Tribunal validates assessment, rejects disallowance under sec 40A(3), and deletes adhoc disallowance.

The Tribunal upheld the validity of the assessment order jurisdiction, rejected the disallowance of Rs. 28.00 lakh under section 40A(3) due to business expediency in advance cash payments, and deleted the adhoc disallowance of Rs. 38,88,175/- out of labour charges at the rate of 10% based on the presented evidence. The appeal of the assessee was partly allowed.

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Issues:
1. Validity of assessment order jurisdiction.
2. Disallowance of Rs. 28.00 lakh u/s 40A(3).
3. Adhoc disallowance of Rs. 38,88,175/- out of labour charges at the rate of 10%.

Issue 1: Validity of assessment order jurisdiction
The assessee contended that the assessment order dated 10.01.2013 lacked jurisdiction as subsequent notices under section 143(2) were issued by a different Income Tax Authority without any order transferring jurisdiction. The Ld. AR argued that the assessment order was valid as per Tribunal's previous orders. The Ld. AR conceded that the issue was against the assessee based on Tribunal's precedents. Consequently, the ground challenging the jurisdiction of the assessment order was rejected.

Issue 2: Disallowance of Rs. 28.00 lakh u/s 40A(3)
The Ld. AR argued for the disallowance made under section 40A(3) by the Assessing Officer, presenting various submissions. It was contended that certain payments were exempt under Rule 6DD of the Income Tax Rules 1962. The Tribunal examined the ledger accounts of the parties involved and noted that cash payments were made before the receipt of supplies. The Tribunal analyzed the provisions of Section 40A(3) and Rule 6DD, emphasizing business expediency for cash payments. Despite the lack of concrete evidence supporting the claims, the Tribunal found that business expediency existed in making advance cash payments. Consequently, the disallowance under Section 40A(3) was deemed unjustified and deleted.

Issue 3: Adhoc disallowance of Rs. 38,88,175/- out of labour charges at the rate of 10%
The Assessing Officer objected to the debited labour charges of Rs. 3,88,81,751, citing self-made vouchers and the absence of a register or Muster Roll. The Tribunal found the objection regarding self-made vouchers invalid for labour payments. Regarding the absence of a register or Muster Roll, the assessee explained that labourers were engaged at various project locations supervised by U.P. Nirman Nigam. The Tribunal observed that due payments were received after verification of employed persons. Sample vouchers for labour payments were presented, showing details of labours. Considering the explanations and evidence provided, the Tribunal concluded that the adhoc disallowance of 10% of labour charges was unwarranted and thus deleted.

In conclusion, the appeal of the assessee was partly allowed based on the detailed analysis and findings on the issues raised.

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