable. unavoidable. Additionally, material procurement, transportation charges, and , material procurement, transportation charges, and , material procurement, transportation charges, and other essential expenses, particularly for remote project sites, also other essential expenses, particularly for remote project sites, also other essential expenses, particularly for remote project sites, also necessitate cash payments. The AO observed that the appellant necessitate cash payments. The AO observed that the appellant necessitate cash payments. The AO observed that the appellant had incurred all cash payments within the prescribed limits under had incurred all cash payments within the prescribed limits under had incurred all cash payments within the prescribed limits under Section 40A(3) of the Income Tax Act, which he has verified from n 40A(3) of the Income Tax Act, which he has verified from n 40A(3) of the Income Tax Act, which he has verified from the cash books provided by the cash books provided by appellant. 8.5 As per remand report the AO mentioned that the appellant has 8.5 As per remand report the AO mentioned that the appellant has 8.5 As per remand report the AO mentioned that the appellant has furnished substantial documentary evidence in connection ion to to furnished substantial documentary evidence in connection ion to to furnished substantial documentary evidence in connection ion to to business b expenses, includ business b expenses, including payments to labourers, creditors ing payments to labourers, creditors and for material procurement, all of which are integral to the and for material procurement, all of which are integral to the and for material procurement, all of which are integral to the appellant's civil construction business. The AO, perused these appellant's civil construction business. The AO, perused these appellant's civil construction business. The AO, perused these documents during the remand proceedings, has neither raised any documents during the remand proceedings, has neither raised any documents during the remand proceedings, has neither raised any adverse finding nor presented adverse finding nor presented any material evidence to contradict any material evidence to contradict the appellant's claims. the appellant's claims. 8.6 In view of above facts, the appellant has furnished substantial 8.6 In view of above facts, the appellant has furnished substantial 8.6 In view of above facts, the appellant has furnished substantial documentary evidence in connection to business expenses, documentary evidence in connection to business expenses, documentary evidence in connection to business expenses, including payments to labourers, creditors and purchase of including payments to labourers, creditors and purchase of including payments to labourers, creditors and purchase of material. The AO, having perused these documents during the he AO, having perused these documents during the he AO, having perused these documents during the remand proceedings, has neither raised any adverse finding nor remand proceedings, has neither raised any adverse finding nor remand proceedings, has neither raised any adverse finding nor presented any material evidence to contradict the appellant's presented any material evidence to contradict the appellant's presented any material evidence to contradict the appellant's claims. Hence, the AO is directed to delete the disallowances made claims. Hence, the AO is directed to delete the disallowances made claims. Hence, the AO is directed to delete the disallowances made

F A Construction to 3897/MUM/2 to 3897/MUM/2025 of Rs. 12,09,21 of Rs. 12,09,21,303/- being 5% of the total expenditure. being 5% of the total expenditure. Accordingly, the ground no. 10 of appeal is also allowed. Accordingly, the ground no. 10 of appeal is also allowed. Accordingly, the ground no. 10 of appeal is also allowed.”

11.1 In the present case, the assessee has produced complete In the present case, the assessee has produced complete In the present case, the assessee has produced complete books of account and supporting evidence during appellate books of account and supporting evidence during appellate books of account and supporting evidence during appellate proceedings, all of which were examined by the Assessing Officer in proceedings, all of which were examined by the Assessing Officer in proceedings, all of which were examined by the Assessing Officer in remand proceedings, without any adverse comment. In such remand proceedings, without any adverse comment. In such remand proceedings, without any adverse comment. In such circumstances, the deletion of the ad hoc disallowance by the circumstances, the deletion of the ad hoc disallowance by the circumstances, the deletion of the ad hoc disallowance by the learned CIT(A) calls for no interference. learned CIT(A) calls for no interference.

11.2 Accordingly, we find Accordingly, we find no infirmity in the order of the learned no infirmity in the order of the learned CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed. CIT(A). Ground Nos. 3 and 4 raised by the Revenue are dismissed.

F A Construction to 3897/MUM/2 to 3897/MUM/2025

Order pronounced in the open Court ounced in the open Court on 23/01/2026. /01/2026.