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TMI Blog2015 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... and vouchers for almost the entire expenditure incurred absence of one bill would not lead to the conclusion that assessee has not incurred the expenditure. So far as the amount of ₹ 49,38,363 is concerned, it is not in dispute that the expenditure incurred is towards labour charges. Only because the expenditures were supported by self-made vouchers a part of the expenditure cannot be disallowed unless it is proved that the expenditure incurred is unreasonable or excessive compared to the turnover of assessee. It is quite evident that ld. CIT(A) does not dispute the fact that assessee has incurred the expenditure towards labour charges. He is only disputing the quantum of expenditure. Therefore, considering the nature of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to file its return. After complying to the notice issued u/s 148, assessee sought for the reasons for reopening of assessment and AO also communicated the gist of reasons for reopening the assessment. 4. Assessee during the assessment proceeding, strongly objected to the initiation of proceeding u/s 147 by stating there is no escapement of income as alleged by AO as neither self assessment tax was paid out of undisclosed income nor any asset was purchased outside the books. Assessee, therefore, requested AO to drop the proceedings. However, as alleged by AO in the assessment order, though a number of notices were issued to assessee calling for various informations and details, assessee did not respond to any one of them. Therefore, AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king addition on the basis of reasons recorded, AO also proceeded to make adhoc disallowance of 25% amounting to ₹ 68,37,471, out of the expenditure of ₹ 2,73,44,888 claimed by assessee. Accordingly, AO passed the assessment order on 30/12/11. Being aggrieved of assessment order, so passed, assessee preferred appeal before ld. CIT(A) by challenging it both on the legal issue of validity of proceeding initiated u/s 147 as well as on the merits of the additions made. 5. As far as the validity of the proceeding initiated u/s 147 is concerned, though assessee advanced elaborate argument but the ld. CIT(A) did not find merit in them. Ld. CIT(A) concluded that as at the time of reopening of assessment AO had primafacie reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to assessee and as supplied at the time of hearing before ld. CIT(A) are different. Approval granted by the sanctioning authority is mechanical. Reopening of assessment is not bonafide as several assessments were reopened simultaneously and indiscriminately. 9. In support of the aforesaid contentions, ld. AR also relied on a number of decisions as submitted in a compilation. As far as merits of the disallowance of ₹ 13,31,815 sustained by ld. CIT(A), ld. AR submitted that while AO made adhoc disallowance of 25% out of the total expenditure claimed by assessee ld. CIT(A) confined the addition to ₹ 13,31,815. Explaining the nature of expenditure, ld. AR submitted that it was incurred on account of payments made to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich formed the basis of reopening. As far as the adhoc disallowance of ₹ 68,37,471 from expenditure, ld. CIT(A) has sustained the addition to the extent of ₹ 13,31,815, which is the only surviving addition awaiting adjudication before us. Therefore, at the first instance, we proceed to deal with the merits of the addition sustained by ld. CIT(A). As can be seen from the assessment order, AO while completing the assessment disallowed 20% out of the total expenditure of ₹ 2,73,49,884 claimed by assessee by observing that assessee could not produce all bills and vouchers for verification. Before the first appellate authority, assessee apart from making his submissions also produced evidence in support of the expenditure clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y because the expenditures were supported by self-made vouchers a part of the expenditure cannot be disallowed unless it is proved that the expenditure incurred is unreasonable or excessive compared to the turnover of assessee. It is quite evident that ld. CIT(A) does not dispute the fact that assessee has incurred the expenditure towards labour charges. He is only disputing the quantum of expenditure. Therefore, considering the nature of expenditure and keeping in view the turnover of assessee we hold that disallowance of a part of the expenditure claimed is not justified. Moreover, when ld. CIT(A) deleted the additions made by AO which formed the basis of reopening, in all fairness he should have deleted entirely the addition made on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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