Estimated disallowance of labour charges was reduced after the record showed the original addition was excessive.

Labour charges disallowed on an estimated basis were held excessive where the assessment relied mainly on non-production of all vouchers, but the record and declared profits were otherwise considered. The estimation was accordingly moderated to better balance the voucher deficiency against the overall facts, and the disallowance was restricted from 10% to 6%.

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Issues: Whether the disallowance of labour charges made on an estimated basis at 10% required interference and, if so, to what extent.

Analysis: The assessment disallowed 10% of the labour charges mainly because all vouchers were not produced. The record was considered in light of the facts and the profits declared by the assessee, and the disallowance was found to be excessive. A reduced estimation was considered to balance the deficiency in voucher support with the overall record.

Conclusion: The disallowance was restricted from 10% to 6%.

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