M/s. Kaveri Infrastructure Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 882/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2829 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Tangible material; Difference of opinion; Validity of assessment; Documents seized; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 37(1); 147; 148; 54; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI D BENCH , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI B.P. JAIN, ACCOUNTANT MEMBER, ITA NO. 5011 /D EL /20 1 2 [ A.Y : 20 0 2 - 0 3 ] ITA NO. 5012 /DEL/201 2 [ A.Y : 20 03 - 04 ] ITA NO. 881 /DEL/201 2 [ A.Y : 20 05 - 06 ] ITA NO. 882 /DEL/201 2 [ A.Y : 20 06 - 07 ] ITA NO. 883 /DEL/201 3 [ A.Y : 20 07 - 08 ] ITA NO. 884 /DEL/201 2 [ A.Y : 20 08 - 09 ] CO NO. 321/DEL/2010 [ A.Y : 20 04 - 05 ] A/O ITA NO. 3766 /DEL/201 0 [ A.Y : 20 04 - 05 ] M/S KAVERI INFRASTRUCRTURE PVT. LTD VS. THE I.T. O B 5, KAVERI HOUSE OSD, DELHI - IX GEETANJALI ENCLAVE NEW DELHI NEW DELHI P AN : A ABCK 7148 K ITA NO. 3766 /DEL/201 0 [ A.Y : 20 04 - 05 ] THE A.C.I.T. VS. M/S KAVERI INFRASTRUCRTURE PVT. LTD CENTRAL CIRCLE 11 B 5, KAVERI HOUSE, GEETANJALI NEW DELHI ENCLAVE, NEW DELHI PAN : A ABCK 7148 K [APPELLANT] [RESP ONDENT] DATE OF HEARING : 07 . 03 . 201 8 DATE OF PRONOUNCEMENT : 16 . 03 .201 8 ASSESSEE BY : S HRI R.S. SINGHVI SHRI S ATYAJEET GOYAL , C A REVENUE BY : SHRI VIJAY VERMA , CIT - DR 2 ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, THESE ARE A BUNCH OF APPEALS FILED BY THE ASSESSEE AND REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AS PER DETAILS GIVEN HEREUNDER : APPEAL/CROSS OBJECTION NO. ASSESSMENT YEAR APPEAL FILED BY ITA NO. 5011/D/12 2002 - 03 ASSESSEE ITA NO. 5012/D/12 2003 - 04 ASSESSEE ITA NO. 3766/D/10 2004 - 05 REVENUE CROSS OBJ NO. 321/D/10 ASSESSEE ITA NO. 881/D/12 2005 - 06 ASSESSEE ITA NO. 882/D/12 2006 - 07 ASSESSEE ITA NO. 883/D/12 2007 - 08 ASSESSEE ITA NO. 884/D/12 2008 - 09 ASSESSEE SINCE THE APPEALS HAVE BEEN HEARD TOGETHER AND PERTAIN TO SAME ASSESSEE, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY AND CONVENIENCE. 3 2. THE BRIEF BACKGROUND OF THE CASE IS THAT SEARCH U/S 132 WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE M/S. KAVERI INFRASTRUCTURE P. LTD. ON 24.04.2007 AS A RESULT OF WHICH, THE ASSESSMENTS IN ABOVE REFERRED ASSESSMENT YEARS WERE COMPLETED U/S 153A READ W ITH 143(3) OF THE INCOME TAX ACT, 1961. IT IS FURTHER NOTED THAT PRIOR TO SEARCH ACTION U/S 132 OF THE INCOME TAX ACT, CBI CARRIED OUT RAIDS ON THE ASSESSEE AND CERTAIN DOCUMENTS AND DIARY WERE SEIZED WHICH WERE HANDED OVER TO INCOME TAX AUTHORITIES AND AR E IN FACT THE PRIMARY EVIDENCES RELIED UPON BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT U/S 153A OF THE ACT. 3. AT THE START OF THE HEARING, IT WAS POINTED OUT BY LD. COUNSEL OF THE ASSESSEE SH. R.S. SINGHVI AND LD. DR SH. VIJAY VARMA VIDE WRITTE N SUBMISSION DATED 05/03/2018 THAT THESE ASSESSMENTS CAN BE CLASSIFIED AS UNDER: CATEGORY 1 ASSESSMENT YEAR STATUS OF ORIGINAL ASSESSMENT ON THE DATE OF SEARCH IN TERMS OF PROVISIONS OF SECTION 153A 2002 - 03 UNABATED 2003 - 04 UNABATED 2004 - 05 UNABATED 2005 - 06 UNABATED 4 CATEGORY 2 2006 - 07 ABATED AS THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(1) WAS AVAILABLE 2007 - 08 ABATED AS THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(1) WAS AVAILABLE 2008 - 09 ABATED BEING YEAR OF SEARCH 4. AS THE LEGAL ISSUE REGARDING VALIDITY OF ASSESSMENT FRAMED U/S 153A IS RELEVANT ONLY IN THE CASE OF UNABATED ASSESSMENTS, FOR THE SAKE OF CONSISTENCY AND IN ORDER TO DEAL WITH THE ISSUES MORE LUCIDLY, WE ARE ADJUDICATING THE APPEALS RELATING TO AY 2002 - 03 TO 2005 - 06 AND AY 2 006 - 07 TO 2008 - 09 IN TWO PARTS I.E. PART I AND II. 5. FIRSTLY, WE ARE ADJUDICATING THE APPEALS AND CROSS OBJECTION RELATING TO AY 2002 - 03 TO 2005 - 06 BEING CASES IN WHICH THE ORIGINAL ASSESSMENT STOOD COMPLETED BEFORE THE DATE OF SEARCH AND THERE IS NO CA SE OF ABATEMENT OF PENDING PROCEEDINGS. 6. WE ARE TAKING UP THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 5011/D/2012 RELATING TO AY 2002 - 03 BEING THE INITIAL AND LEAD YEAR. 5 THE APPEAL IS AGAINST ORDER PASSED BY CIT(A) - XXXI, NEW DELHI DATED 31/07/2012. 7. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT IN PASSING EXPARTE ORDER WITHOUT SERVICE OF NOTICE AND PROPER AND REASONABLE OPPORTUNITY. 2. THAT FURTHER ORDER PASSED BY CIT( A) IS NOT IN CONFIRMITY WITH PROVISIONS OF SEC. 250(6) OF THE INCOME TAX ACT, 1961 AS THERE IS NO PROPER ADJUDICATION OF VARIOUS GROUND IN DISPUTE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER PASSED U/S. 143(3) READ WITH SEC. 153A IS ILLEGAL AND WITHOUT JURISDICTION IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 4. THAT FURTHER THE ORIGINAL ASSESSMENT HAD NOT ABATED AND AS SUCH ASSESSING OFFICER HAD NO JURISDICTION TO INITIATE PROCEEDINGS U/S. 153A. 5. THAT EVEN ON M ERITS, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING DISALLOWANCE IN RESPECT OF CLAIM OF SITE LABOUR EXPENSES AMOUNTING TO RS. 5,50,268/ - . THAT ENTIRE CLAIM IS FOR THE PURPOSE OF BUSINESS AND HAVING ACCEPTED THE CLAIM IN THE ORIGINAL ASSESSMENT, THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE IN RESPECT OF ASSESSMENT IN 6 TERMS OF PROVISIONS OF SEC. 153A PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL REGARDING CORRECTNESS OF CLAIM ACCEPTED IN THE ORIGINAL ASSESSMENT. 8. THAT ORDERS OF THE LOWER AUTH ORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 8. THE LD. COUNSEL SH. R.S. SINGHVI APPEARING FOR THE ASSESSEE SUBMITTED PAPER BOOK OF DOCUMENTS RUNNING INTO 21 PAGES AND FILED TWO VOLUMES OF PAPERBOOK CONSISTING OF VARIOUS JUDGMENTS RELIED UP ON. THE LD. COUNSEL DID NOT PRESS GROUND NO. 1 & 2. 9. AT THE OUTSET, IT WAS SUBMITTED BY THE LD. COUNSEL THAT THIS IS A CASE OF UNABATED ASSESSMENT AS THE RETURN OF INCOME FOR THE YEAR UNDER REFERENCE WAS PROCESSED U/S 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) STANDS EXPIRED ON THE DATE OF SEARCH. IT WAS SUBMITTED THAT THERE IS NO CASE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH RELATING TO YEAR UNDER REFERENCE AND AS SUCH THE ASSESSMENT ORDER U/S 153A IS ILLEGAL AND NOT SUSTAINABLE UNDER LAW. IN THIS CONNECTION, LD. AR INVITED OUR ATTENTION TO PANCHNAMA ISSUED BY INCOME TAX AUTHORITIES IN WHICH THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL RELATING TO ALLEGATION OF BRIBE TO DELHI JAL BOARD OFFICIALS. HOWEVER, IT WAS CLARIFIED THAT ALLEGATION OF INCRIMINATING 7 MATERIAL IS ONLY WITH REFERENCE TO SEIZED ANNEXURE BY CBI AND REFERRED TO BY ASSESSING OFFICER (AO) AT PAGE 6 OF THE ASSESSMENT ORDER. 10. THE LD. COUNSEL TOOK US THROUGH THE ASSESSMENT ORDER AND ARGUED THAT THE ONLY ISSUE UNDE R DISPUTE IN A.Y. 2002 - 03 IS 10% AD - HOC DISALLOWANCE OF SITE LABOUR EXPENSES TO THE EXTENT OF RS. 5,50,268/ - AS PER DETAILS EXTRACTED AT PAGE 6 PARA 3 OF THE ASSESSMENT ORDER. IT WAS FURTHER SUBMITTED THAT THIS BEING A CASE OF SEARCH ASSESSMENT U/S 153A, T HE CONCEPT OF AD - HOC DISALLOWANCE IS NOT RELEVANT AND THE ASSESSING OFFICER HAS LIMITED JURISDICTION TO MAKE ADDITION OR DISALLOWANCE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE SEARCH. IT WAS ALSO SUBMITTED THAT EVEN THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL FOR THE PURPOSE OF MAKING AD - HOC DISALLOWANCE AND DISALLOWANCE WAS ONLY ON THE GROUND THAT SITE LABOUR EXPENSES ARE UNVERIFIED AND UNVOUCHED. THE LD. COUNSEL DREW OUR ATTENTION TO TABLE AT PAGE 6 OF T HE ASSESSMENT ORDER IN WHICH THE ASSESSING OFFICER HAS GIVEN DETAILS OF DISALLOWANCE IN VARIOUS YEARS. 11. IN SUPPORT OF THIS PROPOSITION, THE LD. COUNSEL DREW OUR ATTENTION TO VARIOUS DECISIONS REGARDING OBJECT AND SCOPE OF SECTION 153A AND IN 8 PARTICUL AR DECISION OF JURISDICTION HIGH COURT IN THE CASE OF CIT V. KABUL CHAWLA[2016] 380 ITR 573 WHICH WAS FOLLOWED BY HONBLE HIGH COURT IN SUBSEQUENT CASE OF PR. CIT V. MEETAGUTGUTIA [2017] 395 ITR 526 (DELHI). IT WAS FURTHER SUBMITTED THAT LEGAL POSITION TO THIS EFFECT IS NO LONGER RES - INTEGRA AND HONBLE SUPREME COURT IN THE CASE OF CIT V. SINHGAD TECHNICAL EDUCATIONAL SOCIETY [2017] 397 ITR 344 (SC) HAS HELD THAT IN THE CASE OF SEARCH ASSESSMENT, THERE MUST INCRIMINATING MATERIAL QUA YEAR TO JUSTIFY ANY ADD ITION OR DISALLOWANCE. 12. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND PLACED ON RECORD HIS WRITTEN SUBMISSIONS ALONG WITH PAPER BOOK OF DOCUMENTS CONTAINING SEIZED MATERIAL. FROM THE PERUSAL OF WRITTEN SUBMISSION, WE FIND THAT NO SPECIFIC ARGUMENTS HAVE BEEN MADE WITH RESPECT TO ASSESSMENT YEAR 2002 - 03. HOWEVER, THE LD. DR STRONGLY RELIED ON SEIZED ANNEXURE BY CBI AND CONTENDED THA T SAME ARE OF INCRIMINATING NATURE AND THE ISSUE OF VARIOUS DISALLOWANCE SHOULD BE CONSIDERED IN THE CONTEXT OF SEIZED ANNEXURE WHICH MAKE REFERENCE TO BRIBE GIVEN BY APPELLANT TO VARIOUS OFFICIALS OF DELHI JAL BOARD. IT WAS FURTHER SUBMITTED THAT SINCE T IME LIMIT FOR ISSUE OF NOTICE U/S 148 WAS AVAILABLE ON THE DATE OF SEARCH, THE ASSESSING OFFICER CAN MAKE ALL THE ADDITIONS/DISALLOWANCE WHICH HE COULD MAKE IN ASSESSMENT U/S 147 9 EVEN IN ABSENCE OF ANY INCRIMINATING MATERIAL. IT WAS FURTHER CONTENDED THAT IF LEGAL GROUND OF THE APPELLANT IS ACCEPTED, THE HONBLE TRIBUNAL SHOULD DIRECT THE AO U/S. 150(1) TO INITIATE PROCEEDINGS U/S. 148. 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE DOCUMENTS ON RECORD AND GONE THROUGH THE ORDER OF CIT(A) AND AO. THE LIMI TED ISSUE IN THE CASE OF ASSESSMENT YEAR 2002 - 03 IS ONLY RELATING TO DISALLOWANCE OF 10% OF SITE LABOUR EXPENSES U/S. 37(1) OF THE ACT AS PER TABLE EXTRACTED IN THE ASSESSMENT ORDER AT PAGE 6. THE AO HAS CONSIDERED ADHOC DISALLOWANCE OF 10% IN ALL THE YEA RS ON UNIFORM BASIS. IN PARA 3 OF THE ASSESSMENT ORDER, THE AO ALSO MADE OBSERVATION THAT THE ASSESS E E COULD NOT FURNISH DETAILS RELATING TO CLAIM OF SITE LABOUR EXPENSES AND SAME ARE UNVERIFIED AND UNVOUCHED. IT IS RELEVANT TO TAKE NOTE OF THE FACT THAT AO HIMSELF HAS CONSIDERED DISALLOWANCE ON THE GROUND THAT SITE LABOUR EXPENSES ARE UNVERIFIED AND UNVOUCHED AND THERE WAS NO FINDING THAT DISALLOWANCE IS BASED ON ANY INCRIMINATING MATERIAL. THERE IS NO DISPUTE THAT ALL THESE EXPENSES ARE PART OF RECORD AND SUPPORTED FROM AUDITED ACCOUNTS AND GENUINENESS OF SAME HAS NOT BEEN DISPUTED AT ORIGINAL STAGE. 10 14. THE APPELLANT HAS MADE REFERENCE TO VARIOUS JUDGMENTS IN RESPECT OF PROCEEDINGS U/S. 153A AND SUMMARY OF THE SAME ARE AS UNDER: - CIT V. SINHGAD TECHNI CAL EDUCATIONAL SOCIETY [2017] 397 ITR 344 (SC) PR. CIT V. MEETAGUTGUTIA [2017] 395 ITR 526 (DELHI) PR. CIT V. KURELE PAPER MILLS P. LTD. (SUPREME COURT) CIT V. KABUL CHAWLA [2016] 380 ITR 573 (DEL) PR. CIT V. LATA JAIN [2016] 384 ITR 543 (DEL) CIT VS. M/S. BEST INFRASTRUCTURE (INDIA) P LTD. (DELHI HC) MANJULATAKURELA V. ACIT (DELHI ITAT) (26/02/2016) PR. CIT V. MAHESH KUMAR GUPTA (ITA 810/2016)(DHC)(22/11/16) DCIT V. AGGARW AL ENTERTAINMENT P. LTD. 72 TAXMANN.COM 340 (DEL TRIB) CIT V. GURINDER SINGH BAWA (2016) 386 ITR 483 (BOM) CIT V. ALL CARGO GLOBAL LOGISTICS LTD. [2015] 374 ITR 645 (BOM) LE PASSAGE TO INDIA TOURS AND TRAVELS P. LTD V. ADD. CIT [2015] 232 TAXMAN 277 (DELHI) 15. THE LD CIT DR MADE REFERENCE TO FOLLOWING JUDGMENTS: ANIL KUMAR BHATIA 24 TAXMANN.COM 98 (DELHI) CANARA HOUSING DEVELOPMENT COMPANY V. DCIT (KARNATAKA HC) FILATEX V. CIT (ITA 269/2014)(DELHI HC) CIT V. RAJ KUMAR ARORA (ITA NO. 56 OF 2011) (ALL HC) APOORVA EXTRUSION PVT. LTD. (ITA NO. 3308/D/10)( DELHI ITAT) 11 16. AFTER GOING THROUGH THESE JUDGMENTS, WE ARE OF THE CONSIDERED OPINION THAT IN THE CASE OF PROCEEDINGS U/S. 153A, THE ONLY ADDITION OR DISALLOWANCE COULD BE ON THE BASIS OF INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. IN THE LIGHT OF ABOVE POSITION, VARIOUS GROUNDS ARE TO BE ADJUDICATED ON THE BASIS OF FOLLOWING LEGAL PRINCIPLES. (I) IF ORIGINAL ASSESSMENT IS NOT ABATED AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL, THERE IS NO JUSTIFICATION TO INVOKE PROVISION OF SEC. 153A. (II) IN THE CASE OF PROCEEDINGS U/S. 153A, ANY ADDITION OR DISALLOWANCE SHOULD BE BASED ON INCRIMINATING MATERIAL. (III) THE SEIZED MATERIAL IF ANY IS TO BE CONSIDERED ON THE BASIS OF EVIDENTIARY VALUE OF SUCH MATERIAL AFTER PROPER ENQUIRY AND INVESTIGA TION. IN THE LIGHT OF ABOVE BACKGROUND, WE UNDERTAKE TO DISPOSE OF VARIOUS GROUNDS RELATING TO A.Y. 2002 - 03 AS EXTRACTED ABOVE AND SAME ARE ADJUDICATED AS UNDER: 17. GROUND NO. 1 & 2 ARE DISMISSED AS NOT PRESSED. 18. GROUND NO. 3& 4 ARE REGARDING VALIDITY OF PROCEEDING U/S. 153A OF THE ACT. 12 19. AFTER CONSIDERING THE LEGAL POSITION IN THE CONTEXT OF DECISIONS CITED BY LD. AR AND CIT DR, WE ARE OF THE CONSIDERED OPINION THAT IN THE CASE OF NON ABATED ASSESSMENT, NO ACTION CAN BE TAKEN U/S. 153A IN THE ABSENC E OF ANY INCRIMINATING MATERIAL. ACCORDINGLY, THE LEGAL GROUND RAISED BY THE ASSESSEE IS DESERVES TO BE ACCEPTED. 20. AS REGARDING SUBMISSION OF THE CIT DR THAT IN CASE THE LEGAL GROUND IS ACCEPTED, THE AO SHOULD BE DIRECTED TO INITIATION ACTION U/S. 148 IN TERMS OF PROVISIONS OF SEC. 150(1) OF THE IT ACT, 1961. WE ARE AFRAID SUCH CLAIM IS BEYOND THE JURISDICTION OF THE TRIBUNAL. IN FACT, THIS VERY ISSUE WAS CONSIDERED BY DELHI TRIBUNAL IN THE CASE OF SH. KANWALJEET SINGH TOOR VS. DCIT PLACED IN THE PAGE 160 - 168 OF PAPERBOOK FILED BY THE ASSESSEE AND RECORDED FOLLOWING FINDING : - 11. THE LD. DR FURTHER CONTENDED THAT IN CASE APPEALS ARE DECIDED AGAINST THE REVENUE BY HOLDING THAT THIS ADDITION CANNOT BE MADE U/S. 153A, THEN THE DIRECTION U/S. 150(1) SHOULD BE ISSUED FOR TAXING THIS AMOUNT U/S. 148 OF THE IT ACT, 1961. WE ARE AFRAID TO ACCEPT THIS CONTENTION OF THE LD. DR BECAUSE 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 13 FAVOUR OF THE ASSESS E E, THEREFORE, WHAT REME DY IS AVAILABLE TO THE REVENUE FOR PROCEEDING FUR THER AGAINST THE ASSESS E E C ANNOT BE RAISED IN THE PRESENT PROCEEDINGS. THE SCOPE OF THE PROCEEDING CANNOT BE ENLARGED TO GIVE A DIFFERENT COLOUR TO PROCEED AGAINST THE ASSESSE E . ONCE ASSESSMENT ORDERS HAVE BEEN SET ASIDE U/S. 153A OF THE IT ACT, 1961 AN D 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. THE CONTENTION OF LD. DR IS REJECTED . 21. GROUND NO. 5 OF THE APP ELLANT IS ON MERITS REGARDING DISALLOWANCE OF SITE LABOUR EXPENSES AMOUNTING TO RS. 5,50,268/ - BEING 10% OF THE TOTAL CLAIM. IN THIS CONNECTION, IT WAS POINTED OUT BY APPELLANT THAT AS PER TABLE OF SEIZED ANNEXURE AS EXTRACTED BY AO AT PAGE 6 OF THE ASSESS MENT ORDER, THERE IS NO REFERENCE TO ANY SEIZED MATERIAL RELATING TO A.Y. 2002 - 03 AND AS SUCH ISSUE OF DISALLOWANCE IS NOT RELEVANT FOR CONSIDERATION IN TERMS OF PROVISIONS OF SEC. 153A. EVEN DEHORS THE LEGAL GROUND, THERE IS NO CASE FOR ADHOC DISALLOWANCE OF 10% IN RESPECT OF CLAIM OF SITE LABOUR EXPENSES. THE ASSESSE HAS FURNISHED A COMPARATIVE CHART OF SITE LABOUR EXPENSES AT PAGE 14 OF PAPER BOOK RELATING TO A.Y. 2000 - 01 TO 2009 - 10 AS PER WHICH THE CLAIM OF SITE LABOUR EXPENSES IS A REGULAR FEATURE OF THE BUSINESS ACTIVITIES AND ENTIRE CLAIM IS ON THE BASIS OF AUDITED ACCOUNTS. 14 22. 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 UNV OUCHED 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. 23. NOW WE TAKE UP APPEAL OF THE ASSESS E E RELATING TO A.Y. 2003 - 04 ( ITA NO. 5012/D/2012.) 24 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT IN PASSING EXPARTE ORDER WITHOUT SERVICE OF NOTICE AND PROPER AND REASONABLE OPPORTUNITY. 2. THAT FURTHER ORDER PASSED BY CIT(A) IS NOT IN CONFIRMITY WITH PROVISIONS OF SEC. 250(6) OF THE INCOME TAX ACT, 1961 AS THERE IS NO PROPER ADJUDICATION OF VARIOUS GROUND IN DISPUTE. 15 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER PASSED U/S. 143(3) READ WITH SEC. 153A IS ILLEGAL AND WITHOUT JURISDICTION IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. 4. THAT FURTHER THE ORIGINAL ASSESSMENT HAD NOT A BATED AND AS SUCH ASSESSING OFFICER HAD NO JURISDICTION TO INITIATE PROCEEDINGS U/S. 153A. 5. THAT EVEN ON MERITS THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING DISALLOWANCE IN RESPECT OF CLAIM OF PROJECT CONSULTANCY EXPENSES AMOUNTING TO RS. 5,00,174 / - . THAT ENTIRE CLAIM IS FOR THE PURPOSE OF BUSINESS AND HAVING ACCEPTED THE CLAIM IN THE ORIGINAL ASSESSMENT, THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE IN RESPECT OF ASSESSMENT IN TERMS OF PROVISIONS OF SEC. 153A PARTICULARLY WHEN THERE IS NO INCRIMI NATING MATERIAL REGARDING CORRECTNESS OF CLAIM ACCEPTED IN THE ORIGINAL ASSESSMENT. 6. THAT EVEN ON MERITS THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING DISALLOWANCE IN RESPECT OF CLAIM OF SITE EXPENSES AMOUNTING TO RS. 302,690/ - . THAT ENTIRE CLAIM IS FOR THE PURPOSE OF BUSINESS AND HAVING ACCEPTED THE CLAIM IN THE ORIGINAL ASSESSMENT, THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE IN RESPECT OF ASSESSMENT IN TERMS OF PROVISIONS OF SEC. 153A PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL REGARDIN G CORRECTNESS OF CLAIM ACCEPTED IN THE ORIGINAL ASSESSMENT. 16 7. THAT EVEN ON MERITS THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING DISALLOWANCE IN RESPECT OF CLAIM OF SITE LABOUR EXPENSES AMOUNTING TO RS. 6,28,834/ - . THAT ENTIRE CLAIM IS FOR THE PURPOSE OF BUSINESS AND HAVING ACCEPTED THE CLAIM IN THE ORIGINAL ASSESSMENT, THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE IN RESPECT OF ASSESSMENT IN TERMS OF PROVISIONS OF SEC. 153A PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL REGARDING CORRECTNESS OF CLAIM ACCEPTED IN THE ORIGINAL ASSESSMENT. 8. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 25 . THE LD. COUNSEL SH. R.S. SINGHVI DID NOT PRESS GROUND NO.1 & 2. 26 . IN RESPECT TO GROUND NO. 3 & 4, THE LD. COUNS EL MADE SIMILAR ARGUMENTS WHICH WERE PUTFORTH FOR AY 2002 - 03 ON THE ISSUE OF JURISDICTION TO MAKE ASSESSMENT U/S 153A DEHORS ANY INCRIMINATING MATERIAL. FURTHER, A PAPERBOOK OF DOCUMENTS RUNNING INTO 122 PAGES WAS PLACED ON RECORD. 27. THE FIFTH GROUND I S REGARDING DISALLOWANCE IN RESPECT OF CLAIM OF PROJECT CONSULTANCY EXPENSES AMOUNTING TO RS. 5,00,174/ - . IT WAS POINTED OUT THAT THE ASSESSEE HAS OBTAINED SERVICES OF M/S. ONSITE CENTRAL LTD. (A UK BASED COMPANY) IN CONNECTION WITH DELHI JAL BOARD 17 PROJECT OF REHABILITATION OF TRUCK SEWERS AND AS SUCH THE CLAIM OF EXPENSES IS FOR THE PURPOSE OF BUSINESS AND PROVIDED AFTER DEDUCTION OF TDS @ 21% AS PER COPY OF ACCOUNT PLACED IN PAPERBOOK. THE LD. COUNSEL FURTHER SUBMITTED THAT THE CLAIM OF PROJECT CONSULTANC Y EXPENSES WAS NOT IN DISPUTE DURING ORIGINAL ASSESSMENT PROCEEDINGS AND IN ABSENCE OF ANY SPECIFIC INCRIMINATING MATERIAL OR ANY NEXUS BETWEEN CLAIM OF EXPENSES AND ALLEGED SEIZED MATERIAL, THE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE IMPUGNED DISALL OWANCE AND SAME IS AGAINST THE SCHEME OF SECTION 153A OF THE ACT. REFERENCE WAS MADE TO DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. MEETA GUTGUTIA (SUPRA). 28. IN RESPECT OF GROUND NO. 6, THE LD. COUNSEL SUBMITTED THAT THE IMPUGNED DISA LLOWANCE OF CLAIM OF SITE EXPENSES TO THE EXTENT OF RS. 3,02,960/ - WAS MADE U/S. 37 AND RELATED TO ANNEXURE M - 610/07 SEIZED BY CBI AS PER TABLE AT PAGE 9 OF THE ASSESSMENT ORDER. IT WAS ARGUED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE U/S 37 OF THE ACT, HOWEVER, NO SUCH CLAIM HAS BEEN MADE BY THE ASSESSEE IN THE AUDITED BOOKS AND AS SUCH THE VERY FOUNDATION OF DISALLOWANCE IS MISCONCEIVED. 18 29. THE LD. COUNSEL VEHEMENTLY DISPUTED THE GENUINENESS OF THE SEIZED ANNEXURE AND SUBMITTED THAT SAME DOES NOT BELONG TO THE ASSESSEE. IT WAS FURTHER ARGUED THAT WITHOUT ANY CORROBORATION, THE SAID DOCUMENT HAS NO EVIDENTIARY VALUE AND BEING IN THE NATURE OF DUMB DOCUMENT CANNOT BE CONSIDERED AS INCRIMINATING IN TERMS OF PROVISIONS OF SECTION 153A. THE LD. COUNSEL SUBMITTED THAT THE ALLEGATION OF ASSESSING OFFICER THAT BRIBES WERE BEING PAID BY THE ASSESSEE TO JAL BOARD OFFICIALS IS HIGHLY ARBITRARY AND UNSUBSTANTIATED. 30. THE LD. COUNSEL ALSO BROUGHT OUR ATTENTION TO ANNEXURE M - 610/07 PLACED AT PAGE 50 OF THE PAPERBOOK FILED BY THE REVENUE AND CONTENDED THAT THE FIGURE OF RS. 3,02,960/ - IS NOWHERE TO BE FOUND IN THE DOCUMENT AND IT IS NOT KNOWN AS TO WHAT IS THE BASIS OF SUCH PALPABLY WRONG ASSERTION. 31. GROUND NO. 7 BEING IDENTICAL TO THE ISSUE INVOLVED IN APPEAL FOR AY 2002 - 03, THE ARGUMENTS MADE THEREIN ARE RELEVANT FOR THIS YEAR AS WELL. 19 3 2 . ON THE OTHER HAND, LD. DR JUSTIFIED THE ACTION OF AO AND CIT(A) AND REITERATED THE ARGUMENTS MADE FOR AY 2002 - 03. IT WAS CONTENDED THAT SINCE TIME LIMIT FOR ISSUE O F NOTICE U/S 148 WAS AVAILABLE, IT IS A CASE OF ABATED ASSESSMENT AND AS SUCH THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING DISALLOWANCE OF PROJECT CONSULTANCY CHARGES. 33. IN RESPECT OF GROUND NO. 6, THE LD. CIT DR SUBMITTED THAT SINCE THE ANNEXURE M - 610 HAS BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE, THE SAME BELONGS TO THE ASSESSEE AND AS SUCH THE AO HAS RIGHTLY RELIED UPON THE CONTENTS OF SAID ANNEXURE WHILE MAKING DISALLOWANCE OF SITE EXPENSES. IN HIS WRITTEN NOTE, THE LD. DR REITERATED THE SUB MISSIONS MADE IN AY 2002 - 03 AND SUBMITTED THAT ON IDENTICAL FACTS, THE CIT(A) IN AY 2004 - 05 UPHELD PART DISALLOWANCE AGAINST WHICH THE ASSESSEE HAS NOT FILED AN APPEAL AND AS SUCH IT COULD BE DEEMED THAT THE ASSESSEE HAS ACCEPTED THE DISALLOWANCE IN PRINCI PLE. THE LD. DR ALSO PUTFORTH A THEORY OF SOURCE AND APPLICATION AND CONTENDED THAT ASSESSEE IS UTILIZING UNACCOUNTED INCOME FOR THE PURPOSE OF PAYMENT OF BRIBES TO DELHI JAL BOARD OFFICIALS AND ACCORDINGLY DISALLOWANCE U/S 37(1) OF THE ACT IS JUSTIFIED. 20 34. THE LD. CIT DR ALSO MADE REFERENCE TO SUMMARY OF VARIOUS ANNEXURES WHICH WERE ALLEGED IMPOUNDED BY CBI AND CONTAINS DETAILS OF PAYMENT MADE BY ASSESS E E TO DELHI JAL BOARD OFFICIALS. THE CIT DR STRONGLY CONTENDED THAT THESE DISALLOWANCES ARE APPLICATI ON BASED AND SHOULD BE CONSIDERED ONLY IN THE CONTEXT OF SEIZED ANNEXURE BY CBI THOUGH AO PROCEEDED TO MAKE DISALLO WANCE OF CLAIMS OF EXPENSES U/S 37(1) OF THE ACT. 35 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL AVAILABLE ON R ECORD. WE HAVE CONSIDERED IN DETAIL THE ISSUE RELATING TO ABATEMENT OF COMPLETED PROCEEDINGS AND SCOPE OF SECTIONS 153A AND ALSO GONE THROUGH DISALLOWANCE OF VARIOUS CLAIMS OF EXPENSES U/S. 37(1) WITH REFERENCE TO PROCEEDINGS U/S. 153A. THE ASSESSING OFFI CER HAS PRIMARILY RELIED UPON ANNEXURES SEIZED BY CBI FOR THE PURPOSE OF LEVELLING ALLEGATION ABOUT PAYMENT OF BRIBES BY THE ASSESSEE TO JAL BOARD OFFICIALS. 36. IN THE CONTEXT OF ABOVE POSITION, THE APPELLANT FILED AN AFFIDAVIT TO THE EFFECT THAT NO ADVE RSE ACTION WAS TAKEN BY CBI. HOWEVER, AT SPECIFIC REQUEST OF THE CIT DR, THE ADJOURNMENTS WERE ALLOWED FROM 21 TIME TO TIME AND EVEN AFTER 3 YEARS CIT DR HAS NOT BEEN ABLE TO ESTABLISH VERACITY OF SEIZED ANNEXURE. THE AO PROCEEDED TO DRAW ADVERSE INFERENCE ON THE BASIS OF ABOVE REFERRED TABLE WITHOUT ANY FURTHER ENQUIRY OR INVESTIGATION. 37. IN THE ABSENCE OF ANY ENQUIRY OR INVESTIGATION BY AO OR ADVERSE REPORT FROM CBI, THESE SEIZED ANNEXURE CANNOT BE CONSIDERED ON STANDALONE BASIS FOR THE PURPOSE OF ANY DISALLOWANCE WITH REFERENCE TO VARIOUS TRANSACTIONS DULY RECORDED IN THE BOOKS AND ACCEPTED BY THE AO. THE BARE REFERENCE TO SUCH MATERIAL WITHOUT ANY ENQUIRY COULD NOT BE THE SOLE BASIS FOR ANY ADVERSE INFERENCE AGAINST THE APPELLANT. IN ANY CASE, THE A O HAS MADE VARIOUS DISALLOWANCE ONLY U/S. 37(1) OF THE IT ACT, 1961 IN RESPECT OF CLAIM OF EXPENSES ON THE BASIS OF TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNTS AND AS SUCH SAME ARE TO BE CONSIDERED ON THE BASIS OF FACTS AND SETTLED LEGAL PRINCIPLES AS S UMMARIZED BY US IN FINDING RECORDED AT PARA 8.4 ABOVE. IT IS ALSO RELEVANT TO TAKE NOTE OF THE FACT THAT THERE IS NO CASE OF ANY ALLEGATION OF UNDISCLOSED OR UNRECORDED RECEIPT/INCOME AND ONLY ISSUE BEFORE OUR CONSIDERATION IS JUSTIFICATION OF DISALLOWANCE U/S. 37(1) IN THE CONTEXT OF VARIOUS SEIZED ANNEXURE BY CBI. 22 38 . IN THE LIGHT OF ABOVE POSITION, WE DISPOSE - OFF VARIOUS GROUNDS AS UNDER: * GROUND NO. 1 & 2 ARE DISMISSED AS NOT PRESSED. * GROUND NO. 3 & 4 RELATING TO PROVISIONS OF SEC. 153A AND AS IN A .Y. 2002 - 03, WE HOLD THAT THERE IS NO CASE OF ABATEMENT OF PENDING PROCEEDINGS AND ACCORDINGLY WE ACCEPT THE LEGAL GROUND OF THE APPELLANT. THE VARIOUS OTHER GROUNDS ARE RELATING TO DISALLOWANCE OF CLAIM OF EXPENSES U/S. 37(1) OF THE IT ACT, 1961. AS REGAR DING CLAIM OF PROJECT CONSULTANCY EXPENSES, 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 AN Y DISALLOWANCE IN TERMS OF SEC. 153A. 39. IN RESPECT OF DISALLOWANCE OF RS. 3,02,690/ - , THE ASSESSING OFFICER HAS CONSIDERED THE DISALLOWANCE ON THE BASIS OF ANNEXURE M - 610/07 23 SEIZED BY CBI. THE AO HAS ALLEGED THAT SAID AMOUNT REPRESENTS BRIBE PAID BY THE ASSESSEE TO DELHI JAL BOARD OFFICIALS. HOWEVER, THE APPELLANT, IN OUR VIEW, HAS RIGHTLY POINTED OUT THAT THERE IS NO SUCH CLAIM IN THE PROFIT & LOSS A/C AND ACCORDINGLY THERE IS NO CASE OF ANY SUCH DISALLOWANCE U/S. 37(1) OF THE IT ACT, 1961. FURTHER, WE ARE OF THE VIEW THAT WHETHER THE DOCUMENTS SEIZED BY CBI ARE OF INCRIMINATING NATURE OR NOT CAN BE DECIDED ONLY ON THE BASIS OF ENQUIRY OR INVESTIGATION. IN THE CASE IN HAND, SEARCH TOOK PLACE ON 24/04/2007 AND EVEN AFTER MORE THAN 10 YEARS, THE REVEN UE OR CBI HAS NOT BEEN ABLE TO BRING ANY CREDIBLE EVIDENCE TO SUPPORT THE ALLEGATION OF BRIBE TO DELHI JAL BOARD OFFICIALS. IN THE CONTEXT OF SEARCH BY INCOME TAX AUTHORITIES AND CONSEQUENTIAL PANCHNAMA, THERE IS NO EVIDENCE OR ALLEGATION OF ANY INCRIMINA TING MATERIAL. FURTHER, THE 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 THE SE 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 ME RELY RELATED THE CLAIM OF EXPENSES IN THE BOOKS OF ACCOUNTS AS ATTRIBUTABLE TO PAYMENT 24 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 ALL EGATION. 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. 40. IN RESPECT OF ADHOC DISALLOWANCE OF 10% OF SITE LABOUR EXPENSES, AS PER DETA ILED FINDING RECORDED IN A.Y. 2002 - 03, WE ARE OF THE OPINION THAT SAME IS BEYOND THE SCOPE OF SEC. 153A OF THE ACT. 4 1. THE NEXT APPEAL IS FILED BY THE REVENUE VIDE ITA NO. 3766/D/10 RELATING TO AY 2004 - 05 AGAINST ORDER OF CIT(A) - 1, NEW DELHI DATED 18/05/2010. THE ASSESSEE HAS FILED CROSS OBJECTION IN CO NO. 321/D/10. DURING THE COURSE OF HEARING, THE ASSESSEE FILED REVISED CROSS OBJECTION WHICH ARE TAKEN ON RECORD. 42 . THE REVENUE HAS RAISED FOLLOWING GRO UNDS : 1. THE ORDER OF THE LD CIT (APPEALS) IS NOT CORRECT IN LAW AND FACTS. 2. WHETHER ON THE FACTS AND IN LAW HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN DELETING THE ADDITION OF RS. 51,93,860/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF CLAIM OF THE ASSESSEE UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961. 25 3. WHETHER ON THE FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN HOLDING THE WORK OF REHABILITATION OF AN EXISTING PROJECT AS DEVEL OPING OR OPERATING AND MARINATING NEW INFRASTRUCTURE FACILITY. 4. WHETHER ON THE FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN HOLDING THAT CLAIM UNDER SECTION 80IA ALLOWED IN THE ORIGINAL ASSESSMENT IS BEYOND THE SCOPE OF PROVISION OF SECTION 153A OF THE INCOME TAX ACT, 1961. 5. WHETHER ON THE FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN ALLOWING PART RELIEF AN ACCOUNT OF TECHNICAL AND CONSULTANCY SE RVICES BY ACCEPTING THE CONTENTION OF THE ASSESSEE OF DEDUCTION OF TDS ON SUCH PAYMENTS AND IGNORING THE FACTS OF THE CASE. 6. WHETHER ON THE FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN HOLDING, WHILE DELETING THE ADDITION ON ACCOUNT OF INFLATED SITE EXPENSES TO THE TUNE OF RS. 1,85,09,072/ - AND AD HOC DISALLOWANCE OF SITE LABOUR EXPENSES OF RS. 7,00,938/ - MADE ON THE FACTS AND MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BY OPINING THAT THE ADDITIONS MADE WERE NOT LEGAL. 7. WHETHER ON THE FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE HONBLE CIT (APPEAL) IS LEGALLY JUSTIFIED IN HOLDING, WHILE DELETING THE ADDITION MADE ON ACCOUNT OF SITE LABOUR EXPENSES BY MENTION THE SAME AS MADE WITHOUT ANY LEGAL BASIS. 26 THESE ADDITIONS WERE MADE ON THE BASIS OF FACTS AND MATERIAL AVAILABLE. 43 . THE REVISED CROSS OBJECTION FILED BY THE ASSESSEE IS AS UNDER : 1(I). THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN CONFI RMING DISALLOWANCE OF RS. 89,16,720/ - IN RESPECT OF CLAIM OF PROJECT CONSULTANCY EXPENSES AND RS. 8,77,144/ - IN RESPECT OF CLAIM OF SITE EXPENSES. (II) THAT THE GENUINENESS OF THE CLAIM AND FACTS OF SERVICES RENDERED IS NOT IN DISPUTE AND AS SUCH THERE IS NO GROUND OR BASIS TO DISALLOW THE CLAIM. (III) THAT THE GENUINENESS AND BONAFIDE OF THE CLAIM IS SUPPORTED FROM THE FACT THAT THE TDS WAS DULY DEDUCTED AND AS SUCH THERE IS NO CASE OF ANY REVENUE BENEFIT. 44 . ON PERUSAL OF CIT(A)S ORDER AND ASSESSMENT O RDER, WE NOTE THAT MOST OF THE ISSUES INVOLVED IN THIS APPEAL ARE IDENTICAL TO THAT INVOLVED IN APPEAL FOR AY 2003 - 04 EXCEPT ONE ADDITIONAL ISSUE WHICH IS REGARDING DISALLOWANCE OF CLAIM OF STATUTORY DEDUCTION U/S 80IA OF THE ACT. IT IS NOTED THAT IN THE Y EAR UNDER CONSIDERATION, CIT(A) HAS ALLOWED SUBSTANTIAL RELIEF WHEREAS ON SIMILAR ISSUES IN OTHER YEARS THE CIT(A) TOOK CONTRARY VIEW. 27 45 . IN RESPECT OF GROUND NO. 5,6 & 7, SINCE THE ISSUES INVOLVED ARE IDENTICAL TO THAT IN APPEAL FOR AY 2003 - 04, THE ARGUM ENTS OF THE BOTH THE PARTIES ARE TAKEN AS HEARD AS FAR AS THESE GROUNDS ARE CONCERNED. 46 . APROPOS GROUND NO. 2 TO 4, THE LD. DR ARGUED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF CLAIM OF STATUTORY DEDUCTION U/S 80IA OF THE ACT. THE MAI N ARGUMENT OF LD DR WAS THAT ASSESSEE WAS NOT ENGAGED IN DEVELOPING NEW INFRASTRUCTURE FACILITY INSTEAD IT WAS ENGAGED IN REHABILITATION OF EXISTING SEWAGE PIPELINE SYSTEM AND AS SUCH THE BENEFIT OF DEDUCTION 80IA IS NOT AVAILABLE. ON THE LEGALITY OF THE A DDITION, THE ARGUMENT OF LD. DR REMAINED SAME AS IN AY 2002 - 03 AND 2003 - 04. 47 . THE LD. COUNSEL SH. R.S. SINGHVI ARGUED THAT THE CLAIM OF STATUTORY DEDUCTION U/S 80IA IS PURELY A LEGAL ISSUE AND SAME WAS DULY EXAMINED AND ALLOWED IN ORIGINAL ASSESSMENT ORDER U/S 143(3) NOT ONLY IN THIS YEAR BUT EVEN IN SUBSEQUENT YEARS AS PER COPIES OF THE ASSESSMENT ORDERS PLACED O N RECORD. IT WAS CONTENDED THAT IN RESPECT OF SETTLED ISSUES, THE ASSESSING OFFICER CANNOT RE - EXAMINE THE SAME IN TERMS OF PROVISIONS OF SEC. 153A OF THE ACT. LEGAL ISSUES ARE TO BE 28 DECIDED ON THE BASIS OF PROVISIONS OF THE ACT AND ISSUE OF INCRIMINATING MATERIAL HAS NO RELEVANCE TO THE SAME. 48. FURTHER, LD. COUNSEL SUPPORTED THE ORDER OF CIT(A) AND ARGUED THAT ASSESSEE IS ENGAGED IN NEW PROJECT OF LAYING SEWAGE PIPELINE SYSTEM THROUGH CIPP METHOD WHICH RESULTED IN REPLACEMENT OF EXISTING SEWAGE PIPELIN ES WITH NEW ONE. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL MADE REFERENCE TO CERTIFICATE ISSUED BY DELHI JAL BOARD PLACED AT PAPERBOOK PAGE 68 - 75 WHICH WERE ON RECORD DURING ORIGINAL ASSESSMENT PROCEEDINGS. AFTER MAKING REFERENCE TO THE TERMS OF THE A GREEMENT, IT WAS SUBMITTED THAT THE ASSESSEE HAS PERFORMED THE WORK OF CREATING NEW PIPELINE IN PLACE OF DEFUNCT SEWER LINES. THE LD. COUNSEL ALSO ARGUED THAT THE CLAIM OF DEDUCTION U/S 80IA IS DULY SUPPORTED FROM CA CERTIFICATE IN FORM NO. 10CCB PLACED AT PAPERBOOK PG 59 - 61. 49. THE LD. AR ALSO PLACED RELIANCE ON DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. ABG HEAVY INDUSTRIES LTD. [2010] 322 ITR 323 AGAINST WHICH THE SLP FILED BY THE DEPARTMENT WAS DISMISSED BY HONBLE SUPREME COURT. 29 50 . WE HAVE GONE THROUGH THE DOCUMENTS ON RECORD AND ARGUMENTS OF BOTH SIDES. IN FACT, THE LD. 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 CONCED ED 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 TECHNOL OGY 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). 51. REGARDING ISSUE OF PROJECT AND TE CHNICAL CONSULTANCY EXPENSES, IT IS NOTED THAT THESE CLAIMS WERE ACCEPTED BY AO IN ORIGINAL ASSESSMENT U/S. 143(3).HOWEVER, THE CIT(A) ACCEPTED THE PART OF CLAIM IN RESPECT OF TECHNICAL CONSULTANCY AMOUNTING TO RS. 49,11,754/ - ON THE GROUND THAT PAYMENT WA S MADE AFTER DEDUCTION OF TDS. HOWEVER, IN RESPECT OF CLAIM TO THE EXTENT OF RS. 89,16,720/ - , DISALLOWANCE WAS CONFIRMED ON THE ALLEGED GROUND THAT PAYMENT IN RESPECT OF THE SAME WAS NOT MADE. HOWEVER, THERE IS NO DISPUTE THAT IN RESPECT OF THIS CLAIM AL SO TDS WAS DULY DEDUCTED. THESE CLAIMS WERE RELATING TO FOREIGN 30 CONSULTANT AND THESE CONSULTANTS WERE CONFIRMING PARTY TO THE CONTRACT WITH DELHI JAL BOARD AND AS SUCH ISSUE OF GENUINENESS IS NOT IN DISPUTE. WE FURTHER FIND THAT THERE IS NO INCRIMINATING MATERIAL RELATING TO THIS VERY ISSUE FOUND DURING THE SEARCH AND ACCORDINGLY THE IMPUGNED DISALLOWANCE OUTRIGHTLY FALLS OUTSIDE THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT. THERE IS NO NEXUS BETWEEN THESE EXPENSES AND ALLEGATION OF BRIBE AND AS SUCH THER E IS NO CASE OF ANY DISALLOWANCE IN TERMS OF PROVISIONS OF SEC. 153A. ACCORDINGLY, THE GROUND OF THE REVENUE RELATING TO DISALLOWANCE OF TECHNICAL CONSULTANCY CLAIM AMOUNTING TO RS. 49,11,754/ - IS DISMISSED AND CO OF THE APPELLANT REGARDING CLAIM OF PROJ ECT CONSULTANCY EXPENSES IS ACCEPTED. 5 2. AS REGARDING GROUND RELATING TO SITE EXPENSES, THE AO MADE DISALLOWANCE TO THE EXTENT OF RS. U/S. 37(1) OF THE IT ACT, 1961. THE CIT(A) DELETED DISALLOWANCE TO THE EXTENT OF RS. 1,85,09,072/ - AND SUSTAINED DISAL LOWANCE OF RS. 8,77,144/ - . THE REVENUE IS IN APPEAL AGAINST RELIEF ALLOWED BY CIT(A) AND APPELLANT FILED CO IN RESPECT OF DISALLOWANCE SUSTAINED BY CIT(A). 53. AT THE OUTSET, IT WAS POINTED OUT BY THE AR THAT THE TOTAL CLAIM OF SITE EXPENSES IS ONLY TO T HE EXTENT OF RS. 8,77,144/ - AND IN SUPPORT 31 OF THE SAME, OUR ATTENTION WAS DRAWN TO AUDITED BALANCE SHEET AND RELEVANT SCHEDULE AT PAPERBOOK PAGE 57. IT WAS SUBMITTED THAT WHEN CLAIM OF SITE EXPENSES IS ONLY TO THE EXTENT OF RS. 8,77,144/ - , THERE COULD BE NO GROUND OR BASIS FOR DISALLOWANCE OF RS. 1,93,86,216/ - U/S. 37(1) OF THE IT ACT, 1961. THE LD. AR ALSO MADE REFERENCE TO CBDT CIRCULAR NO. 37/2016 DATED DATED 2 ND NOVEMBER, 2016. THE CIT DR CONTENDED THAT THESE ARE APPLICATION BASED DISALLOWANCE AND PRO VISIONS OF SEC. 37(1) HAVE NO RELEVANCE. 54. WE HAVE CONSIDERED FACTS OF THE CASE, ARGUMENTS OF BOTH SIDES AND ALSO PERUSED THE AUDITED BALANCE SHEET. THIS ISSUE IS IDENTICAL TO ISSUE INVOLVED IN GROUND NO. 6 IN ITA NO. 5012/D/12 RELATING TO AY 2003 - 04 WHICH HAS ALREADY BEEN DECIDED BY US IN FAVOUR OF ASSESSEE AS PER OBSERVATION AT PARA 15.4 AND THE FINDING RECORDED THEREIN IS RELEVANT FOR THIS GROUND AS WELL. IN ADDITION TO THIS, IT IS FURTHER NOTED THAT IN THE YEAR UNDER REFERENCE, THE CLAIM OF SITE EXPENSES IS ONLY TO THE EXTENT OF RS. 8,77,144/ - AND DISALLOWANCE BY THE AO IS ALSO IN TERMS OF PROVISIONS OF SEC. 37(1) AND AS SUCH IT IS NOT UNDERSTOOD AS TO HOW AO COULD CONSIDER DISALLOWANCE TO THE EXTENT OF RS.1,93,86,216/ - . ON THE FACE OF RECORD, TH E GROUND OF REVENUE IS MISCONCEIVED AND WITHOUT ANY LEGAL BASIS. THE ADDITIONAL ARGUMENT OF THE LD. DR THAT 32 THESE ARE APPLICATION BASED DISALLOWANCE AND SHOULD BE CONSIDERED IN THE LIGHT OF SEIZED ANNEXURE IS NOT JUSTIFIED FOR REASON STATED IN SUBSEQUENT PARAS. 55. THE TRIBUNAL CANNOT GO BEYOND FACTS AND ISSUES BEFORE IT AND CANNOT CONSIDER ANY NEW SOURCE OF ADDITION OR DISALLOWANCE. FURTHER, AS WE HAVE ALREADY HELD THAT ALLEGATION OF BRIBE TO DELHI JAL BOARD AUTHORITY HAS NOT BEEN SUBSTANTIATED, THE SA ME COULD NOT BE CONSIDERED AS LEGAL EVIDENCE. IN FACT, AS RIGHTLY POINTED OUT BY LD. AR THAT AS PER THE CIRCULAR NO. 37/2016 DATED 2 ND NOVEMBER, 2016 ISSUED BY CBDT, IN CASE ON ACCOUNT OF ANY DISALLOWANCE THE ELIGIBLE BUSINESS INCOME OF THE APPELLANT IS R EVISED THE STATUTORY CLAIM SHOULD ALSO BE MODIFIED ACCORDINGLY. IN OUR VIEW, THE AO HAS MERELY MADE VARIOUS DISALLOWANCE WHICH ARE PART OF RECORD AND EVEN IF TECHNICALLY SAME ARE CONSIDERED TO BE INADMISSIBLE, THE SAME WILL HAVE NO ADVERSE REVENUE IMPLICA TION AS THE APPELLANT WILL BE ENTITLED TO CONSEQUENTIAL BENEFIT U/S. 80IA. 56. IT IS FURTHER NOTED THAT IN THE ORIGINAL ASSESSMENT, THE CLAIM WAS CONSIDERED AND ACCEPTED U/S. 143(3), THERE IS NO VALID BASIS FOR ANY DISALLOWANCE AND ACCORDINGLY GROUND OF R EVENUE REGARDING 33 DISALLOWANCE OF SITE EXPENSES IS DISMISSED AND CO OF THE APPELLANT IS ACCEPTED. 57. 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 BEYO ND THE SCOPE OF SEC. 153A OF THE ACT. 58 . THE NEXT APPEAL IS FILED BY THE ASSESSEE IN ITA NO. 881/D/2012 RELATING TO AY 2005 - 06 AGAINST THE ORDER OF CIT(A) - XXXI, NEW DELHI DATED 02/01/2012. 59 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1(I). THAT CIT(A) HAS FAILED TO ADJUDICATE THE GROUND RELATING TO JURISDICTION U/S. 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH IN RESPECT OF SETTLED ISSUES AND COMPLETED ASSESSMENTS. (II) THAT PROVISIONS OF SEC. 153A HAVE BEEN APPLIED IN RESPECT OF STATUTORY CLAIM U/S. 80IA ON ILLEGAL AND ARBITRARY BASIS AND WITHOUT JURISDICTION. 2(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING CLAIM OF STATUTORY DEDUCTION U/S. 80IA IN THE CONT EXT OF PROCEEDING U/S. 153(A) EVEN THOUGH THE STATUTORY CLAIM U/S. 80IA WAS SETTLED AS PER ORIGINAL ORDERS 34 U/S. 143(3) AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL RELATING TO CORRECTNESS OF CLAIM U/S. 80IA. (II) THAT THE CLAIM U/S. 80IA IS DULY SUP PORTED FROM ORDER OF THE CIT(A) IN ASSESSMENT YEAR 2004 - 05 IN TERMS OF PROCEEDINGS U/S. 153A IN THE ASSESSEES OWN CASE AND THERE IS NO GROUND OR BASIS TO DISREGARD THE SAME EVEN THOUGH THERE IS NO CHANGE IN THE RELEVANT FACTS AND PROVISIONS OF LAW. (III) THAT EVEN OTHERWISE, THE CLAIM OF STATUTORY DEDUCTION U/S. 80IA IS IN ACCORDANCE WITH LAW AND THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF THE SAME. 3(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOW ANCE OF RS. 92,82,224/ - IN RESPECT OF CLAIM OF PROJECT CONSULTANCY SERVICES WITHOUT PROPER APPRECIATION OF FACTS AND IN TOTAL DISREGARD TO SCOPE AND OBJECTIVE OF PROVISIONS U/S. 153A. (II) THAT THERE IS NO LEGAL OR FACTUAL BASIS FOR DISALLOWANCE OF RS. 92 ,82,224/ - AND WHOLE BASIS OF DISALLOWANCES IS ILLEGAL, ARBITRARY AND WITHOUT JURISDICTION. (III) THAT DISALLOWANCE OF RS. 92,82,224/ - IS BASED ON CHANGE OF OPINION AS THE CLAIM OF PROJECT CONSULTANCY WAS DULY ACCEPTED IN THE ORIGINAL ASSESSMENT U/S. 143(3 ) AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL. 4(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF LABOUR SITE EXPENSES TO THE EXTENT OF 10% OF THE TOTAL CLAIM AMOUNTING TO 35 RS. 24,58,191/ - IN TOTAL DISREGARD TO PROVISIONS OF SEC. 153A AND MERELY ON THE BASIS OF CHANGE OF OPINION. (II) THAT THE CIT(A) IS NOT JUSTIFIED IN DISREGARDING FINDING OF CIT(A) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 WHERE THE SAME GROUND WAS DECID ED IN FAVOUR OF THE ASSESSEE AND THERE IS NO CHANGE IN FACTS AND LEGAL PROVISIONS. (III) THAT EVEN OTHERWISE, CORRECTNESS OF CLAIM OF LABOUR SITE EXPENSES IS SUPPORTED FROM ORIGINAL ASSESSMENT U/S. 143(3) AND THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE U/S. 153A IN THE ABSENCE OF ANY INCREMENTING MATERIAL. 5(I) THAT ADDITION OF RS. 33,42,000/ - AS INCOME FROM UNDISCLOSED SOURCES IS MERELY ON THE BASIS OF WRONG APPRECIATION OF FACTS AND WITHOUT PROPER OPPORTUNITY. (II) THAT THERE IS NO FINDING OR MATERIA L ABOUT ALLEGED UNDISCLOSED SOURCES AND WHOLE BASIS OF ADDITION IS ILLEGAL, ARBITRARY AND WITHOUT JURISDICTION. 6. THAT SIMILARLY ADDITION OF RS. 11,71,000/ - IS NOT JUSTIFIED AND SAME IS NOT SUSTAINABLE ON FACTS AND UNDER THE LAW. 7(I) THAT DISALLOWANCE OF RS. 42,66,135/ - U/S. 37(1) IS WITHOUT ANY FACTUAL AND LEGAL BASIS IN THE ABSENCE OF ANY SUCH CLAIM AND WHOLE BASIS OF DISALLOWANCE IS ILLEGAL, ARBITRARY AND MISCONCEIVED. (II) THAT THE CIT(A) HAS TOTALLY DISREGARDED THE APPELLATE ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 EVEN THOUGH THE FACTS ARE IDENTICAL. 36 (III) THAT LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE RELEVANT FACTS AND ADVERSE INFERENCE IS WITHOUT PROPER INVESTIGATION, APPRECIATION OF FACTS, APPLICATION OF MIND AND OP PORTUNITY TO THE ASSESSEE. 8. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 6 0 . THE GROUND NO. 1,2,3,4 & 7 RAISED IN THIS APPEAL ARE SAME AS IN PRECEDING ASSESSMENT YEARS AY 2002 - 03, 2003 - 04 AND 2004 - 05 WHICH HAV E BEEN ADJUDICATED BY US WHILE DECIDING THE APPEALS OF SAID YEARS. HOWEVER, GROUND NO.5 & 6 ARE NEW GROUNDS RELEVANT FOR THIS YEAR ONLY. IN THE LIGHT OF ABOVE POSITION, GROUND 1 - 4 & 7 ARE DECIDED IN FAVOUR OF THE APPELLANT AS PER DETAILED FINDING RECORDED IN APPELLATE ORDER FOR A.Y. 2002 - 03, 2003 - 04 & 2004 - 05. 61 . THE GROUND NO. 5 IS REGARDING ADDITION OF RS. 33,42,000/ - AND GROUND NO. 6 REGARDING ADDITION OF RS. 11,71,000/ - ALLEGED TO BE INCOME FROM UNDISCLOSED SOURCES. ON GOING THROUGH THE ASSESSMENT ORDER AND CIT(A), WE FIND THAT THESE GROUNDS ARE REGARDING CERTA IN CASH TRANSACTION INVOLVING SH. VIJAY KUMAR KATARIA, THE DIRECTOR OF THE ASSESSEE COMPANY WITH REFERENCE TO SEIZED ANNEXURE M 488/07 PAGE 93 & M 490/07 PAGE 42 - 46. THE ASSESSING OFFICER HAS MADE ADDITION ON THE 37 BASIS ROUGH JOTTINGS ON THE SAID ANNEXURE A ND INFERRED THAT THESE TRANSACTION ARE PERTAINING TO ASSESSEE COMPANY EVEN THOUGH THERE IS NO REFERENCE TO THE NAME OF ASSESSEE COMPANY ON THE LOOSE SHEETS OF PAPER. 62 . THE LD. COUNSEL OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE ORDER OF CIT(A) AND AO IS BASED ON CONJECTURES AND SURMISES AND THE SEIZED ANNEXURE IS NOT RELEVANT IN THE CASE OF THE ASSESSEE COMPANY. IT WAS FURTHER ARGUED THAT ROUGH NOTINGS ON A DOCUMENT WITHOUT ANY CORROBORATION HAS NO EVIDENTIARY VALUE AND SAME COULD NOT BE USED FOR THE PURP OSE OF MAKING ADDITION U/S 153A OF THE ACT. IT WAS FURTHER CONTENDED THAT EVEN IF IT IS PRESUMED THAT THE CONTENT OF THE SEIZED ANNEXURE IS TRUE, THE CASH TRANSACTIONS SO INVOLVED ARE FULLY COVERED OUT OF CASH IN HAND AND WITHDRAWALS FROM THE BANK. THE LD. COUNSEL ARGUED THAT THE ASSESSING OFFICER HAS NOT VERIFIED THE CASH BOOK AND HAS IGNORED THE AVAILABILITY OF CASH IN HAND. 6 3. THE LD DR RELIED UPON THE ORDER OF AO AND CIT(A) AND SUBMITTED THAT REFERENCE TO THE NAME OF VIJAY KUMAR KATARIA WAS IN CAPACIT Y OF DIRECTOR OF THE ASSESSEE AND AS SUCH THE ASSESSING OFFICER HAS RIGHTLY CONSIDERED ADDITION IN THE HANDS OF THE ASSESSEE. 38 64 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT LOWER AUTHORITIES HAVE NOT PROPERLY ANALYSED AND DRAWN ADVERSE INFERENC E WITHOUT PROPER APPRECIATION OF FACTS. THE ALLEGATION OF AO THAT ALLEGED CASH TRANSACTIONS REPRESENT INCOME FROM UNDISCLOSED SOURCES IS NOT BORN OUT FROM RECORD. EVEN ON THE BASIS OF SEIZED ANNEXURE, THE CASH WAS PROVIDED BY SIR WHICH PURPORTEDLY MEAN S V.K. KATARIA AND IN SUCH CIRCUMSTANCE, WHAT COULD BE THE LEGAL BASIS FOR ANY ADDITION IN THE HANDS OF THE APPELLANT. IT IS NOT THE CASE OF THE AO THAT APPELLANT HAS ANY OTHER SOURCE OF INCOME OTHER THAN FROM DELHI JAL BOARD AND AS SUCH PRESUMPTION AGAIN ST THE APPELLANT COMPANY IS ALSO MISCONCEIVED. HOWEVER, AS THE MATTER IS NOT EXAMINED IN CORRECT PERSPECTIVE THE SAME IS RESTORED TO THE AO FOR FRESH ADJUDICATION. 65 . NOW WE ARE TAKING UP APPEAL RELATING TO AY 2006 - 07 FILED BY THE ASSESSEE IN ITA NO. 882/DEL/2012 AGAINST THE ORDER PASSED BY CIT(A) - XXXI, NEW DELHI DATED 02/01/2012. 66 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1(I). THAT CIT(A) HAS FAILED TO ADJUDICATE THE GROUND RELATING TO JURISDICTION U/S. 153A I N THE ABSENCE OF ANY INCRIMINATING 39 MATERIAL FOUND AS A RESULT OF SEARCH IN RESPECT OF SETTLED ISSUES AND COMPLETED ASSESSMENTS. (II) THAT PROVISIONS OF SEC. 153A HAVE BEEN APPLIED IN RESPECT OF STATUTORY CLAIM U/S. 80IA ON ILLEGAL AND ARBITRARY BASIS AND WITHOUT JURISDICTION. 2(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING CLAIM OF STATUTORY DEDUCTION U/S. 80IA IN THE CONTEXT OF PROCEEDING U/S. 153(A) EVEN THOUGH THE STATUTORY CLAIM U/S. 80IA WAS SETTLE D AS PER ORIGINAL ORDERS U/S. 143(3) AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL RELATING TO CORRECTNESS OF CLAIM U/S. 80IA. (II) THAT THE CLAIM U/S. 80IA IS DULY SUPPORTED FROM ORDER OF THE CIT(A) IN ASSESSMENT YEAR 2004 - 05 IN TERMS OF PROCEEDINGS U/S. 153A IN THE ASSESSEES OWN CASE AND THERE IS NO GROUND OR BASIS TO DISREGARD THE SAME EVEN THOUGH THERE IS NO CHANGE IN THE RELEVANT FACTS AND PROVISIONS OF LAW. (III) THAT EVEN OTHERWISE, THE CLAIM OF STATUTORY DEDUCTION U/S. 80IA IS IN ACCORDANCE WITH LAW AND THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF THE SAME. 3(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF RS. 84,29,752/ - AND RS.86,70,000/ - IN RESPECT OF CLAIM OF PROJECT CONSULT ANCY SERVICES WITHOUT PROPER APPRECIATION OF FACTS AND IN TOTAL DISREGARD TO SCOPE AND OBJECTIVE OF PROVISIONS U/S. 153A. 40 (II) THAT THERE IS NO LEGAL OR FACTUAL BASIS FOR DISALLOWANCE OF RS. 84,29,752/ - AND RS.86,70,000/ - AND WHOLE BASIS OF DISALLOWANCES I S ILLEGAL, ARBITRARY AND WITHOUT JURISDICTION. (III) THAT DISALLOWANCE OF RS. 84,29,752/ - AND RS.86,70,000/ - IS BASED ON CHANGE OF OPINION AS THE CLAIM OF PROJECT CONSULTANCY WAS DULY ACCEPTED IN THE ORIGINAL ASSESSMENT U/S. 143(3) AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL. 4(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF LABOUR SITE EXPENSES TO THE EXTENT OF 10% OF THE TOTAL CLAIM AMOUNTING TO RS. 31,65,023/ - IN TOTAL DISREGARD TO PR OVISIONS OF SEC. 153A AND MERELY ON THE BASIS OF CHANGE OF OPINION. (II) THAT THE CIT(A) IS NOT JUSTIFIED IN DISREGARDING FINDING OF CIT(A) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 WHERE THE SAME GROUND WAS DECIDED IN FAVOUR OF THE ASSESS EE AND THERE IS NO CHANGE IN FACTS AND LEGAL PROVISIONS. (III) THAT EVEN OTHERWISE, CORRECTNESS OF CLAIM OF LABOUR SITE EXPENSES IS SUPPORTED FROM ORIGINAL ASSESSMENT U/S. 143(3) AND THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE U/S. 153A IN THE ABSENCE OF ANY INCREMENTING MATERIAL. 5(I) THAT DISALLOWANCE OF RS. 3,12,79,704/ - U/S. 37(1) IS WITHOUT ANY FACTUAL AND LE GAL BASIS IN THE ABSENCE OF ANY SUCH CLAIM AND WHOLE BASIS OF DISALLOWANCE IS ILLEGAL, ARBITRARY AND MISCONCEIVED. 41 (II) THAT THE CIT(A) HAS TOTALLY DISREGARDED THE APPELLATE ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 EVEN THOUGH THE FACTS ARE IDENTICAL. (III) THAT LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE RELEVANT FACTS AND ADVERSE INFERENCE IS WITHOUT PROPER INVESTIGATION, APPRECIATION OF FACTS, APPLICATION OF MIND AND OPPORTUNITY TO THE ASSESSEE. 6. THAT ORDERS OF THE LOWER AUT HORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 67. GROUND NO. 1 & 2 ARE AGAINST DISALLOWANCE OF CLAIM OF STATUTORY DEDUCTION U/S 80IA OF THE ACT. THE ASSESSING OFFICER AND CIT(A) HAS DISALLOWED THE CLAIM ON THE GROUND THAT ASSESSEE IS ENGAGED IN ACTIVITY OF REHABILITATION OF EXISTING SEWER LINE AND HAS NOT DEVELOPED ANY NEW INFRASTRUCTURE ACTIVITY SO AS TO CLAIM BENEFIT U/S 80IA OF THE ACT. 68 . THE LD. COUNSEL SH. R.S. SINGHVI APPEARING FOR THE ASSESSEE SUBMITTED THAT IN RESPECT YEAR U NDER CONSIDERATION, THE DEPARTMENT HAS PASSED TWO ASSESSMENT ORDERS, ONE U/S 143(3) AND SECOND U/S 153A READ WITH 143(3). IT WAS ARGUED THAT THE ORIGINAL ASSESSMENT PROCEEDINGS U/ 143(3) WERE COMPLETED VIDE ORDER DATED 28.04.2008 WHEREIN THE ASSESSING OFFI CER AFTER EXAMINING THE RELEVANT FACTS DULY ALLOWED THE CLAIM OF STATUTORY DEDUCTION U/S 80IA AND AS SUCH THE 42 IMPUGNED DISALLOWANCE IS ONLY ON ACCOUNT OF CHANGE OF OPINION. THE LD. COUNSEL DREW OUR ATTENTION TO PAGE 12 PARA 5.2 OF THE CIT(A) ORDER IN WHICH THE FINDING RECORDED BY AO IN ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) IS REPRODUCED AND IT WAS SUBMITTED THAT AO HAS CRITICALLY EXAMINED THIS VERY ISSUE BEFORE PASSING THE ORDER. IT WAS CONTENDED THAT THE CLAIM U/S. 80IA IS PURELY OF LEGAL NATURE BASE D ON INCOME AS MAY BE COMPUTED AND AS SUCH ISSUE OF INCRIMINATING MATERIAL HAS NO RELEVANCE TO THE SAME. 69. IT WAS FURTHER ARGUED THAT EVEN ON MERITS, THE CLAIM OF STATUTORY DEDUCTION IS IN ACCORDANCE WITH PROVISIONS OF SECTION 80IA OF THE ACT. IT WAS ARGUED THAT OBSERVATION OF AO THAT ASSESSEE IS NOT ENGAGED IN DEVELOPING NEW INFRASTRUCTURE FACILITY IN TERMS OF PROVISIONS OF SECTION 80IA IS CONTRARY TO FINDING RECORDED IN THE ASSESSMENT COMPLETED U/S. 143(3). THE LD. COUNSEL WHILE EXPLAINING THE NATURE OF ACTIVITY CARRIED OUT BY THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE, UNDER A CONTRACT FROM DELHI JAL BOARD, WAS ENGAGED IN THE BUSINESS OF INSTALLING NEW SEWER LINE IN PLACE OF DEFUNCT LINES. THE ASSESSEE WITH THE HELP OF REVOLUTIONARY CIPP TECHNOLOGY HAS LAID DOWN NEW PIPELINES IN PLACE OF OLD ONE AND AS SUCH THE ASSESSEE FULLY SATISFIED THE REQUIREMENT PRESCRIBED U/S 80IA OF THE 43 ACT. FURTHER, THE LD. COUNSEL SUBMITTED THAT CIT(A) IN ITS ORDER FOR AY 2004 - 05 AFTER IN D EPTH EXAMINATION HAS DECIDED THIS VERY ISSUE IN FAVOUR OF ASSESSEE. THE LD. COUNSEL TOOK US THROUGH THE FINDING OF CIT(A) IN AY 2004 - 05 WHICH IS EXTRACTED AT PAGE 13 OF THE IMPUGNED CIT(A) ORDER. THE LD. COUNSEL ALSO MADE REFERENCE TO PG 68 - 72 OF THE PAPE RBOOK FILED IN APPEAL RELATING TO AY 2004 - 05 WHEREIN THE DELHI JAL BOARD HAS CERTIFIED THAT ASSESSEE HAS DEVELOPED A NEW INFRASTRUCTURE FACILITY IN THE FORM OF NEW SEWER PIPELINES. 70. THE LD. COUNSEL ALSO SUBMITTED THAT EVEN IF IT PRESUMED THAT ASSESSEE IS ENGAGED IN RENOVATION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE FACILITY, EVEN THEN THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IA IN VIEW OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. ABG HEAVY INDUSTRIES LTD. 322 ITR 33 AGAIN ST WHICH THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED BY SUPREME COURT. IT WAS ARGUED THAT AS PER THE SAID DECISION, THE THREE CONDITIONS PRESCRIBED U/S 80IA NAMELY(I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINT AINING AN INFRASTRUCTURE FACILITY ARE NOT CUMULATIVE IN NATURE. 44 71 . THE LD. CIT DR ON THE OTHER HAND, SUBMITTED THAT ASSESSEE IS MERELY CARRYING OUT THE ACTIVITY OF REHABILITATING THE EXISTING SEWER LINES THROUGH CIPP TECHNOLOGY AND SAME COULD NOT BE SAID TO BE LAYING DOWN NEW PIPELINES. IT WAS ARGUED THAT CIT(A) HAS RIGHTLY UPHELD THE ORDER OF AO AS THE AO HAS NOT PROPERLY APPRECIATED THE FACTS WHILE GRANTING RELIEF IN THE ORDER U/S. 143(3). IN RESPECT OF OTHER GROUNDS, BOTH THE SIDES HAVE RELIED ON SUB MISSION MADE IN THE PRECEEDING YEARS. 72. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE GROUND NO. 1 &2 ARE RELATING TO VALIDITY OF ORDER U/S. 153A AND CLAIM OF STATUTORY DEDUCTION U/S. 80 IA. IT IS OBSERVED THAT FOR THE YEAR UNDER CONSIDERATION, 2 SEPARATE ORDERS WERE PASSED U/S. 143(3) AND U/S. 153A/143(3) AFTER SEARCH ON 24/04/2007. THE ORDER U/S. 143(3) WAS PASSED ON 28/4/2008 AND ORDER U/S. 153A WAS PASSED ON 29/12/2009. THERE IS NO E VIDENCE OR ARGUMENT EVEN BY DR THAT THERE IS ANY DISPUTE REGARDING VALIDITY OF ORDER PASSED U/S. 143(3). AS PER THE SCHEME OF THE ACT AND IN CONFIRMITY WITH SEARCH PROVISIONS, ALL PENDING PROCEEDINGS SHALL ABATE AND ASSESSING OFFICER SHALL HAVE JURISDICTI ON U/S. 153A TO PASS ONE ORDER. IT IS FURTHER NOTED THAT THE ASSESSING OFFICER IN THE ORDER U/S. 143(3) HAS DULY ACCEPTED THE CLAIM OF STATUTORY DEDUCTION U/S. 80IA 45 AND VARIOUS OTHER CLAIMS OF EXPENSES AS PER AUDITED ACCOUNTS. IN THE CIRCUMSTANCES, ANY D ISALLOWANCE IF CALLED FOR U/S. 153A HAS TO BE ON THE BASIS OF INCRIMINATING MATERIAL. 73. IT IS NOTED THAT CLAIM U/S. 80IA IS OF STATUTORY NATURE AND HAVE BEEN ACCEPTED BY AO HIMSELF IN THE ORDER U/S. 143(3) FOR THIS VERY YEAR AND VARIOUS OTHER YEARS AN D AS SUCH MERIT OF CLAIM IS NOT IN DISPUTE. FURTHER, THIS BEING PURELY OF LEGAL NATURE, ISSUE OF INCRIMINATING MATERIAL HAS NO RELEVANCE AS BENEFIT U/S. 80IA IS TO BE ALLOWED ON THE BASIS OF INCOME AS MAY BE COMPUTED. FURTHER, THE CONTRARY VIEW TAKEN BY THE AO IN THE ORDER U/S. 153A IS MERELY ON THE BASIS OF CHANGE OF OPINION. IN CONFORMITY WITH FACTS OF THE CASE, NATURE OF THE CLAIM AND PAST HISTORY, THERE IS NO DISPUTE REGARDING CLAIM U/S. 80IA AND ACCORDINGLY THIS GROUND OF APPELLANT IS ACCEPTED. 74 . GROUND NO. 3 IS AGAINST DISALLOWANCE OF RS. 84,29,752/ - AND RS.86,70,000/ - BEING CLAIM OF PROJECT CONSULTANCY EXPENSES AND TECHNICAL SUPPORT EXPENSES IN THE NAME OF M/S. C.M. CONTRACTING LTD., NEW ZEALAND AND MR. VERNON DOWNES RESPECTIVELY. 46 75. THE ASSES SING OFFICER HAS MADE THE DISALLOWANCE BY HOLDING THESE EXPENSES TO BE BOGUS AND NON GENUINE. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT ASSESSEE HAS FAILED TO SUBSTANTIATE THE CLAIM OF EXPENSES AND THAT THE SAME HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. 76. ON THE LEGALITY OF THE DISALLOWANCE, THE LD. COUNSEL SH. SINGHVI REITERATED THE SUBMISSION MADE IN PREVIOUS GROUND AND SUBMITTED THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AND AS SUCH THE ASSESSING OFFICER HAS NO JURISDICTION TO MAKE DISALLOWANCE IN ABSENCE OF ANY FRESH TANGIBLE MATERIAL OR ADVERSE INFORMATION. 77. IT WAS FURTHER ARGUED THAT CLAIM OF PROJECT CONSULTANCY AND TECHNICAL SUPPORT EXP IS FOR THE PURPOSE OF ONGOING PROJECT OF DELHI JAL BOARD. THE LD. COUNSEL STRESSED UPON THE FACT THAT ASSESSEE DEDUCTED TDS ON THE PAYMENTS AND THE PAYMENTS WERE MADE TH ROUGH BANKING CHANNELS. IT WAS ALSO SUBMITTED THAT THE RELEVANT AGREEMENT/CONTRACT WAS PLACED ON RECORD BEFORE AO AND CIT(A). SH. SINGHVI ALSO DREW OUR ATTENTION TO FINDING RECORDED BY AO AT PAGE 5 OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS DEALT WITH THIS ISSUE. IT WAS ARGUED THAT THE OBSERVATION OF AO IS CYCLOSTYLED AND APPEARS TO BE BORROWED 47 FROM PRECEEDING YEARS ASSESSMENT ORDER. IT WAS SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT CLAIMED ANY EXPENSES IN THE NAME OF M/S. ONSITE CENTRAL LTD. UK AND INSTEAD THE CLAIM OF PROJECT CONSULTANCY EXP IS FROM M/S. C.M. CONTRACTING LTD., NEW ZEALAND AND AS SUCH THE OBSERVATION OF ASSESSING OFFICER IN RESPECT OF M/S. ONSITE CENTRAL LTD. UK IS NOT RELEVANT. IN RESPECT OF CLAIM OF TECHNICAL SUPPORT EXP PAID TO MR. VERNON DOWNES, THE RELIANCE WAS PLACED ON CIT(A)S ORDER FOR AY 2004 - 05 WHEREIN THE IDENTICAL DISALLOWANCE WAS DELETED. THE LD. COUNSEL SUBMITTED THAT PAYMENT TO MR. VERNON DOWNES WAS SUBJECTED TO TDS @ 33% AND ACCORDIN GLY THE IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE. 78. ALTERNATIVELY, IT WAS PLEADED THAT IN ANY CASE THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IA AND AS SUCH THERE COULD BE NO REASON OR LOGIC FOR CLAIMING BOGUS EXPENSES PARTICULARLY WHEN THE PROFITS ARE SUBJECT TO DEDUCTION U/S 80IA OF THE ACT. THE LD. COUNSEL FURTHER RELIED UPON CBDT CIRCULAR NO. 37/2016 DATED 2 ND NOVEMBER, 2016 AS PER WHICH THE BOARD HAS CLARIFIED THAT BENEFIT OF DEDUCTION U/S 80IA SHALL BE AVAILABLE ON ADDITIONAL INCOME ARISING ON ACCOUNT OF ADDITION/DISALLOWANCES MADE IN THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT IN CASE THE ASSESSEE IS HELD TO BE ELIGIBLE TO CLAIM DEDUCTION U/S 48 80IA OF THE ACT, THE IMPUGNED DISALLOWANCE WOULD BE OF ACADEMIC IN NATURE AS IN THE E VENT OF DISALLOWANCE, THE BENEFIT OF DEDUCTION U/S 80IA SHALL BE AVAILABLE ON ENHANCED INCOME. 79 . ON THE OTHER HAND, THE LD. CIT DR DEFENDED THE ORDER OF CIT(A) AND ASSESSING OFFICER. HE CONTENDED THAT AS THIS IS A CASE OF ABATEMENT OF PENDING ASSESSMENT U/S 153A, THE AO IS EMPOWERED TO ASSESS ALL THE INCOME IRRESPECTIVE OF ANY INCRIMINATING MATERIAL. 80 . IN THIS CONNECTION, WE FIND THAT VIDE ASSESSMENT U/S. 143(3) DTD. 28/04/2008 PASSED AFTER SEARCH, THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF PROJE CT CONSULTANCY SERVICES AND TECHNICAL SUPPORT EXPENSES. THERE IS NO DISPUTE THAT THESE EXPENSES ARE PART OF RECORD AND SUPPORTED FROM AUDITED ACCOUNTS. HOWEVER, THE REVENUE HAS CONSIDERED DISALLOWANCE U/S. 153A MERELY BY MAKING REFERENCE TO SEIZED ANNEXU RE FOUND BY CBI. 81. ON THE BASIS OF DETAILED COMPARATIVE CHART, WE FIND THAT THESE ARE ROUTINE EXPENSES CONNECTED WITH BUSINESS ACTIVITIES. THERE IS NO DISPUTE THAT THESE EXPENSES WERE CLAIMED AFTER DEDUCTION AND 49 PAYMENT OF TDS TO THE EXTENT OF 21%. IT IS ALSO NOTED THAT M/S. C.M. CONTRACTING LTD., NEW ZEALAND AND M/S. VERNON DOWNES DIRECTOR OF M/S. ONSITE CENTRAL LTD. UK WERE TECHNICAL CONSULTANTS AND ON THE BASIS OF THEIR EXPERTISE, THE CONTRACT WAS AWARDED BY DELHI JAL BOARD TO THE APPELLANT. FURTHE R, THERE IS NO INCRIMINATING MATERIAL WITH REFERENCE TO THE SAID CLAIM AND DISALLOWANCE WAS ONLY ON THE BASIS OF ADVERSE INFERENCE. IN OUR OPINION, THESE CLAIMS ARE NOT YEAR SPECIFIC AND DIRECTLY RELATED TO VARIOUS YEARS AND THEIR BEING DIRECT NEXUS BETWE EN CLAIM OF EXPENSES AND BUSINESS ACTIVITIES, THERE IS NO VALID BASIS FOR DISPUTING THE GENUINENESS OF THE SAME PARTICULARLY WHEN TDS HAS BEEN DEDUCTED IN RESPECT OF THE SAME. 82. IN CONFORMITY WITH FINDING RECORDED IN PARA 15.3, WE DELETE THE SAID DISALL OWANCE AND THIS GROUND OF APPELLANT IS ALLOWED. 83 . GROUND NO. 4 IS IN RESPECT OF DISALLOWANCE OF 10% OF SITE LABOUR EXPENSES TO THE EXTENT OF RS. 31,65,023/ - . THE ASSESSING OFFICER HAS MADE THE AD - HOC DISALLOWANCE ON THE GROUND THAT CLAIM OF SITE LABOUR EXP IS UNVERIFIABLE AND UNVOUCHED. 50 8 4. THE LD. COUNSEL SH. SINGHVI ARGUED THAT THE IMPUGNED AD - HOC DISALLOWANCE IS PRIMA FACIE NOT SUSTAINABLE AS THE ASSESSING OFFICER HAS FAILED TO GIVE ANY SPECIFIC REASONS OR POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNT. IT WAS ARGUED THAT GENUINENESS OF THE EXPENSES IS NOT IN DISPUTE AS THE ASSESSING OFFICER HIMSELF HAS ALLOWED 90% OF THE CLAIM. SH. SINGHVI ALSO CONTENDED THAT IT IS NOT THE CASE OF ASSESSING OFFICER THAT THE CLAIM IS EXCESSIVE OR NOT FOR THE PURPOSE OF BUSINESS. IN ADDITION TO ABOVE ARGUMENT, THE LD. COUNSEL ALSO DISP UTED THE VALIDITY OF DISALLOWANCE ON THE GROUND THAT SAME IS ON ACCOUNT OF CHANGE OF OPINION AS THE ORIGINAL ASSESSMENT WAS COMPLETE U/S 143(3) WHEREIN THE CLAIM OF SITE LABOUR EXPENSES WAS ACCEPTED IN TOTALITY. 85. THE ALTERNATE ARGUMENT ABOUT AVAILABILI TY OF BENEFIT OF DEDUCTION U/S 80IA IN VIEW OF CBDT CIRCULAR NO.37/2016 WAS ALSO TAKEN FOR THIS GROUND AS WELL. THE LD. CIT DR SUPPORTED THE ORDER OF CIT(A) AND AO AND REQUESTED FOR DISMISSAL OF GROUND RAISED BY THE ASSES S EE. 86. WE HAVE CONSIDERED THE CL AIM OF THE APPELLANT, IT IS NOTED THAT THE ASSESSING OFFICER HAS MADE IDENTICAL CLAIM OF ADHOC DISALLOWANCE OF 10% IN VARIOUS YEARS WHICH ARE SUBJECT MATTER OF APPEAL. WHEN AO HIMSELF HAS ACCEPTED THE CLAIM TO THE EXTENT OF 90%, THERE COULD BE NO 51 BASIS FO R DISALLOWANCE OF 10% PARTICULARLY WHEN SAME IS SUPPORTED FROM AUDITED ACCOUNTS. THE ASSESSING OFFICER HAS NOT RECORDED ANY SPECIFIC FINDING AND MERELY RELATED THE SAME TO SEIZED ANNEXURE. HOWEVER, IN THE LIGHT OF DETAILED FINDING VIDE PARA 8.5.3, THERE IS NO JUSTIFICATION FOR ANY SUCH DISALLOWANCE AND SAME IS HEREBY DELETED. 87 . THE NEXT GROUND IS AGAINST UPHOLDING OF DISALLOWANCE OF RS. 3,12,79,704/ - U/S 37(1) OF THE ACT. THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF CLAIM OF SITE EXPENSES ON THE GROU ND THAT AS PER THE SEIZED ANNEXURES AS REFERRED TO IN TABLE AT PAGE 11 OF THE ASSESSMENT ORDER, THE ASSESSEE HAS ALLEGEDLY PAID BRIBE TO VARIOUS DELHI JAL BOARD OFFICIALS AND SAME IS NOT ALLOWABLE U/S 37(1) OF THE ACT. HOWEVER, AO HAS NOT BEEN ABLE TO RE LATE THE SAME WITH CLAIM OF SITE EXPENSES IN THE AUDITED ACCOUNTS. 88 . THE ASSESSING OFFICER HAS CONSIDERED DISALLOWANCE IN TERMS OF PROVISIONS OF SEC. 37(1) OF THE ACT. HOWEVER, WE FIND THAT THERE IS NO SUCH CLAIM BY THE ASSESSEE AND AS SUCH THERE COULD BE NO BASIS FOR ANY DISALLOWANCE U/S. 37(1) OF THE ACT. FURTHER, THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE CLAIM OF SITE EXPENSES VIDE ORDER U/S. 143(3) 52 PASSED AFTER SEARCH. THE PRESUMPTION OF THE ASSESSING OFFICER THAT THE SAME ARE IN THE NATURE O F INFLATED CLAIM FOR THE PURPOSE OF PAYMENT OF BRIBE TO DELHI JAL BOARD IS MISPLACED IN THE ABSENCE OF ANY PROPER EVIDENCE TO THIS EFFECT AND ACCORDINGLY WE ARE NOT INCLINED TO ACCEPT THE SAME. IN CONFORMITY WITH DETAILED FINDING RECORDED WHILE ADJUDICATIN G APPEAL RELATING TO AY 2003 - 04 TO 2005 - 06 IN ITA 5012/D/12, 3766/D/12 &881/D/12, THERE IS NO JUSTIFICATION FOR ANY SUCH DISALLOWANCE AND SAME IS HEREBY DELETED. WE MAY ALSO OBSERVE THAT ALL THESE DISALLOWANCES HAVE DIRECT BEARING TO THE COMPUTATION OF STA TUTORY CLAIM U/S. 80IA AND IN ACCORDANCE WITH CIRCULAR NO 37/2016 DATED 2 ND NOVEMBER, 2016 , THE DISALLOWANCE OF SAME WOULD HAVE NO ADVERSE REVENUE IMPLICATION AS THE APPELLANT WILL BE ENTITLED TO CONSEQUENTIAL BENEFIT U/S. 80IA OF THE ACT. 89 . NEXT WE TAK E UP THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 883/D/2012 AGAINST ORDER OF CIT(A) - XXXI, NEW DELHI DATED 02/01/2012 RELATING TO AY 2007 - 08. 90 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1(I). THAT CIT( A) HAS FAILED TO ADJUDICATE THE GROUND RELATING TO JURISDICTION U/S. 153A IN THE ABSENCE OF ANY INCRIMINATING 53 MATERIAL FOUND AS A RESULT OF SEARCH IN RESPECT OF SETTLED ISSUES AND COMPLETED ASSESSMENTS. (II) THAT PROVISIONS OF SEC. 153A HAVE BEEN APPLIED I N RESPECT OF STATUTORY CLAIM U/S. 80IA ON ILLEGAL AND ARBITRARY BASIS AND WITHOUT JURISDICTION. 2(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING CLAIM OF STATUTORY DEDUCTION U/S. 80IA IN THE CONTEXT OF PR OCEEDING U/S. 153(A) EVEN THOUGH THE STATUTORY CLAIM U/S. 80IA WAS SETTLED AS PER ORIGINAL ORDERS U/S. 143(3) AND THERE IS NO CASE OF ANY INCRIMINATING MATERIAL RELATING TO CORRECTNESS OF CLAIM U/S. 80IA. (II) THAT THE CLAIM U/S. 80IA IS DULY SUPPORTED FR OM ORDER OF THE CIT(A) IN ASSESSMENT YEAR 2004 - 05 IN TERMS OF PROCEEDINGS U/S. 153A IN THE ASSESSEES OWN CASE AND THERE IS NO GROUND OR BASIS TO DISREGARD THE SAME EVEN THOUGH THERE IS NO CHANGE IN THE RELEVANT FACTS AND PROVISIONS OF LAW. (III) THAT EVE N OTHERWISE, THE CLAIM OF STATUTORY DEDUCTION U/S. 80IA IS IN ACCORDANCE WITH LAW AND THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF THE SAME. 3(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF R S. 75,91,634/ - IN RESPECT OF CLAIM OF PROJECT CONSULTANCY SERVICES WITHOUT PROPER APPRECIATION OF FACTS AND IN TOTAL DISREGARD TO SCOPE AND OBJECTIVE OF PROVISIONS U/S. 153A. 54 (II) THAT THERE IS NO LEGAL OR FACTUAL BASIS FOR DISALLOWANCE OF RS. 75,91,634/ - AND WHOLE BASIS OF DISALLOWANCES IS ILLEGAL, ARBITRARY AND WITHOUT JURISDICTION. (III) THAT DISALLOWANCE OF RS. 75,91,634/ - IS BASED ON CHANGE OF OPINION AS THE CLAIM OF PROJECT CONSULTANCY WAS DULY ACCEPTED IN THE ORIGINAL ASSESSMENT U/S. 143(3) AND T HERE IS NO CASE OF ANY INCRIMINATING MATERIAL. 4(I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF LABOUR SITE EXPENSES TO THE EXTENT OF 10% OF THE TOTAL CLAIM AMOUNTING TO RS. 30,80,125/ - IN TO TAL DISREGARD TO PROVISIONS OF SEC. 153A AND MERELY ON THE BASIS OF CHANGE OF OPINION. (II) THAT THE CIT(A) IS NOT JUSTIFIED IN DISREGARDING FINDING OF CIT(A) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 WHERE THE SAME GROUND WAS DECIDED IN F AVOUR OF THE ASSESSEE AND THERE IS NO CHANGE IN FACTS AND LEGAL PROVISIONS. (III) THAT EVEN OTHERWISE, CORRECTNESS OF CLAIM OF LABOUR SITE EXPENSES IS SUPPORTED FROM ORIGINAL ASSESSMENT U/S. 143(3) AND THERE IS NO JUSTIFICATION FOR ANY DISALLOWANCE U/S. 15 3A IN THE ABSENCE OF ANY INCREMENTING MATERIAL. 5(I) THAT DISALLOWANCE OF RS. 3,20,03,596/ - U/S. 37(1) IS WITHOUT ANY FACTUAL AND LEGAL BASIS IN THE ABSENCE OF ANY SUCH CLAIM AND WHOLE BASIS OF DISALLOWANCE IS ILLEGAL, ARBITRARY AND MISCONCEIVED. 55 (II) THA T THE CIT(A) HAS TOTALLY DISREGARDED THE APPELLATE ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 EVEN THOUGH THE FACTS ARE IDENTICAL. (III) THAT LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE RELEVANT FACTS AND ADVERSE INFERENCE IS WITH OUT PROPER INVESTIGATION, APPRECIATION OF FACTS, APPLICATION OF MIND AND OPPORTUNITY TO THE ASSESSEE. 6. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 91 . ON PERUSAL OF ASSESSMENT ORDER, CIT(A)S ORDER AND GROUND S RAISED BY THE ASSESSEE, IT IS OBSERVED THAT ALL THE ISSUES AND CORRESPONDING GROUNDS ARE SIMILAR TO THAT RAISED IN APPEAL RELATING TO AY 2006 - 07 IN ITA NO. 882/D/2012. FURTHER, THE ARGUMENTS OF THE BOTH THE SIDES BEING SIMILAR, THE SAME ARE TAKEN AS HEAR D FOR THE PURPOSE OF ADJUDICATION OF VARIOUS GROUNDS. 92 . AS THE GROUND AND BASIS OF VARIOUS DISALLOWANCES ARE SAME AS IN AY 2006 - 07, THE GROUND WISE FINDING RECORDED BY US IN AFORESAID PARA 37, 41, 45 & 47 IS APPLICABLE MUTATIS MUTANDIS TO PRESENT APPEA L AND THIS APPEAL IS TREATED AS ADJUDICATED AS PER FINDING RECORDED THEREIN. 56 93 . LASTLY, WE TAKE UP THE APPEAL PREFERRED BY THE ASSESSEE IN ITA NO. 884/DEL/2012 AGAINST ORDER PASSED BY CIT(A) - XXXI, NEW DELHI DATED 02/01/2012 RELATING TO AY 2008 - 09 . 94. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ADDITION OF RS. 5,50,000/ - AS UNEXPLAINED CASH EVEN THOUGH THE ENTIRE CASH IS SUPPORTED FROM BOOKS OF ACCOUNTS AND OTHER EVIDENCES. (II) THAT IMPUGNED ADDITION IS WITHOUT PROPER APPRECIATION OF FACTS AND OPPORTUNITY TO THE ASSESSEE. 2(I) THAT DISALLOWANCE OF RS. 42,40,549/ - U/S. 37(1) IS WITHOUT ANY FACTUAL AND LEGAL BASIS IN THE ABSENCE OF ANY SUCH CLAIM AND WHOLE BASIS OF DISALLOWANCE IS ILLEGAL, ARBITRARY AND MISCONCEIVED. (II) THAT THE CIT(A) HAS TOTALLY DISREGARDED THE APPELLATE ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 EVEN THOUGH THE FACTS ARE IDENTICAL. (III) THAT LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE RELEVANT FACTS AND ADVERSE INFERENCE IS WITHOUT PROPER INVESTIGATION, APPRECIATION OF FACTS, APPLICATION OF MIND AND OPPORTUNITY TO THE ASSESSEE. 3(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF SITE LABOUR 57 EXPENSES AMOUNTING TO RS. 10,66,846/ - BEING 10% OF TOTAL CLAIM WITHOUT PROPER APPRECIATION OF FACTS AND APPLICATION OF MIND. (II) THAT ENTIRE CLAIM IS SUPPORTED FROM AUDITED BOOKS OF ACCOUNTS AND ADHOC DISALLOWANCE IS ON MECHANICAL BASIS AND EVEN IN TOTAL DISREGARD TO ORDER OF CIT(A) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05. 4. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUSTIFIED ON FACTS AND SAME ARE BAD IN LAW. 95. AS NOTED EARLIER WHILE ADJUDICATING APPEAL IN ITA NO. 883/D/2012, EVEN IN THIS APPEAL, THE GROUNDS RAISED BY THE ASSESSEE ARE SIMILAR TO THAT RAISED IN ITA NO. 882/D/2012 RELATING TO AY 2006 - 07. AS THE GROUND AND BASIS OF VARIOUS DISALLOWANCES ARE SAME AS IN AY 2006 - 07, THE GROUND WISE FINDI NG RECORDED BY US IN AFORESAID PARA 45 & 47 IS APPLICABLE MUTATIS MUTANDIS TO PRESENT APPEAL AND AS SUCH GROUND NO. 2 & 3 ARE TREATED AS ADJUDICATED AS PER FINDING RECORDED THEREIN. 96. HOWEVER, THERE IS ONE NEW GROUND I.E. GROUND NO. 1 REGARDING ADDITIO N OF RS. 5,50,000/ - ON ACCOUNT OF UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH. THE APPELLANT HAS NOT BEEN ABLE TO PROVIDE ANY 58 EXPLANATION IN RESPECT OF THE SAME AND ACCORDINGLY NO INTERFERENCE IS CALLED FOR WITH REFERENCE TO ADDITION SUSTAINED BY CIT(A). 97 . IN THE RESULT: ITA NO. 5011 /DEL/201 2 [ A.Y : 20 02 - 03 ] IS PARTLY ALLOWED ITA NO. 5012 /DEL/201 2 [ A.Y : 20 03 - 04 ] IS PARTLY ALLOWED ITA NO. 881 /DEL/201 2 [ A.Y : 20 05 - 06 ] IS PARTLY ALLOWED ITA NO. 882 /DEL/201 2 [ A.Y : 20 06 - 07 ] IS ALLOWED ITA NO. 883 /DEL/201 3 [ A.Y : 20 07 - 08 ] IS ALLOWED ITA NO. 884 /DEL/201 2 [ A.Y : 20 08 - 09 ] IS PARTLY ALLOWED CO NO. 3 21/DEL/2010 [ A.Y : 20 04 - 05 ] IS ALLOWED ITA NO. 3766 /DEL/201 0 [ A.Y : 20 04 - 05 ] IS DISMISSED THE ORDER IS PR ON OUNCED IN THE OPEN COURT ON 1 6 . 03 .201 8 . S D S D [H.S. SIDHU] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 T H MARCH , 201 8 VL/ 59 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI