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2013 (11) TMI 374 - AT - Income TaxAssessment u/s 153A Disallowance of labour and site expenses @ 7 percent Most of the vouchers are self-made, payments have been made in cash and the identity of the payees were not provided completely to make any verification - Held that - The labour is engaged in far flung areas where it is impossible to maintain documents It is difficult to verify the identity of labour after gap of years The disallowance was restricted to 5% - Partly allowed in favour of the assessee. Disallowance out of travelling expenses The assessee has claimed abnormally high travelling expenses as compared to last year The assessee did not furnish necessary evidences in support of the travel expenses - Held that - 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 travelling expenses Not every expense can be supported with third party confirmation The disallowance was reduced to 50% - Partly allowed in favour of the assessee. Determination of income u/s 143(3) The search was conducted on 28.7.2008, while the assessment order was passed on 28.12.2007 - Held that - The assessment order passed u/s 143(3) is still valid Decided against assessee. Disallowance of miscellaneous expenditure The assessee has not furnished necessary details of the expenses incurred Held that - The AO as well as CIT(A) has not mentioned what evidence were required to support claim - 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 Decided in favour of assessee.
Issues Involved:
1. Legality and validity of assessment under Section 153A. 2. Disallowance of labor and site expenses. 3. Disallowance of travel expenses. 4. Determination of income for the assessment year. 5. Disallowance of miscellaneous expenditure. 6. Disallowance of workmen and staff welfare expenses. Issue-wise Detailed Analysis: 1. Legality and Validity of Assessment under Section 153A: - In all the appeals, the assessee did not press the grounds regarding the legality and validity of the assessment under Section 153A. Consequently, these grounds were rejected as not pressed. 2. Disallowance of Labor and Site Expenses: - Assessment Year 2003-04: The Assessing Officer (AO) disallowed 10% of labor expenses due to self-made vouchers and incomplete payee information. The CIT(A) reduced this disallowance to 7%. The Tribunal further reduced it to 5%, considering the difficulty in maintaining perfect records for labor expenses in remote sites and the lack of incriminating evidence found during the search. - Assessment Year 2004-05: Similar facts and circumstances as 2003-04. The Tribunal restricted the disallowance to 5%. - Assessment Year 2006-07: The AO disallowed 10%, reduced by CIT(A) to 7%. The Tribunal again restricted it to 5%, citing similar reasons as in previous years. - Assessment Year 2007-08: The AO disallowed 10%, reduced by CIT(A) to 7%. The Tribunal restricted it to 5%, consistent with previous judgments. - Assessment Year 2009-10: The AO disallowed 10%, reduced by CIT(A) to 7%. The Tribunal restricted it to 5%, following the same rationale. 3. Disallowance of Travel Expenses: - Assessment Year 2004-05: The AO disallowed Rs. 1,00,000 out of total travel expenses due to lack of evidence. The CIT(A) confirmed this disallowance. The Tribunal reduced the disallowance to Rs. 50,000, considering the nature of travel expenses and the absence of specific defects pointed out by the AO. 4. Determination of Income for the Assessment Year: - Assessment Year 2005-06: The AO adopted the income of Rs. 29,07,250 as determined in the earlier assessment under Section 143(3), due to lack of supporting evidence for expenses. The CIT(A) confirmed this. The Tribunal upheld the AO's determination since the earlier assessment was still valid and the assessee failed to provide necessary evidence. 5. Disallowance of Miscellaneous Expenditure: - Assessment Year 2006-07: The AO disallowed 10% of miscellaneous expenditure due to lack of verification. The CIT(A) confirmed this. The Tribunal found no reason to sustain the disallowance, as similar expenses were accepted in other years without specific findings of defects. The disallowance was deleted. 6. Disallowance of Workmen and Staff Welfare Expenses: - Assessment Year 2006-07 and 2007-08: The AO disallowed 10%, reduced by CIT(A) to 7%. The Tribunal restricted the disallowance to 5%, consistent with the treatment of labor expenses in previous years. The Revenue's appeals against this reduction were dismissed, noting that similar decisions were accepted for other years. Conclusion: - The Tribunal partly allowed the assessee's appeals for the assessment years 2003-04, 2004-05, 2006-07, 2007-08, and 2009-10 by reducing the disallowance of labor and site expenses to 5% and making specific adjustments for travel and miscellaneous expenses. - The appeal for the assessment year 2005-06 was dismissed, upholding the AO's determination of income. - The Revenue's appeals for the assessment years 2006-07 and 2007-08 were dismissed, maintaining the CIT(A)'s reduction of disallowances.
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