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TMI Blog2013 (11) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... irmation – 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. - ITA No.1396/ Hyd/2011, ITA No.1397/ Hyd/2011, ITA No.1398/ Hyd/2011, ITA No.1399/ Hyd/2011, ITA No.1400/ Hyd/2011, ITA No.1402/ Hyd/2011, ITA No.1357/ Hyd/2011, ITA No.1358/ Hyd/2011 - - - Dated:- 27-12-2011 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Shri Sadasiva Shri M. V. Anil Kumar For the Respondent : Smt. K. Mythi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of self-made vouchers without full addresses of payees, he has disallowed 10% of labour expenses, which worked out to Rs. 9,32,060/-, 6. During the appeal proceedings, it was submitted by the assessee that the assessee being a contractor has to deal with labourers, and therefore, the assessee had used self-made vouchers with regard to the payments made to them. Therefore, the discrepancies with regard to payees addresses are bound to happen. Hence, it was pleaded that the disallowance of 10% of labour expenses made by the assessing officer is on higher side and the same may be reduced. 7. The CIT(A) observed that during the appeal proceeding also the relevant books of accounts, bills and vouchers were not produced before him. Further, the CIT(A) pointed out that the Assessing Officer has disallowed the 10% of labour expenses since the assessee did not produce the valid bills and vouchers in support of labour expenses claimed and even during appeal proceedings, the assessee did not furnish any details. The CIT(A), therefore, held that expenses disallowed by the Assessing Officer are justified to some extent because the assessee did not furnish necessary details in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tains to disallowance of 7% of labour and site expenses are concerned, facts and circumstances of the case are similar to those for the assessment year 2003-04 in ITA No 1396/H/11, discussed above. While the Assessing officer disallowed 10% of the labour expenses which came to Rs.27,04,530 on the ground that most of the vouchers are selfmade, payments have made in cash and the identity of the payees is not complete so as to enable verification, on appeal, the CIT(A) reduced the disallowance made by the assessing officer to 7% of the expenses. 14. Facts and circumstances of the case being 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. 15. The next grievance of the assessee in this appeal is with regard to disallowance of Rs 1,00,000 out of travelling expenses claimed. The Assessing Officer observed that for the previous assessment year 2003-04 the Assessee s claim towards travelling expenses was only Rs 27,000 whereas for the assessment year under consideration, the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under appeal at Rs. 29,07,250/- as against Rs. 27,02,250/- returned by the Assessee. 21. At the time of hearing, the learned counsel 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. 22. The next grievance of the assessee in this appeal is with regard to income adopted by the assessing officer at Rs 29,07,250 which was determined as per the order under sec. 143(3) dated 28.12.2007. The then Assessing Officer had adopted the total income of the assessee at Rs 29,07,250, since he found that certain expenses were not supported by any receipts, vouchers or bills. Therefore, the Assessing Officer adopted the total income of the assessee at Rs. 29,07,250/- against the income returned at Rs 27,02,250/- 23. On appeal the CIT(A) has found that the assessee has not furnished any details with regard to expenses claimed by it. The assessee has not produced any books of accounts. The Assessing Officer had adopted the assessed income, while framing assessment under sec 143(3) of the I.T. Act 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it pertains to disallowance of 7% of labour and site expenses are concerned, facts and circumstances of the case are similar to those for the assessment year 2003-04 in ITA No 1396/H/11, discussed above. While the Assessing officer disallowed 10% of the labour expenses on the ground that most of the vouchers are self-made, payments have been made in cash and the identity of the payees are not furnished to enable any verification, on appeal, the CIT(A) reduced the disallowance made by the assessing officer to 7% of the expenses. 30. Facts and circumstances of the case being 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 are of the opinion that disallowance of 5% of labour an site expenses are reasonable. 31. The next grievance of the assessee in this appeal is in respect of disallowance made by the Assessing Officer of 10% of the Miscellaneous expenditure of Rs 24,62,702/-. The said disallowance was made by the assessing officer on the ground the same is not verifiable since necessary details are not furnished by the assessee. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding paras, following the view taken by us on this very aspect for the assessment year 2003-04(ITA No.s1396/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 and assessment year 2009-10. 36. In the result the revenue s appeal for assessment year 2006-07, being ITA 1357/H/2011 is dismissed. Assessee s Appeal : ITA No. 1400/H/2011 : Asst. Year: 2007-08 37. This appeal of the assessee is also directed against the order of the CIT(A) confirming the assessment made u/s 153A, and confirmation of disallowance of 7% of labour and site expenses. 38. 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. 39. With regard to the merits of case, in so far as it pertains to disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 46. With regard to the merits of case pertaining to disallowance of 7% of labour and site expenses are concerned, facts and circumstances of the case are similar to those for the assessment year 2003-04 in ITA No 1396/H/11, discussed above. While the Assessing officer disallowed 10% of the labour expenses of Rs.2,12,59,262, working out to Rs.21,25,926, on the ground that most of the vouchers are self-made, payments have been made in cash and the identity of the payees are not furnished to enable any verification, on appeal, the CIT(A) reduced the disallowance made by the assessing officer to 7% of the expenses. 47. Facts and circumstances of the case being 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 are of the op9ikion that disallowance of 5% of labour and site expenses is reasonable. . 48. In the result, appeal of the assessee, being ITA No.1402/Hyd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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