TaxTMI 
TaxTMI 
2018 (3) TMI 1615
X X X X Extracts X X X X
X X X X Extracts X X X X
..../12 2006-07 Assessee ITA No. 883/D/12 2007-08 Assessee ITA No. 884/D/12 2008-09 Assessee Since the appeals have been heard together and pertain to same assessee, these are being disposed of by this common order for the sake of brevity and convenience. 2. The brief background of the case is that search u/s 132 was carried out at the premises of the assessee M/s. Kaveri Infrastructure P. ltd. on 24.04.2007 as a result of which, the assessments in above referred assessment years were completed u/s 153A read with 143(3) of the Income Tax Act, 1961. It is further noted that prior to search action u/s 132 of the Income tax Act, CBI carried out raids on the assessee and certain documents and Diary were seized which were handed over to Income tax authorities and are in fact the primary evidences relied upon by the assessing officer while completing assessment u/s 153A of the Act. 3. At the start of the hearing, it was pointed out by Ld. Counsel of the assessee Sh. R.S. Singhvi and Ld. DR Sh. Vijay Varma vide written submission dated 05/03/2018 that these assessments can be classified as under: Category 1 Assessment Year....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions of sec. 153A particularly when there is no incriminating material regarding correctness of claim accepted in the original assessment. 8. That orders of the lower authorities are not justified on facts and same are bad in law. 8. The Ld. Counsel Sh. R.S. Singhvi appearing for the assessee submitted paper book of documents running into 21 pages and filed two volumes of paperbook consisting of various judgments relied upon. The Ld. Counsel did not press ground no. 1 & 2. 9. At the outset, it was submitted by the Ld. Counsel that this is a case of unabated assessment as the return of income for the year under reference was processed u/s 143(1) and time limit for issue of notice u/s 143(2) stands expired on the date of search. It was submitted that there is no case of any incriminating material found during search relating to year under reference and as such the assessment order u/s 153A is illegal and not sustainable under law. In this connection, Ld. AR invited our attention to panchnama issued by income tax authorities in which there is no reference to any incriminating material relating to allegation of bribe to Delhi Jal Board Officials. However, it was clari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us officials of Delhi Jal Board. It was further submitted that since time limit for issue of notice u/s 148 was available on the date of search, the assessing officer can make all the additions/disallowance which he could make in assessment u/s 147 even in absence of any incriminating material. It was further contended that if legal ground of the appellant is accepted, the Hon'ble tribunal should direct the AO u/s. 150(1) to initiate proceedings u/s. 148. 13. We have heard both the parties, perused the documents on record and gone through the order of CIT(A) and AO. The limited issue in the case of assessment year 2002-03 is only relating to disallowance of 10% of site labour expenses u/s. 37(1) of the Act as per table extracted in the assessment order at page 6. The AO has considered adhoc disallowance of 10% in all the years on uniform basis. In para 3 of the assessment order, the AO also made observation that the assessee could not furnish details relating to claim of site labour expenses and same are unverified and unvouched. It is relevant to take note of the fact that AO himself has considered disallowance on the ground that site labour expenses are unverified and unvouche....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounds relating to A.Y. 2002-03 as extracted above and same are adjudicated as under: 17. Ground No. 1 & 2 are dismissed as not pressed. 18. Ground No. 3& 4 are regarding validity of proceeding u/s. 153A of the Act. 19. After considering the legal position in the context of decisions cited by Ld. AR and CIT DR, we are of the considered opinion that in the case of non abated assessment, no action can be taken u/s. 153A in the absence of any incriminating material. Accordingly, the legal ground raised by the assessee is deserves to be accepted. 20. As regarding submission of the CIT DR that in case the legal ground is accepted, the AO should be directed to initiation action u/s. 148 in terms of provisions of sec. 150(1) of the IT Act, 1961. We are afraid such claim is beyond the jurisdiction of the tribunal. In fact, this very issue was considered by Delhi tribunal in the case of Sh. Kanwaljeet Singh Toor vs. DCIT placed in the page 160-168 of paperbook filed by the assessee and recorded following finding :- "11. The Ld. DR further contended that in case appeals are decided against the revenue by holding that this addition cannot be made u/s. 153A, then the direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y adhoc disallowance even u/s. 143(3) much less u/s. 153A. There is this no legal basis for any such disallowance even on merits. 23. Now we take up appeal of the assessee relating to A.Y. 2003-04 ( ITA No. 5012/D/2012.) 24. The assessee has raised following grounds of appeal : "1.That on the facts and circumstances of the case, the CIT(A) was not in passing exparte order without service of notice and proper and reasonable opportunity. 2. That further order passed by CIT(A) is not in confirmity with provisions of sec. 250(6) of the Income Tax Act, 1961 as there is no proper adjudication of various ground in dispute. 3. That on the facts and circumstances of the case, order passed u/s. 143(3) read with sec. 153A is illegal and without jurisdiction in the absence of any incriminating material found as a result of search. 4. That further the original assessment had not abated and as such Assessing Officer had no jurisdiction to initiate proceedings u/s. 153A. 5. That even on merits the lower authorities were not justified in making disallowance in respect of claim of project consultancy expenses amounting to Rs. 5,00,174/-. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment proceedings and in absence of any specific incriminating material or any nexus between claim of expenses and alleged seized material, the assessing officer had no jurisdiction to make impugned disallowance and same is against the scheme of section 153A of the Act. Reference was made to decision of Hon'ble Delhi High Court in the case of Pr. CIT v. Meeta Gutgutia (Supra). 28. In respect of Ground No. 6, the Ld. Counsel submitted that the impugned disallowance of claim of Site expenses to the extent of Rs. 3,02,960/- was made u/s. 37 and related to Annexure M-610/07 seized by CBI as per table at Page 9 of the assessment order. It was argued that the assessing officer has made disallowance u/s 37 of the Act, however, no such claim has been made by the assessee in the audited books and as such the very foundation of disallowance is misconceived. 29. The Ld. Counsel vehemently disputed the genuineness of the seized annexure and submitted that same does not belong to the assessee. It was further argued that without any corroboration, the said document has no evidentiary value and being in the nature of dumb document cannot be considered as incriminating in terms of provisions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tement of completed proceedings and scope of sections 153A and also gone through disallowance of various claims of expenses u/s. 37(1) with reference to proceedings u/s. 153A. The assessing officer has primarily relied upon annexures seized by CBI for the purpose of levelling allegation about payment of bribes by the assessee to Jal Board Officials. 36. In the context of above position, the appellant filed an affidavit to the effect that no adverse action was taken by CBI. However, at specific request of the CIT DR, the adjournments were allowed from time to time and even after 3 years CIT DR has not been able to establish veracity of seized annexure. The AO proceeded to draw adverse inference on the basis of above referred table without any further enquiry or investigation. 37. In the absence of any enquiry or investigation by AO or adverse report from CBI, these seized annexure cannot be considered on standalone basis for the purpose of any disallowance with reference to various transactions duly recorded in the books and accepted by the AO. The bare reference to such material without any enquiry could not be the sole basis for any adverse inference against the appellant. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....support the allegation of bribe to Delhi Jal Board Officials. In the context of search by Income Tax Authorities and consequential panchnama, there is no evidence or allegation of any incriminating material. Further, the AO considered the seized annexures by CBI on mechanical basis. It is noted that in the context of show cause notice issued by AO with reference to these seized annexures by CBI, the appellant has denied any connection with these annexures and alleged that same seems to have been planted by our competitor M/s. Enviorntech Overseas Ltd. It is strange that inspite of above submission of the assesse, the AO has not carried out any investigation or sought any report from CBI and merely related the claim of expenses in the books of accounts as attributable to payment of bribe to Delhi Jal Board Officials. In the absence of any adverse report to justify allegation of bribe, we are not inclined to give any credence to such sweeping allegation. Accordingly, we find no justification in the order of CIT(A) in confirming the impugned disallowance of site expenses u/s 37(1) of the Act and same is hereby deleted. 40. In respect of adhoc disallowance of 10% of site labour expe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd material available. 43. The revised cross objection filed by the assessee is as under : 1(i). That on facts and circumstances of the case, the CIT(A) was not justified in confirming disallowance of Rs. 89,16,720/- in respect of claim of project consultancy expenses and Rs. 8,77,144/- in respect of claim of site expenses. (ii) That the genuineness of the claim and facts of services rendered is not in dispute and as such there is no ground or basis to disallow the claim. (iii) That the genuineness and bonafide of the claim is supported from the fact that the TDS was duly deducted and as such there is no case of any revenue benefit. 44. On perusal of CIT(A)'s order and assessment order, we note that most of the issues involved in this appeal are identical to that involved in appeal for AY 2003-04 except one additional issue which is regarding disallowance of claim of statutory deduction u/s 80IA of the Act. It is noted that in the year under consideration, CIT(A) has allowed substantial relief whereas on similar issues in other years the CIT(A) took contrary view. 45. In respect of Ground No. 5,6 & 7, since the issues involved are identical to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... facts and legal position. The Ld. CIT DR has fairly conceded that claim of statutory deduction u/s. 80IA being a purely legal issue is beyond scope of sec. 153A. Further, the appellant has placed on record extract of the contract which is for complete overhaul of sewage system with the help of innovative technology and as such the claim was correctly accepted by AO at the original stage and CIT(A) has rightly considered and accepted the same. There is thus no case of any interference in the finding and conclusion of CIT(A). 51. Regarding issue of project and technical consultancy expenses, it is noted that these claims were accepted by AO in original assessment u/s. 143(3).However, the CIT(A) accepted the part of claim in respect of technical consultancy amounting to Rs. 49,11,754/- on the ground that payment was made after deduction of TDS. However, in respect of claim to the extent of Rs. 89,16,720/-, disallowance was confirmed on the alleged ground that payment in respect of the same was not made. However, there is no dispute that in respect of this claim also TDS was duly deducted. These claims were relating to foreign consultant and these consultants were confirming party ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,216/-. On the face of record, the ground of revenue is misconceived and without any legal basis. The additional argument of the Ld. DR that these are application based disallowance and should be considered in the light of seized annexure is not justified for reason stated in subsequent paras. 55. The tribunal cannot go beyond facts and issues before it and cannot consider any new source of addition or disallowance. Further, as we have already held that allegation of bribe to Delhi Jal Board Authority has not been substantiated, the same could not be considered as legal evidence. In fact, as rightly pointed out by Ld. AR that as per the circular No. 37/2016 dated 2nd November, 2016 issued by CBDT, in case on account of any disallowance the eligible business income of the appellant is revised the statutory claim should also be modified accordingly. In our view, the AO has merely made various disallowance which are part of record and even if technically same are considered to be inadmissible, the same will have no adverse revenue implication as the appellant will be entitled to consequential benefit u/s. 80IA. 56. It is further noted that in the original assessment, the claim w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the claim of project consultancy was duly accepted in the original assessment u/s. 143(3) and there is no case of any incriminating material. 4(i) That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining disallowance of labour site expenses to the extent of 10% of the total claim amounting to Rs. 24,58,191/- in total disregard to provisions of sec. 153A and merely on the basis of change of opinion. (ii) That the CIT(A) is not justified in disregarding finding of CIT(A) in the assessee's own case for the assessment year 2004- 05 where the same ground was decided in favour of the assessee and there is no change in facts and legal provisions. (iii) That even otherwise, correctness of claim of labour site expenses is supported from original assessment u/s. 143(3) and there is no justification for any disallowance u/s. 153A in the absence of any incrementing material. 5(i) That addition of Rs. 33,42,000/- as income from undisclosed sources is merely on the basis of wrong appreciation of facts and without proper opportunity. (ii) That there is no finding or material about alleged undisclosed sources and who....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... u/s 153A of the Act. It was further contended that even if it is presumed that the content of the seized annexure is true, the cash transactions so involved are fully covered out of cash in hand and withdrawals from the bank. The Ld. Counsel argued that the assessing officer has not verified the cash book and has ignored the availability of cash in hand. 63. The Ld DR relied upon the order of AO and CIT(A) and submitted that reference to the name of Vijay Kumar Kataria was in capacity of Director of the assessee and as such the assessing officer has rightly considered addition in the hands of the assessee. 64. We have considered the rival submissions and find that lower authorities have not properly analysed and drawn adverse inference without proper appreciation of facts. The allegation of AO that alleged cash transactions represent income from undisclosed sources is not born out from record. Even on the basis of seized annexure, the cash was provided by 'Sir' which purportedly means V.K. Kataria and in such circumstance, what could be the legal basis for any addition in the hands of the appellant. It is not the case of the AO that appellant has any other source of income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any incriminating material. 4(i) That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining disallowance of labour site expenses to the extent of 10% of the total claim amounting to Rs. 31,65,023/- in total disregard to provisions of sec. 153A and merely on the basis of change of opinion. (ii) That the CIT(A) is not justified in disregarding finding of CIT(A) in the assessee's own case for the assessment year 2004- 05 where the same ground was decided in favour of the assessee and there is no change in facts and legal provisions. (iii) That even otherwise, correctness of claim of labour site expenses is supported from original assessment u/s. 143(3) and there is no justification for any disallowance u/s. 153A in the absence of any incrementing material. 5(i) That disallowance of Rs. 3,12,79,704/- u/s. 37(1) is without any factual and legal basis in the absence of any such claim and whole basis of disallowance is illegal, arbitrary and misconceived. (ii) That the CIT(A) has totally disregarded the appellate order in the assessee's own case for assessment year 2004-05 even though the facts are identical. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee fully satisfied the requirement prescribed u/s 80IA of the Act. Further, the Ld. Counsel submitted that CIT(A) in its order for AY 2004-05 after in depth examination has decided this very issue in favour of assessee. The Ld. Counsel took us through the finding of CIT(A) in AY 2004-05 which is extracted at Page 13 of the impugned CIT(A) order. The Ld. Counsel also made reference to Pg 68 -72 of the Paperbook filed in appeal relating to AY 2004-05 wherein the Delhi Jal Board has certified that assessee has developed a new infrastructure facility in the form of new sewer pipelines. 70. The Ld. Counsel also submitted that even if it presumed that assessee is engaged in renovation, operation and maintenance of infrastructure facility, even then the assessee is eligible to claim deduction u/s 80IA in view of decision of Hon'ble Bombay High Court in the case of CIT v. ABG Heavy Industries Ltd. 322 ITR 33 against which the SLP filed by the revenue has been dismissed by Supreme Court. It was argued that as per the said decision, the three conditions prescribed u/s 80IA namely(i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining an infras....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses and Technical Support Expenses in the name of M/s. C.M. Contracting Ltd., New Zealand and Mr. Vernon Downes respectively. 75. The assessing officer has made the disallowance by holding these expenses to be bogus and non genuine. The assessing officer has further observed that assessee has failed to substantiate the claim of expenses and that the same have been incurred for the purpose of business. 76. On the legality of the disallowance, the Ld. Counsel Sh. Singhvi reiterated the submission made in previous ground and submitted that original assessment was completed u/s 143(3) and as such the assessing officer has no jurisdiction to make disallowance in absence of any fresh tangible material or adverse information. 77. It was further argued that claim of Project Consultancy and Technical Support exp is for the purpose of ongoing project of Delhi Jal Board. The Ld. Counsel stressed upon the fact that assessee deducted TDS on the payments and the payments were made through banking channels. It was also submitted that the relevant agreement/contract was placed on record before AO and CIT(A). Sh. Singhvi also drew our attention to finding recorded by AO at Page 5 of the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hart, we find that these are routine expenses connected with business activities. There is no dispute that these expenses were claimed after deduction and payment of TDS to the extent of 21%. It is also noted that M/s. C.M. Contracting Ltd., New Zealand and M/s. Vernon Downes director of M/s. Onsite Central Ltd. UK were technical consultants and on the basis of their expertise, the contract was awarded by Delhi Jal Board to the appellant. Further, there is no incriminating material with reference to the said claim and disallowance was only on the basis of adverse inference. In our opinion, these claims are not year specific and directly related to various years and their being direct nexus between claim of expenses and business activities, there is no valid basis for disputing the genuineness of the same particularly when TDS has been deducted in respect of the same. 82. In conformity with finding recorded in para 15.3, we delete the said disallowance and this ground of appellant is allowed. 83. Ground No. 4 is in respect of disallowance of 10% of Site labour expenses to the extent of Rs. 31,65,023/-. The assessing officer has made the ad-hoc disallowance on the ground that c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... basis for any disallowance u/s. 37(1) of the Act. Further, the Assessing Officer himself has accepted the claim of site expenses vide order u/s. 143(3) passed after search. The presumption of the Assessing Officer that the same are in the nature of inflated claim for the purpose of payment of bribe to Delhi Jal Board is misplaced in the absence of any proper evidence to this effect and accordingly we are not inclined to accept the same. In conformity with detailed finding recorded while adjudicating appeal relating to AY 2003-04 to 2005-06 in ITA 5012/D/12, 3766/D/12 &881/D/12, there is no justification for any such disallowance and same is hereby deleted. We may also observe that all these disallowances have direct bearing to the computation of statutory claim u/s. 80IA and in accordance with Circular No 37/2016 dated 2nd November, 2016, the disallowance of same would have no adverse revenue implication as the appellant will be entitled to consequential benefit u/s. 80IA of the Act. 89. Next we take up the appeal filed by the assessee in ITA No. 883/D/2012 against order of CIT(A)-XXXI, New Delhi dated 02/01/2012 relating to AY 2007-08. 90. The assessee has raised following ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same ground was decided in favour of the assessee and there is no change in facts and legal provisions. (iii) That even otherwise, correctness of claim of labour site expenses is supported from original assessment u/s. 143(3) and there is no justification for any disallowance u/s. 153A in the absence of any incrementing material. 5(i) That disallowance of Rs. 3,20,03,596/- u/s. 37(1) is without any factual and legal basis in the absence of any such claim and whole basis of disallowance is illegal, arbitrary and misconceived. (ii) That the CIT(A) has totally disregarded the appellate order in the assessee's own case for assessment year 2004-05 even though the facts are identical. (iii) That lower authorities have not properly appreciated the relevant facts and adverse inference is without proper investigation, appreciation of facts, application of mind and opportunity to the assessee. 6. That orders of the lower authorities are not justified on facts and same are bad in law. 91. On perusal of assessment order, CIT(A)'s order and grounds raised by the assessee, it is observed that all the issues and corresponding grounds are similar to....