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2022 (9) TMI 1480
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.... the tax effect, which is below the monetary limit, where the department could have filed the appeals before this Tribunal. Accordingly, these appeals are not maintainable in view of the CBDT No.17/2019 dated 8.8.2019. Accordingly, these two appeals of revenue are dismissed as not maintainable. The remaining appeals are tabulated as below:- 2.1 The captioned appeals and miscellaneous petitions Nos. 194 to 199/Bang/2017 have been restored to the Tribunal in terms of the judgement of the Hon'ble High Court of Karnataka in ITA Nos. 468/2018, 816/2017, 817/2017, 818/2017, 819/2017, 820/2017, 821/2017, 469.2018, 470/2018, 471/2018, 472/2018 & ITA No. 473/2018, dated 02/09/2021, whereby, the earlier order passed by the Hon'ble Bench dated 02/05/2017 in the Department Appeals in ITA Nos. 1358 to 1363/Bang/2015 has been set-aside. It has been further directed by the Hon'ble High Court in ITA No.468/2018 dated 2.9.2021 that the aforesaid appeals filed by the Department have to be heard along with the appeals filed by the assessee that are numbered as IT[SS]A. Nos. 1 to 6/PNJ/2015. 2.2 At the very outset, Ld. A.R. submitted that the Miscellaneous petitions filed by the assessee that ar....
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....: 1. Excess speed money and 2. Illegal payment [10% of the speed money allowed by the A.O.] as per u/s.37[1] Ground No.2 to 10 3,71,19,204 Ground No.3,4, 8 & 9 4,08,76,846 Ground No.3,4, 8 & 9 4,31,56,759 Ground No.3,4, 8 & 9 48,89,813 ASSESSEE APPEALS - ITA Nos. 1 to 6/PNJ/2015, ITA No.30/Bang/2017 & ITA No.870/Bang/2017 :- Particulars & Issues Assessment year/s & ITA Nos./Ground Nos. 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1/PNJ/ 2015 2/PNJ/ 2015 3/PNJ/ 2015 4/PNJ/ 2015 5/PNJ/ 2015 6/PNJ/ 2015 30/Bang/ 2017 870/Bang/ 2017 Addition of 10% in respect of inflation of labour charges -- Ground No.3 17,43,815 Ground No.3 3,55,261 Ground No.3 4,04,000 Ground No.3 3,32,717 Ground No.3 5,07,125 Ground No.3 4,54,350 Ground No.3 6,30,869 Ground Nos.1 to 3 85,92,400 Ground No.1 & 2 1,02,11,237 Ground No.1 & 2 1,09,41,275 Ground No.1 & 2 25,36,336 Ground No.1 & 2 37,00,823 G....
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.... Staff Salary NMP Casual Labour Wages 2,64,000 3,14,400 10,60,380 Casual Labour Wages 66,170 20,46,400 Travelling Expenses 1,87,740 Sundry Expenses 2,63,730 Machine Operators and Cleaners Shift Allowance 2,84,000 TOTAL 1,74,38,149 35,52,611 40,40,000 33,27,170 50,71,250 4. The assessee has filed detailed objections vide letter dated 14/11/2013 to the show cause notice proposing to make the aforesaid disallowance, which has also been extracted in the assessment order, and is also placed at Page 207 to 218 of the paper book. After considering the objections of the assessee, the disallowance has been made by the learned A.O. rejecting the explanation that the aforesaid expenses are genuine and the extent of expenses under various heads claimed are reasonable considering the nature and extent of work undertaken by the appellant. The learned A.O. has relied extensively on the fact that there were no si....
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.... 10% of these expenses and the same ought to have been allowed in full. He also made similar arguments for the assessment years 2013-14 & 2014-15 that addition of 2.5% sustained by Ld. CIT(A) in respect of speed money and labour charges to be deleted. Hence, he prayed that the departmental appeal on this ground be dismissed and the appeal of the assessee on this ground be allowed. 5. Ld. D.R. submitted that since the evidence gathered during the search and seizure operation and post search enquiries reveal that substantial expense have been booked by the assessee under the head of labour charges which lacked the substance of proving the genuineness of the expenses to the satisfaction of the Assessing Officer, for the current year also the same issue has been taken up. The authorized representative has been asked to furnish the labour payments for the financial year relevant to current assessment year. From the details made available, it is seen that the assessee has incurred labour payments made in cash to the extent of Rs. 2,52,34,724/-. Considering the volume of vouchers and records, it was decided to test check the vouchers of such labour payments for the month of February, 2....
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....red vouchers and they were duly accounted in the books of accounts of the assessee and books of accounts were audited by the statutory auditors and no adverse comments has been made by them. The A.O. alleged in the first page of the assessment order that incriminating evidence has been seized which reveals that the assessee has been engaged in inflation of expenditure substantially. This statement of the AO in the first page of the order shows that he has opened the file with pre-determined mind that assessee has inflated the expenditure. It was so alleged by the AO even without rejecting the books of accounts. Before making allegation that assessee has inflated expenditure, it is incumbent upon the AO to reject the audited books of accounts maintained by the assessee, he should challenge the entries in the books of accounts by duly rejecting the same. In other words, it is evident that the AO considered the income declared by the assessee, thereafter, he made disallowances of expenditure after accepting the books of accounts. The total disallowance made by the AO is only on conjectures and surmises. The claim of labour charges in these assessment years commensurate with the nature....
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....o reject the books of accounts by observing that books of accounts are not reliable and not verifiable. Then he has to specify the each entry which are to be considered as bogus or unverifiable and only to that extent he can make disallowance. In the present case, in a wholesome manner the A.O. made disallowance on estimate basis without rejecting the books of accounts. However, Ld. CIT(A) sustained this addition to the tune of 10% in A.Y. 2007-08 to 2011-12 and 2.5% in A.Y. 2012- 13 & 2013-14. This is having no legal sanction. For this purpose, we rely on the judgement of Hon'ble Karnataka High Court in the case of Shri Ganesh Shipping Agency in ITA No.366 of 2015 dated 6.2.2021, wherein held as follows:- "5. We have considered the submissions made on both sides and have perused the record. From perusal of the order passed by the authorities, it is evident that the authorities have accepted the books of accounts produced by the assessee. The Assessing Officer, in its order, has admitted that the payment of speed money is a trade practice which is followed by the assessee and similar business concerns functioning for speedy completion of their work. However, the disallowan....
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....2012-13 to 2013-14:- 7. Next common issue in these appeals is speed money in Revenue's appeals in ITA Nos. 1353/Bang/2015, 1359/Bang/2015, 1360/Bang/2015 & 1361/Bang/2015. This is a common issue in all revenue's appeals for the assessment years 2006-07 to 2009-10. The revenue is in appeal before us for deleting the speed money payment to the tune of 90% by Ld. CIT(A) and assessee in appeal before us for sustaining 10% ITA Nos. 1 to 6/PNJ/2015, ITA No.30/Bang/2017 & ITA No.870/Bang/2017 in assessment years 2006-07 to 2013-14. 7.1 The Ld. A.R. submitted that the aforesaid disallowance has been made by the learned A.O. under 3 different components as under:- [a] Payment made through Sub-contractors; [b] Excess claim of Speed money; [c] Disallowance for illegal payments. 7.2 Firstly, the learned A.O. has held that there were payments made to employee sub-contractors that were found at the time of search and these payments were all routed through sub-contractors. The learned A.O. has mentioned that statements were recorded from these employee-sub contractors viz., Sulaiman, Nagesh Rao, Suresh. U and Mohammed Rafiq and has observed that these employees....
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....o the Port Labours and Casual Labours inside the Port and to track the movement of tippers inside the Port and to see that the handling work is completed smoothly. Q.6 I am showing you inventory Nos. 1/DOCK/3 & 1/DOCK/4 impounded during the course of survey proceedings on 04.08.2011. Please go through these inventories and explain the contents. Ans. I have gone through the inventory Nos. 1/DOCK/3 & 1/DOCK/4 and explain the contents as under :- Page No.1 to 5 contains details of actual expenditures incurred ship wise, towards handling of Iron ore belonging to KIOCL. For Eg : I am explaining the contents of Page 5 as under :- M V ALEX 'D" is the name of the ship. KIOCL is Kudremukh Iron Ore Co., Ltd., 49160 MT means the quantity of iron are handled in metric tons. Port Labour cash payment Rs. 8,67,950/- : amount paid in cash to the Port Labours as Speed money for handling the Cargo over and above the cheque payment made towards Bill raised by the Port for labour charges. Casual labours - Rs. 74,635/- : cash paid to the casual labours at the rate of Rs. 310/- per shift per person. Foreman and A Foremen - Rs. 35,325/- : Cash paid to foreman ....
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....itures incurred towards the foreman. Tipper Hire - Rs. 5,7,700/- : Cheque paid to tipper owners towards tipper hire charges. Page 6 contains the same details as that of page No.8 & 9 of 1/DOCK1 dated 04.08.2011. Page No.7 & 8 : They do not pertain to our firm. 1/DOCK/4 details : The notings in this note book are made by me. The contents are as under :- Page 1 contain cargo discharge details tonnage wise in different shifts on 02.05.2011 and 03.05.2011 by M V JAG RAHUL Ship. The last column contains the details of cash payment made to the Port Labours. Page No.2 to 33 contains the details of various miscellaneous expenditures incurred on different dates on behalf of M/s. Hasan Hajee & Co. The same expenditure are consolidated to prepare the expenditure sheets as mentioned above for 1/DOCK/3. Page 35 contains details of vehicle hire given to NIG and RICK. Page 35 to 43 contains date wise payment of casual labour expenditures incurred and paid in cash. Q.7 Please explain at what stage you make the notings as mentioned in Inventory No.1/Dock/4 DATED 04.08.2011. Ans. The notings are made on the date of incu....
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....rds handling of cargo in respect of Ship M V Haydar/M V Glorry Guan G-3 HOV. The first half of the page contains the following entries : Tonnage 1,06,600 Metric Ton RCHW Bill Rs. 25/- per metric Ton which is to be paid in cheque. Cash payment to NMPT Labours Rs. 27/- per MT paid through sub contractors. Transportation charges Rs. 16/- per MT paid directly through cheque to the Tipper Owners. Machine expenses Rs. 6/- per MT paid in cash to the machine owners through sub contractors. Extra payment of Rs. 2/- per MT paid in cash through sub contractors towards miscellaneous expenses. Second half of the page contains similar details in respect of direct loading to ship from wagon for 20000 metric tons of Cargo. Page 72 contains actual expenditure incurred through sub contractors except for the RCHW Bill in respect of handling of Cargo for the Ship M V African Oryz. Page 71 contains same details as that of page 72 excluding the RCHW Bill. Page 63 contains details of movement of trucks from 27.02.2009 to 31.03.2009". 7.8 On the basis of the aforesaid seized materials and after extracting the afor....
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.... assessee has inflated the expenditure relating to the speed money though it was argued that the speed money has been paid in accordance with the agreement reached between assessment of NMPT Stevedores and Labour Unions, which is in the knowledge of NMPT authorities. Further, it was submitted that the evidence collected during the course of search says that the inflation of expenditure on this count cannot be ruled out. He submitted that the Ld. CIT(A) overlooked the entire evidence brought on record by AO in the form of seized material and various statements recorded u/s 132(4) of the Act and 131 of the Act were overlooked which are crucial evidence and these statements are recorded from principal persons and crucial employees like Abdul Aziz, Accountant, Shri H.N. Shetty, Manager, Mr. Md. Sharif, Supervisor, Mr. Md. Amin, Partner and those statements were self- explanatory, which cannot be ruled out that assessee is habitual of inflating the speed money payment. Accordingly, he relied on the assessment order and prayed that addition to be sustained in its entirety. 9. We have heard the rival submissions and perused the materials available on record. In this case, the AO consid....
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....ntractor's expenses of Rs. 2,53,29,660/- and Rs. 2,70,70,475/- respectively has been claimed as an expenditure. The assessee could not prove that payment is with reference to service rendered. The A.O. disallowed 20% of the said amount works out at Rs. 1,17,59,931/-. On further appeal to the Tribunal, the Tribunal sustained only Rs. 15 lakhs by observing as under in ITA No.947/Bang/2018 dated 30.4.2019:- "18. We have heard both the parties. The first issue which we have to consider is as to whether such speed money is being paid by the assessee for handling the cargo at the port. The Hon'ble Madras High Court in the case of CIT v South India. Corporation (Agencies) Ltd. 293 ITR 237 had an occasion to consider the allowability of expenditure of giving incentives to Dock workers. In that case, the AO has not disbelieved the payments but he was not satisfied with the quantum of expenditure debited and therefore, disallowed 50% of such expenditure. In that case, the CIT(A) held that though nature of payment is unverifiable but allowed the expenditure on the ground that expenditure claimed in the year of appeal was not unjustifiably different from the earlier year. The Trib....
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....n order to ensure that work of handling goods are done within reasonable time and emergency operations of cargo handling beyond the working hours are attended. Such payments are made either through labour or workers union cannot be considered to be either prohibited in law and further the assessee cannot be expected to take the receipt from individual workers or make payments by way of cheques. 22. The Bangalore Tribunal in the case of Mrs. Irene D'Souza also had an occasion to consider the allowability of such payments. In that case, the assessee was handling cargo at New Mangalore Port. The asst. year involved was 1998-99. The Tribunal vide order dated 2nd August, 2005 in ITA No.72/PANJ/2002 deleted the disallowance made by the AO. The learned Tribunal accepted the finding of the CIT(A) in that case. 23. This Tribunal also had an occasion to consider the allowability of such expenditure in the case of Shri Devanand Shetty for the asst. year 2001-02. The Tribunal vide order dated 8th September, 2006 in ITA No.2932/Bang/2004 confirmed the order of learned CIT(A), who in turn deleted the disallowance of 10% of the expenses claimed under the head "incentive paid to ....
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....where a fundamental aspect permeating through the- different assessment years has been found as a. fact one way or the other and parties have allowed that position to be sustained by not challenging the order; it would not be at all appropriate to allow the position to be changed in a subsequent year. 28. Such rule of consistency has been followed by the Delhi High Court in the case of CIT v B Amrutha Lakshmi 300 ITR 78, CIT v Moonlight Builders and Developers 307 ITR 197, by Rajasthan High Court in the case of CIT v Malborough Polychem P. Ltd. 309 ITR 43 and by Bangalore Bench in the case of Tally Solutions Pvt. Ltd. V. DCIT. 29. The learned CIT(A) has enhanced the income by Rs. 2,70,70,745/- after making certain observations. According to the learned CIT(A), the recipients have not maintained any books of accounts. All the recipients have given the same answers and the AO has asked the same questions. It is not the fault of the assessee that the AO has asked the same questions to the recipients to whom the speed money was paid through cheques for disbursement. The learned CIT(A) has not examined such persons. Once such recipients have admitted that they have rec....
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.... Such vouchers bear different signatures. Hence the voucher gives the details and it is not a case where person preparing the voucher has signed. Hence, facts are different from the facts of APL (India) Pvt. Ltd. (supra) decided by Mumbai Tribunal where disallowance of 25% was confirmed. 32. The learned AR was asked to furnish certain details for the perusal of the Bench to see as to what is the net profit ratio declared and to see the percentage of labour expenses viz-a-viz turnover. The details so filed are reproduced as under for ready reference:- Business income Asst. year Gross turnover (Rs) Disclosed (Rs.) Assessed (Rs.) Ratio Returned Assessed 2002-03 7,37,46,115 42,76,062 86,47,110 5.7% 11.72% 2003-04 7,77,61,525 29,29,766 53,91,800 3.76% 6.93% 2004-05 13,97,75,712 67,79,673 3,56,19,635 4.85% 25.48% 2005-06 30,65,84,000 11, 82,73,251 1,82,73,251 5.96% 2006-07 24,37,73,103 84,66,051 87,66,590 3.47% 3.59% Wages Asst. year Gross turnover (Rs.) Wages (Rs.) Ratio 2002-03 7,37,46,115 4,38,27,054 59.42% 2003-04 7,77,61,525 4,62,71,697 59.50%....
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.... disclosed in the year under consideration and considering that this was first year when iron ore was handled, we feel that ends of justice will be met in case the overall addition of Rs. 15 lakhs is sustained. This will include the disallowance out of the payments made in cash and out of the payments made to the sub-contractors. 35. In the result, addition to the extent of Rs. 15 lakhs is sustained and the appellant will get consequential relief. In the result, the appeal is partly allowed." 9.2 Further, the Tribunal in the case of HML Agencies Pvt. Ltd. In ITA No.1209/Bang/2009 dated 30.6.2010 with regard to speed money has held as under:- "5. We have heard the rival submissions and minutely perused the records furnished before us. The following facts of the case have merits and cannot be brushed aside. 1) The payments are made to the laborers employed under pooling arrangements canalized by the New Mangalore Port Trust. 2) The assessee occupation is 'Clearing & Forwarding Agent' which requires high integrity and Goodwill. 3) The assessee has to entirely depend on the labour force to execute its work and thus keep up the Goo....
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....of business. Therefore, the deduction was allowable by way of business expenditure." 9.4 Further, it is well settled that it is not open to the department to adopt a subjective standard of reasonableness and disallow business expenditure as being unreasonably large or decide that what type of expenditure, the assessee should incur and in what circumstances as held in the case of CIT Vs. Oracle India Pvt. Ltd. (2011) Taxmann.com 139 (Del.). Thus, the jurisdiction of the A.O. only confined to decide "profit & gains of business or profession" i.e. whether expenditure claimed actually and factually expended or not and whether it was wholly and exclusively for the purpose of business. The A.O. cannot put himself in the chair of businessman and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The A.O. must put himself in the shoes of the assessee and see how a prudent businessman would act. The A.O. must not look at the matter from their own view point but that of a prudent businessman. A businessman's sole intention is to run the business and earn profit. In the course ....
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....contractors have indeed engaged with the labour indented by NMPT Registered Cargo Handling Workers Association based on the estimate of the work load for which payments are made by the assessee to the employee sub- contactors who withdraw the amount in cash and disburse it to the labourers. 10.2 The A.O. has disallowed the expenditure stating that the assessee exercises control over the employee sub-contractors and that the payments made by them are infact the expenses of the assessee itself, which ought to have been incurred by it directly. This arrangement was devised to conceal the actual extent of expenses and to give a colour of genuineness. 10.3 The learned CIT[A] in his impugned order has considered the contentions of the assessee and has considered the said disallowance along with the disallowance in respect of speed money wherein 10% of the expenses has been disallowed. It is submitted the learned CIT[A] ought to have deleted the entire addition in as much as, the disallowance has been made by the A.O. only on suspicion and surmise. From the statement of Mr. Sulaiman Manchi reproduced in the assessment order, it is clear that he is aware of the nature of work that wa....
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....of assessment order for the A.Y. 2008-09. The reading of the above statement of sub-contractors shows that the sub-contractors engaged with the labour intended by NMPT Registered Cargo handling workers assessment based on the estimate of the work load for which payments are made by the assessee to the employee sub-contractors who withdrawn the amount in cash and disbursed it to the labourers. According to the AO, assessee had a control over the employees of sub-contractors that the payment made by them are in fact expenses of the assessee itself which ought to have been incurred by it directly and this arrangement was fixed to conceal the actual expenses and to give a colour of genuineness. In our opinion, hiring assessee's employees as a sub-contractors and making payment to them cannot be reason to disallow this expenditure. There is no provision under any provisions of the Act to hire assessee's own employees as a sub- contractors and there is no allegation that these expenditure not incurred by the assessee for the purpose of business. In such circumstances, when the assessee paid the amount to its sub- contractors though they were the employees of the assessee that expenditure....
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....ourers. it has also been submitted that it was nor established by the respondent-assessee that the sub-contractors were directly involved in the business of providing labourers. Learned counsel also submitted that in the previous years, the payment was made directly to the labourers whereas for the assessment year in question the payment was made to the labourers through four sub- contractors. It was lastly contended that the Tribunal as well as the CIT(Appeals) have wrongly placed reliance on the decision of this Court in the case of Commissioner of. income Tax & another -vs- Konkan Marine Agencies (2009) 313 ITR 308 as the facts of the said case Were different from the facts of the case on hand. 4. On the other hand, the learned counsel for the respondent-assessee has submitted the very fact that 70% of the payment made has been allowed by the Assessing Officer would be a admission on the part of the Department that the sub-contractors were carrying on the business of providing labourers to the respondent- assessee and hence the genuineness of the transaction cannot be doubted. It is contended that the accepted, the business nexus between the respondent-assessee and sub-....
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....missible. In view of the aforesaid facts, we do not find that any substantial question of law arises in the present case for determination of this Court." 12.4 In view of the above discussion, we allow the ground taken by the assessee and delete the addition made towards payment to sub-contractors. ISSUE -4 REGARDING ILLEGAL PAYMENTS:- Assessment years 2006-07 to 2009-10:- 13. This is the issue in Revenue's appeals ITA Nos. 1358 to 1361/Bang/2015 for the assessment years 2006-07 to 2009-10. The Ld. A.R. submitted as follows:- 13.1 ILLEGAL PAYMENTS: In so far as the allegation that the speed money paid consisted of illegal gratification to government servants, it is submitted that there is no case to hold that these amounts paid are illegal. The learned A.O. has mentioned in the assessment order that there were payments made to government officials in para 6.25 of the assessment order for the assessment year 2007-08. 10% of the speed money considered as allowable has been disallowed u/s. 37[1] of the Act. There is no basis for the presumption that 10% of the speed money constitutes illegal payments made by the assessee. The entire disallowance made is purely on suspicion....
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....IT Vs Pruthvi Brokers & Shareholders Pvt. Ltd. 349 ITR 336. Hence, he prayed that the bad debts claimed by the assessee for AY 2009- 10 and AY 2010-11 may kindly be allowed. 15.2 In light of the above, Ld. A.R. prayed that the appeal of the assessee may be allowed and that of the revenue be dismissed for the advancement of substantial cause of justice. 16. Ld. D.R. submitted that he had considered the claim of the assessee. It's a fact that when the original return of income was filed, the assessee did not claim any bad debt. The assessee is a substantially large business concern and his accounts are subject to Audit for many years. He is ably supported by competent Chartered Accountants when the concern filed its original return of income, its book had been closed and audit report had been obtained and admittedly, there was no debt which had become bad at that point of there. Whether a debt has become bad or not is a question of fact and depends upon the judgement of the entrepreneur. Most of the higher courts of law have supported this view and the position of law in this regard is settled. If a debt had not become bad on 31.03. of that year, it cannot become bad subsequent....
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..../s 143[3] of the Act. Similarly, for the AY 2007-08 and AY 2009-10, the time limit for issuance of notice u/s 143[2] had expired on the date of search and thus, the assessments did not abate by virtue of search conducted in the case of the assessee on 04/08/2011. The details of the returns filed by the assessee for the assessment years 2006-07, 2007-08, 2008-09 and 2009-10 before the search action was conducted and the status of the assessments is tabulated below :- Asst. Year Date of filing original return Date of order u/s. 143[3] /143[1] Remarks 2006-2007 30/10/2006 Order u/s 143[3] dated 26/11/2008 Concluded assessment. Copy of the order passed u/s 143[3] 2007-2008 31/10/2007 Time limit for issue of notice expired on 30/09/2008 and hence, assessment not pending on date of search i.e. 04/08/2011 2008-2009 30/09/2008 Order u/s 143[3] dated 24/12/2010 Concluded assessment. Copy of the order passed u/s 143[3] 2009-2010 30/09/2009 30/09/2010 Time limit for issue of notice expired on 30/09/2010 and hence, assessment not pending on date of search i.e. 04/08/2011 18.3 Ld. A.R. submitted that as can be seen from the a....
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....urisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 4. Return of income filed by the assessee. Intimation passed or not u/s 143(1) and time limit for issue of notice u/s 143(2) has expired. Return of income of the assessee shall be treated as having being accepted and attained finality. AO loses jurisdiction to verify the return of income Since, no assessment would be pending there would be no abatement of any proceedings. Accordingly, the scope of assessment u/s 153A would be restricted to incriminating material found during the course of search. 5. Notice u/s 143(2) issued and assessment pending u/s 143(3) Pending regular assessment proceedings would abate and would converge/merge in proceedings u/s 153A. Accordingly the scope of assessment under section 153A would cover the pending return filed as well and would not be restricted to incriminating material found during the course of search. 6. Assessment u/s 143(3) completed. Since regular assessment proceedings have been completed & are not pending, there would be no abatement of proceedings. AO loses jurisdiction to review the completed assessment. Acc....
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....ts of this inventory and accounting treatment in the books of account. Ans: This inventory contains details of various expenditure incurred by M/s HasanHajee& Co. which are paid through the Sub-Contractors. The Payments are made in cheques to the Sub Contractors as calculated in these papers who in turn make cash payments to the labours." 19.3 On the basis of above seized materials and statement recorded on 14.9.2011 from Shri Abdul Aziz as recorded by us in para 7.5 to 7.8 of this order, the assessment was reopened u/s 153A of the Act for assessment years 2006-07, 2007-08, 2008-09 & 2009-10. As rightly pointed out by the Ld. A.R., the assessment for assessment year 2006-07 has been already concluded u/s 143(3) of the Act vide order dated 26.11.2018. This assessment cannot be reopened without seized material found during the course of search action as held by Special bench in the case of All Cargo Global Logistics Ltd. Vs. DCIT (2012) 18 ITR (Trib) 106 (Mumbai)(SB) that in case of assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A of the Act for which assessment shall be made for each of 6 assessment y....
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....d assessment could not be disturbed without there being any basis for doing so which is impermissible in law. Even in case of a searched person, the same reason would hold good......................." 19.4 The judgment of the Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla reported in (2016) 380 ITR 573 (Delhi) had summarized the legal position as regards assessment u/s 153A of the Act, as follows:- "37. On a conspectus of Section. 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six A Ys immediately preceding the previous year relevant to the A Y in which the search. takes place. ii. Assessments and reassessments pending on the date of the search shall abate The total income for such AYs will have to be computed by the AOs as afresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant A....
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....erial found during the course of search. 19.6 Therefore, as mentioned in the judgement of jurisdictional High Court in the case of Delhi International Airport Pvt. Ltd. (supra), it is clear that, in case of persons searched, the assessment for those assessment years where the assessments are concluded as on the date of search, cannot be disturbed unless incriminating material pertain to such assessment year is found and seized during the course of search. Hence, in our opinion, completed assessment cannot be tinkered without the support of any incriminating material found during the course of search. Therefore, the assessment framed for assessment 2006-07 without any incriminating material, the AO was not justified in framing assessment u/s 153A r.w.s. 143(3) of the Act as there was no seized material relating to AY 2006-07 was found during search action. It is not the case of AO that the seized material, if any suggested the inflation of expenditure. Hence, the framing of assessment for the assessment year 2006-07 cannot be upheld. A.Y. 2007-08:- 19.7 The return for assessment year 2007-08 has been filed by the assessee on 31.10.2007. Time limit for issue of notice for co....