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 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 Status of original assessment on the date of search in terms of provisions of section 153A 2002-03 U....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied 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 clarified that allegation of incriminating material is only with reference to seized annexure by CBI and referred to by Assessing Officer (AO) at page 6 of the assessment order. 10. The Ld. Counsel took us through....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 unvouched and there was no finding that disallowance is based on any incriminating material. There is no dispute that all these expenses are part of record and supported from audited accounts and genuineness of same has not b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 direction u/s. 150(1) should be issued for taxing this amount u/s. 148 of the IT Act, 1961. We are afraid to accept this contention of the Ld. DR because it is the sold prerogative of the AO to initiate reassessment proceedings after satisfying the conditions of sec. 148 and recording the reasons for the same. The jurisdiction of the AO cannot be ushered-up in the prese....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te 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/-. That entire claim is for the purpose of business and having accepted the claim in the original assessment, there is no justification for any disallowance in respect of assessment in terms of provisions of sec. 153A particularly when there is no incriminating material regarding correctness of claim accepted in the original assessment. 6. That even on merits the lower authorities were not justified in making disal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 of section 153A. The Ld. Counsel submitted that the allegation of assessing officer that bribes were being paid by the assessee to Jal Board officials is highly arbitrary and unsubstantiated. 30. The ld. Counsel also brought our attention to annexure M-610/07 placed at Page 50 of the Paperbook filed by the revenue and contended that the figure of Rs. 3,02,960/- is nowhere to be found in the document and it is not known as to what is the basis of such palp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. In any case, the AO has made various disallowance only u/s. 37(1) of the IT Act, 1961 in respect of claim of expenses on the basis of transactions recorded in the books of accounts and as such same are to be considered on the basis of facts and settled legal principles as summarized by us in finding recorded at Para 8.4 above. It is also relevant to take note of the fact that there is no case of any allegation of undisclosed or unrecorded receipt/income and only issue befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een 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 expenses, as per detailed finding recorded in A.Y. 2002-03, we are of the opinion that same is beyond the scope of sec. 153A of the Act. 41. The next appeal is filed by the revenue vide ITA No. 3766/D/10 relating to AY 2004-05 against order of CIT(A)-1, New Delhi dated 18/05/2010. The assessee has filed Cross objection in CO No. 321/D/10. During the course of hearing, the assessee filed revised cross objection which are taken on record. 42. The revenue has raised following grounds : 1. The orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 that in appeal for AY 2003-04, the arguments of the both the parties are taken as heard as far as these grounds are concerned. 46. Apropos Ground No. 2 to 4, the Ld. DR argued that CIT(A) was not justified in deleting the disallowance of claim of statutory deduction u/s 80IA of the Act. The main argument of Ld DR was that assessee was not engaged in developing new infrastructure facility instead it was engaged in rehabilitation of existing sewage pipeline system and as such the benefit of deduction 80IA is not available. On the legality of the addition, the argument of Ld. DR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....penses, 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 to the contract with Delhi Jal Board and as such issue of genuineness is not in dispute. We further find that there is no incriminating material relating to this very issue found during the search and accordingly the impugned disallowance outrightly falls outside the scope of assessment u/s 153A of the Act. There is no nexus between these expenses and allegation of bribe and as such there is no case of any disallowance in terms of provisions of sec. 153A. Accordingly, the ground of the revenue relating to disallowance of technical consultancy claim amounting to Rs. 49,11,754/- is dismis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 was considered and accepted u/s. 143(3), there is no valid basis for any disallowance and accordingly ground of revenue regarding disallowance of site expenses is dismissed and CO of the appellant is accepted. 57. In respect of adhoc disallowance of 10% of site labour expenses, as per detailed finding recorded in A.Y. 2002-03, we are of the opinion that same is beyond the scope of sec. 153A of the Act. 58. The next appeal is filed by the assessee in ITA No. 881/D/2012 relating to AY 2005-06 against the order of CIT(A)-XXXI, New Delhi dated 02/01/2012. 59. The assessee has raised following groun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 whole basis of addition is illegal, arbitrary and without jurisdiction. 6. That similarly addition of Rs. 11,71,000/- is not justified and same is not sustainable on facts and under the law. 7(i) That disallowance of Rs. 42,66,135/- 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, appreciatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference 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 other than from Delhi Jal Board and as such presumption against the appellant company is also misconceived. However, as the matter is not examined in correct perspective the same is restored to the AO for fresh adjudication. 65. Now we are taking up appeal relating to AY 2006-07 filed by the assessee in ITA No. 882/Del/2012 against the order passed by CIT(A)- XXXI, New Delhi dated 02/01/2012. 66. The assessee has raised following grounds : 1(i). That CIT(A) has failed to adjudicate the ground relating to jurisdiction u/s. 153A in the absence of any incriminating material found as a result of search in respect of settled issues and completed assessments. (ii) That provisions of sec. 153A have been applied in respect of statutory cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. (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. 67. Ground No. 1 & 2 are against disallowance of claim of statutory deduction u/s 80IA of the Act. The assessing officer and CIT(A) has disallowed the claim on the ground that assessee is engaged in activity of rehabilitation of existing sewer line and has not developed any new infrastructure activity so as to claim benefit u/s 80IA of the Act. 68. The Ld. Counsel Sh. R.S. Singhvi appearing for the assessee submitted that in respect year under consideration, the department has passed two assessment orders, one u/s 143(3) and seco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 infrastructure facility are not cumulative in nature. 71. The Ld. CIT DR on the other hand, submitted that assessee is merely carrying out the activity of rehabilitating the existing sewer lines through CIPP technology and same could not be said to be laying down new pipelines. It was argued that CIT(A) has rightly upheld the order of AO as the AO has not properly appreciated the facts while granting relief in the order u/s. 143(3). In respect of other grounds, both the sides have relied on submission made in the preceeding years. 72. We have considered the submission of both the parties and gone through the orders of the lower authorities. The Ground No. 1 &2 are relating to validity of order u/s. 153A and claim of statutory deduction u/s. 80IA. It is observed that for the year under consideration, 2 separate orders were passed u/s. 143(3) and u/s. 153A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oard. 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 assessment order wherein the assessing officer has dealt with this issue. It was argued that the observation of AO is cyclostyled and appears to be borrowed from preceeding year's assessment order. It was submitted that in the year under consideration, the assessee has not claimed any expenses in the name of M/s. Onsite Central Ltd. UK and instead the claim of Project Consultancy Exp is from M/s. C.M. Contracting Ltd., New Zealand and as such the observation of assessing officer in respect of M/s. Onsite Central Ltd. UK is not relevant. In respect of claim of Technical Support exp paid to Mr. Vernon Downes, the reliance was placed on CIT(A)'s order for AY 2004-05 wherein the identical disallowance was deleted. The Ld. Counsel submitted that payment to Mr. Vernon Downes was subjected to TDS @ 33% and accordingly the impugned disallowance is not sustainable. 78. Alte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 claim of Site Labour Exp is unverifiable and unvouched. 84. The Ld. Counsel Sh. Singhvi argued that the impugned ad-hoc disallowance is prima facie not sustainable as the assessing officer has failed to give any specific reasons or point out any defect in the books of account. It was argued that genuineness of the expenses is not in dispute as the assessing officer himself has allowed 90% of the claim. Sh. Singhvi also contended that it is not the case of assessing officer that the claim is excessive or not for the purpose of business. In addition to above argument, the ld. Counsel also disputed the validity of disallowance on the ground that same is on account of change of opinion as the original assessment was complete u/s 143(3) wherein the claim of Site Labour Expenses was accepted in totality. 85. The alternate argument about availability of benefit of deduction u/s 80I....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 grounds of appeal : 1(i). That CIT(A) has failed to adjudicate the ground relating to jurisdiction u/s. 153A in the absence of any incriminating material found as a result of search in respect of settled issues and completed assessments. (ii) That provisions of sec. 153A have been applied in respect of statutory claim u/s. 80IA on illegal and arbitrary basis and without jurisdiction. 2(i). That on the facts and circumstances of the case, the CIT(A) was not justified in not accepting claim of statutory deduction u/s. 80IA in the context of proceeding u/s. 153(A) even though the statutory claim u/s. 80IA was settled as per original orders u/s. 143(3) and there is no case of any incriminating material relating to correctness of claim u/s. 80IA. (ii) That the claim u/s. 80IA is duly supported from order of the CIT(A) in assessment year 2004-05 in terms of proceedings u/s. 153A in the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts 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 that raised in appeal relating to AY 2006-07 in ITA No. 882/D/2012. Further, the arguments of the both the sides being similar, the same are taken as heard for the purpose of adjudication of various grounds. 92. As the ground and basis of various disallowances are same as in AY 2006-07, the ground wise finding recorded by us in aforesaid Para 37, 41, 45 & 47 is applicable mutatis mutandis to present appeal and this appeal is treated as adjudicated as per finding recorded therein. 93. Lastly, we take up the appeal preferred by the assessee in ITA No. 884/Del/2012 against order passed by CIT(A)-XXXI, New Delhi dated 02/01/2012 relating to AY 2008-09. 94. The assessee has raised following grounds : 1(i). That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 5,50,000/- as unexplained cash even though the entire cash is supported from books of accounts and other evidences. (ii) That impugned addition is without proper appreciation of fact....