Tribunal allows appeal, rejects labor charges, finds no unaccounted money

The Tribunal partially allowed the appeal, deleting the addition of outstanding labour charges as unexplained expenditure under section 69C of the Act. The Tribunal found no evidence of unaccounted money use, accepted subsequent payment, and noted the lack of bogus expenditure or worker examination. The remaining grounds not pressed by the assessee were dismissed.

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Issues involved: Challenge to order of CIT(A) for assessment year 2005-06 regarding disallowance of outstanding labour charges as unexplained expenditure u/s 69C of the Act.

First issue - Disallowance of outstanding labour charges:
The assessee, engaged in civil construction and labour contract business, declared income of &8377; 14,29,579. AO noticed outstanding labour charges of &8377; 54,56,235 for Jan, Feb, and March 2005. Assessee explained financial crisis prevented immediate payment, but payment was made in subsequent year. AO treated outstanding amount as unexplained expenditure u/s 69C, citing reasons such as lack of dates on wage payments proof, inability to postpone such payments, and site-wise breakdown of outstanding payments. CIT(A) upheld AO's decision. Assessee argued against addition u/s 69C, citing subsequent payment and lack of examination of workers by AO. Tribunal found no evidence of unaccounted money use, accepted subsequent payment, and noted lack of bogus expenditure or worker examination. Tribunal deleted the addition u/s 69C, dismissing remaining grounds not pressed by assessee.

Conclusion:
Tribunal allowed the appeal partly, deleting the addition of outstanding labour charges as unexplained expenditure u/s 69C of the Act.

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