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2018 (3) TMI 1615 - AT - Income TaxValidity of assessment framed u/s 153A - Held that:- 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. Reopening of assessment - Held that:- 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 present proceedings. Since the appeals have already been allowed in favour of the assessee, therefore, what remedy is available to the revenue for proceeding further against the assessee cannot be raised in the present proceedings. The scope of the proceeding cannot be enlarged to give a different colour to proceed against the assessee. Once assessment orders have been set aside u/s. 153A of the IT Act, 1961 and additions have been deleted, revenue is at liberty to take any action as per law, if so, advised in accordance with law. Therefore, no direction is required u/s. 150(1) of the IT, Act Disallowance of site labour expenses - Held that:- Our attention was specifically drawn to the fact that even after search, the AO has accepted claim of site labour expenses to the extent of 15% of the total receipt. Further, in fact, the AO himself is not clear whether adhoc disallowance is on the basis of non verification of claim or based on incriminating material. In para 3 of the assessment order, AO has merely considered disallowance on the ground of unverified and unvouched claim. However, in the case of audited books of accounts, the AO cannot consider any adhoc disallowance even u/s. 143(3) much less u/s. 153A. There is this no legal basis for any such disallowance even on merits. Claim of Project Consultancy expenses - Held that:- The same was provided after deduction of TDS and further these consultancy services were integral part of the business activities as per evidence placed on record and accordingly there is no prima facie basis for invoking provisions of section 153A in the absence of any nexus between such expenses and seized annexure. We are of the considered opinion that all these expenses are part of record and duly accepted at original stage and as such there is no case of any disallowance in terms of sec. 153A. Disallowance on the basis of annexure M-610/07 seized by CBI - Held that:- AO considered the seized annexures by CBI on mechanical basis. It is noted that in the context of show cause notice issued by AO with reference to these seized annexures by CBI, the appellant has denied any connection with these annexures and alleged that same seems to have been 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. Disallowance of claim of statutory deduction u/s 80IA - Held that:- CIT(A) has considered this issue in great detail and finding was recorded after proper appreciation of facts and legal position. The Ld. CIT DR has fairly conceded that claim of statutory deduction u/s. 80IA being a purely legal issue is beyond scope of sec. 153A. Further, the appellant has placed on record extract of the contract which is for complete overhaul of sewage system with the help of innovative technology and as such the claim was correctly accepted by AO at the original stage and CIT(A) has rightly considered and accepted the same. There is thus no case of any interference in the finding and conclusion of CIT(A). 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.
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