Tribunal upholds labour charges, dismisses appeal on supervision charges. Decision dated 17th Nov 2022.

The Tribunal upheld the additions on account of labour charges to two individuals and the disallowance of supervision charges, dismissing the appeal of the assessee. The decision was rendered on 17th November 2022.

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Issues:
1. Confirmation of addition made on account of payment of labour charges to two individuals.
2. Confirmation of disallowance of payment made on account of supervision charges.

Analysis:
1. The first issue pertains to the challenge raised by the assessee against the confirmation of additions made on account of payment of labour charges to two individuals, Malati V. Deshpande and Sumati D. Patil. The Assessing Officer (AO) found that the assessee inflated expenditure without obtaining bills and issued a summon to Malati V. Deshpande for verification of labour charges. However, Malati V. Deshpande did not attend due to health reasons, and the AO rejected the contention of the assessee regarding payment of labour charges. In the case of Sumati D. Patil, the AO raised objections regarding the lack of books, bills, and income tax return. Both authorities disallowed the amounts due to insufficient evidence, despite the payments being made through bank with TDS. The Tribunal upheld the decision, noting the absence of detailed evidence and the failure to establish the nature of work performed by the individuals. Therefore, the additions on account of labour charges were confirmed.

2. The second issue concerns the disallowance of supervision charges paid by the assessee. The AO questioned the details of these charges and noted payments made to 36 persons below Rs.20,000 each, without providing reasons for discontinuation or site details. The CIT(A) upheld the disallowance due to lack of evidence regarding the nature of work and regular employment. The Tribunal found that the assessee failed to rebut the findings of the AO and CIT(A) with supporting evidence. Despite the assessee's claim of payments being related to a substantial contract amount, no evidence was presented to substantiate the payments made to 36 supervisors at different locations. Consequently, the Tribunal affirmed the disallowance of supervision charges.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the additions made on account of labour charges and the disallowance of supervision charges. The decision was pronounced on 17th November 2022.

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