WAANEEP SOLAR PRIVATE LIMITED,DELHI vs. CENTRAL CIRCLE 2(4), MUMBAI

Brief facts are that the assessee is in the business of setting up and running solar plants. For the AY 2015-16, it filed Return of Income declaring Nil income. Subsequently, scrutiny assessment under section 143(3) of the Act was made. A search and seizure action under Section 132 of the Act was initiated in the case of M/s. Waaree Energies Ltd., M/s. Cessare Bonetti India Pvt. Ltd., Shri Hitesh Chimanlal Doshi, Shri Kirit Chimanlal Doshi and Shri Viren Chimanlal Doshi on 20.11.2018. The assessee is one of the entities of Waaree group. In the said search, certain document/material relating to the assessee was allegedly found and seized. A notice under section 153C of the Act was issued, in response to which the assessee filed its return claiming a loss of Rs.1,33,70,723/-.

Ground no.1-The ld. AR has raised a preliminary ground. It is objective circumstances/material is a sine qua non for assumption of juri iction.

1 In this regard, the ld. DR has submitted that the satisfaction note cannot be questioned as it sets out the necessary particulars which are the basis for the impugned addition for both the years and no prejudice is demonstrated. It is contended that it is only where the additions in respect of different years is based on distinct circumstances/reason that would require separate satisfaction note. It is submitted that the assessee has failed to submit reconciliation in respect of the entire amount and, therefore, the addition made in respect of the balance amount is justified and does not require any interference. The ld. DR has also placed reliance on the decision of hon'ble Delhi High reproduce the preliminary ground as under :- “1) (a) The assessment order passed u/s. 153C of the Act by the Ld. Assessing Officer is without juri iction, invalid and bad in law and in violation of the principles of natural justice. (b) The Ld. Assessing Officer erred in law and on facts in initiating proceedings u/s. 153C of the Act, without recording proper and valid satisfaction thereby rendering the entire proceedings invalid and void ab initio. (c) The satisfaction recorded by the Ld. Assessing Officer is in the form of a consolidated satisfaction note, which is generic, vague, non- specific, and not in accordance with the mandatory requirement of law."

1 We find that the said ground would go to the root of the matter and as the necessary material to decide the said ground is available on record, the same can be allowed to be raised for the first time before this Tribunal.

2 It is not disputed that the satisfaction note forms the basis of assumption of juri iction under section 153C of the Act and the consequent assessment. Before going further in the matter, it would be relevant to peruse the contents of the said satisfaction note,a scanned copy of which has been incorporated as below: SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C M/s Waaneep Solar Pvt. Ltd PAN: AABCW5050A

3 From the above satisfaction note, it appears that the only incriminating material found/seized during the search and seizure operation was certain e-mail communication alongwith its attached excel file showing correspondence between the two important employees of the company. No other material is referred therein. Cash transactions worth Rs 8.20 cr. were mentioned therein and the MD of the company had during the search admitted the transaction as undisclosed income of the appellant company. Although the satisfaction note refers to AY 2013- 14 to 2018-19,the additions impugned before us on the basis of such recording in the incriminating material have been made in AYs 2015-16 and 2016-17 only as admitted in the remand report dated 09.07.2024 submitted by the AO before the ld.CIT(A).We do not find any infirmity or deficiency in the satisfaction note which although is a common satisfaction, the only common incriminating material pertained to email communication and annexed 'Land ledger' as also the statement of the key persons of the assessee company. These incriminating materials formed the basis of additions in assessment of AYs 2015-16 and 2016-17 as the entries recorded therein pertained to these two assessment years which are before us for adjudication. Therefore, in our considered view there is no ambiguity in the satisfaction note qua incriminating materials. A composite satisfaction on the facts and the circumstances of the case, in no manner cause any prejudice to the assessee.

4 It may be stated there the hon'ble Delhi ITAT in its recent decision in the case of Upkar Mani, Delhi vs ACIT CC-8, Jhandewalan on 6 June, 2025 in ITA 3022/DEL/2023 has dismissed similar ground of appeal after duly taking into consideration the provisions of the section 153C of the Act qua facts of the case and also the cited decision of Sunil Kumar Sharma (supra).Relevant parts of the order are extracted as under:

In this case in the satisfaction note dated 13.05.2021 as reproduced on page no.3 of this order, it seen that the Assessing Officer has mentioned inter alia the following details...

Thus, the Assessing Officer has correctly recorded the satisfaction note for the year by recording the fact that the amount of Rs.32,62,500/- received in cash from Sh. Shamik Choksi for purchase of 1st and 2nd Floor + Terrace of B- 766, Sushant Lok, Phase-1, Gurgaon, has a bearing on determination of the total income of the assessee for AY 2018- 19 as in the above seized document, the transactions relate to FY 2017-18 relevant to AY 2018-19 in the case of the assessee. Therefore, relying upon the decision of the Hon'ble Delhi High Court in the above case, no fault can be found in the single/combined satisfaction note recorded by the Assessing Officer in the case if the assessee as the entries of the undisclosed transaction referred in the seized document relate to FY 2017- 18 relevant to AY 2018-19. Therefore, the said satisfaction note is held to be validly recorded and consequently, it is also held that the assessment order u/s 153C dated 31.12.2022 in the case of the assessee is also a valid assessment order. Hence ground no. 3 of the appeal is dismissed."

5 In view of the above discussion and respectfully following the cited decision in the case of Upkar Mani, Delhi(supra),we hold that there is infirmity in the action taken by the AO u/s 153C of the Act. The ground no.1 in this regard is therefore, dismissed.

In the ground no.2 the assesse has contested the addition of Rs 1.86 cr. made u/s 69C of the Act on the basis of certain email communication alongwith certain annexures showing cash transactions not recorded in the books of account. It is stated that the ld. CIT(A) failed to appreciate that the addition has been sustained solely on the basis of entries in an excel file allegedly found from the email account of a director, without any corroborative evidence to establish that the appellant was in possession of unaccounted cash purportedly utilized for the purchase of land. The ld.CIT(A) further erred in placing reliance upon unauthenticated, incomplete, and informal data contained in a draft excel file attached to the email received from an employee, which does not bear any signature, approval, or acknowledgment of the appellant, and which cannot be treated as conclusive evidence against the appellant and even the presumption under section 132(4A) or section 292C of the Act arises only in relation to the person subjected to search, and cannot be extended to a third party without independent evidence.

According to the assessment order, the AO found that during the search an email was received by Shri Mayank Shah who earlier worked as Director (Finance) in group company, Waaree Energies Ltd. The said email was received from one Shri Kamal Marwah, an employee working in the group, in January, 2016. There was an excel document captioned “land ledger” which was attached to the email comprising several worksheets. One of the worksheets captioned “final summary land expenses" (in 14 pages) was also recovered. The statement of Shri Mayank Shah was recorded on oath under Section 132(4) of the Act in relation to the “final summary land expenses” in which he claimed that cash was sent and received by Shri Kamal Marwah, an intermediary for land purchase for Icchawar project of the assessee, Waaneep Solar Pvt. Ltd. in Madhya Pradesh. During the assessment proceedings, the statement of Shri Hitesh Doshi was also recorded in which he offered an amount of Rs.8,20,40,460/- as undisclosed investment generated out of cash sales/scrap sales/land transactions. Shri Hitesh Doshi subsequently filed an Affidavit dated 06.12.2018 withdrawing the said offer. During the assessment proceedings, the statement of Shri Hitesh Doshi was recorded under Section 131 of the Act on 23.02.2021. It was claimed by the assessee that it had entered into registered agreements with the farmers for purchase of land to the tune of approximately Rs. 6.20 cr. and the cash payment was made to the intermediary in connection with the said transaction.

1 The AO observed that M/s Waaree Energies Limited entered into EPC agreement with M/s Waaneep Solar Pvt. Ltd for its Icchawar Solar Project. In the process of land procurement, assessee Company has incurred amount totalling to Rs. 8,20,40,360/- in cash (Shri Mayank J. Shah had accepted this fact in his statement recorded on oath under section 132(4) of the Income Tax Act, 1961 on 21.11.2018). Moreover, during the search proceedings, Shri Hitesh Chimanlal Doshi, Managing Director of M/s Waaree Energies Limited had also accepted the facts and offered the amount of Rs. 8,20,40,360/- for taxation purpose considering the same as his undisclosed investments out of his undisclosed income generated through cash sale/scrap sale/land transactions etc. His retraction through affidavit was devoid of any merit and did not indicate any one to one flow of funds from the Bank account to the farmers from whom the land was purchased. In view of the above, it was evident that a total of Rs.8,06,32,460/- was incurred in cash by the assessee company out of its undisclosed income.

2 Accordingly, a show cause notice was issued by him asking why the amount of Rs. 8,06,32,460/- should not be treated as unexplained cash income and added to the total income for the AY 2015- 16.In response to the show-cause notice, the assessee filed its submission vide letter dated 15.03.2021. The relevant portion of the submission were reproduced below: a) “M/s. Waaneep Solar Pvt. Ltd. had won a 50MW tender floated by M/s. Solar Energy Corporation of India in respect of which a Solar Plant was to be set up at Ichhawar, Madhya Pradesh. Shri Kamal Marwah used to work for M/s. Waaneep Solar Pvt. Ltd. as project in charge of the said project and he was entrusted with the responsibility to execute the project, obtaining necessary permissions, procure land and registration of land. He used to report to Shri Mayank Shah who was the CFO of M/s. Waaneep Solar Pvt. Ltd. and was managing day to day operations including fund planning of the said Project. b) For the purpose of installing the solar project, the assessee company used to purchase barren land i.e. agricultural land but not fertile in nature after getting necessary approvals. The land required for the above project was procured from the local farmers at Ichhawar. Since lands were located in remote location having no streamlined banking facility and also farmers were not having easy access to the banks, the farmers also asked for payment/part payment in cash and accordingly the assessee company was required to disburse certain portions payments through cash. Hence, to meet the commercial requirements of setting up the project and for business exigency, cash was withdrawn from the bank account of the assessee company and the said duly accounted cash was in turn utilized for disbursing the payments to the farmers as per the land purchase agreements. Further, certain cash amounts were also remitted to Shri Kamal Marwah by M/s. Waaree Energies Ltd. from the cash available in its books on behalf of the assessee company. In other words, the said cash was duly accounted and recorded in the books of accounts and its utilization is also as per the land purchase agreement entered with the sellers. All such withdrawals and payments are duly recorded in the books of accounts. Even the land purchase agreements reflects the payment made in cash for purchase of land. c)For control purpose, Shri Kamal Marwah was maintaining status of amounts received and payment made by him for procurement of land which were to be verified by Shri Mayank Shah. In this regard, he had sent an email having subject line “land ledger as on 28-01-2016.xlsx” to Shri Mayank Shah on 28-01- 2016 which had a worksheet attached to it namely “Final summary land expense