TaxTMI 
TaxTMI 
2013 (11) TMI 374
X X X X Extracts X X X X
X X X X Extracts X X X X
....and mine and iron ore activities. There was a search in the case of Sri. Venkata Kutumba Rao and others on 28.7.2008. Search operations were conducted at the business premises of the Assessee. Notice u/s 53A was issued and pursuant thereto assessee filed returns for the years under appeal. Aggrieved by the legality and validity of the proceedings taken up under S.153A of the Act, and also by the additions/disallowances made by the assessing officer and confirmed by the CIT(A), assessee preferred the present appeals, whereas aggrieved by the reliefs granted by the CIT(A), Revenue preferred appeals for the assessment years 2006-07 and 2007-08. Assessee's Appeal : ITA No. 1396/H/2011 Asst. Year: 2003-04 3. The assessee's appeal is against the order of the CIT(A) confirming the assessment made u/s 153A, and disallowance of 7% of labour and site expenses. 4. At the time of hearing the learned Authorised Representative for the assessee submitted that he is not pressing the grounds regarding legality and validity of assessment u/s 153A. Accordingly the grounds raised by the Assessee against legality of assessment u/s 153A are rejected as not pressed. 5. With regard to the meri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contractor. Assessee is engaging labour at site at far flung places. In such circumstances, it is difficult to have documents for such expenditure, to the satisfaction of the Assessing officer. It is also difficult to verify the identity of the labour, after lapse of many years. The accounts of the assessee have been audited and auditor's certificate u/s 44AB has also been furnished. The Assessing Officer has not analysed the expenses compared to the turnover for the earlier years. A search has been made in the premises of the assessee and no incriminating evidence in this regard has been found. Only an ad hoc disallowance of expenditure claimed by the assessee has been made. However, from the observations of the lower authorities it can be inferred that full details of expenditure have not been properly documented. Hence, the possibility of some inflation of such expenses cannot be ruled out. Considering totality of facts and circumstances of the case, we are of the opinion that disallowance of 5% of Labour and site expenses is reasonable. 10. In the result, this appeal of the assessee is partly allowed. Assessee's Appeal : ITA No. 1397/H/2011 Asst. Year: 2004-05 11. This....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the ground that the assessee did not furnish necessary evidences in support of the travel expenses claimed. Further, during the appeal proceedings also the assessee had not explained its case by producing the books of accounts and other details. Therefore, in absence of necessary evidence to substantiate the claim of the assessee, the CIT(A) confirmed the disallowance of Rs. 1,00,000 made by the assessing officer out of travelling expenses. 17 Aggrieved the assessee is on appeal. 18. We have heard the parties and perused the material on record. We find that the accounts of the assessee have been audited and certificate u/s 44AB has been furnished. Both the assessing officer as well as the CIT(A) have not specifically mentioned as to what particulars have not been furnished by the assessee and whether the particulars which were not given about persons who travelled, or places to which they had travelled or the necessary supporting vouchers for the same. In case of most of the travelling expenses, like food, travel by bus or train, local conveyance etc., it may not be possible to be supported by third party vouchers. Hence, considering totality of the facts and circumstances ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der that the assessee has also furnished all the particulars required by the assessing officer. As already an assessment u/s 143(3) has been made in the case of the assessee for the very same assessment year 2005-06, the assessing officer, in the proceedings under S.153A of the Act, merely adopted the income of Rs. 29,07,250determined in the order of assessment passed u/s 143(3) on 28.12.2007. As per the second proviso to sec 153A, if an assessment or reassessment are pending on the date of initiation of search, they will abate. In the present case, the search was conducted on 28.7.2008, while the assessment order was passed on 28.12.2007. Therefore, the assessment order passed u/s 143(3) is still valid. In the circumstances the Assessing officer rightly adopted the income assessed in the order of assessment dated 28.12.2007. The assessee's appeal fails on this ground. We accordingly uphold the orders of the lower authorities on this issue and reject the grounds of the assessee in this appeal. 26. In the result, the Assessee's appeal in ITA No 1398/H/11 for assessment year 2005-06 is dismissed. Assessee's Appeal : ITA No. 1399/H/2011 : Asst. Year: 2006-07 27. This appeal o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... us. 33. We have considered the rival submissions and perused the material on record. We find that the accounts of the assessee have been audited and certificate of the auditor u/s 44AB has also been furnished. In the circumstances, it is not clear as to what was required by assessing officer/CIT(A) to be furnished by the assessee which the latter did not comply. No further light has been thrown by either side in the course of the appeal proceedings. There has been no such disallowance out of miscellaneous expenditure in other years under appeal before us. This is an assessment made pursuant to search. There is no differentiating facts for this year compared to other years, so as to justify disallowance out of miscellaneous expenses claimed only in the assessment year under consideration. There cannot be any ad-hoc disallowance of expenses in one year without a specific finding about claim of expenditure, when similar expenses have been accepted in other years in assessments framed almost simultaneously and under similar circumstances. In the circumstances, we see no reason to sustain the disallowance of 5% of miscellaneous expenditure made by the assessing officer and sustained....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng identical, except for the amount of payments involved, for the detailed reasons discussed in the context of appeal for assessment year 2003-04 (ITA No.1396/Hyd/2011) in para-9 hereinabove, we restrict the disallowance to 5% of labour and site expenses. 41. In the result, appeal of the assessee, being ITA No.1400/Hyd.2011 for assessment year 2007-08 is partly allowed. Revenue's Appeal : ITA No. 1358/H/2011 : Asst. Year: 2007-08 42. For the assessment year 2007-08, Revenue is also in appeal against the order of the CIT(A) restricting the disallowance of workmen and staff welfare expenses to 7% as against 10% made by the assessing officer. While dealing with the assessee's appeal in ITA No 1400/H/11 for the assessment year 2007-08 itself in the preceding paras, following the view taken by us on this very aspect for the assessment year 2003-04(ITA No.1396/Hyd/2011) in para-9 of this very order, we have restricted the disallowance of Labour charges to 5%. For the reasons stated in the Assessee's appeal we see no reason to take a different view. Incidentally, the revenue seems to have accepted the decision of the CIT(A) on this issue for assessment years 2003-04 to 2005-06 an....