TaxTMI 
TaxTMI 
2013 (10) TMI 420
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....ion 251. 2] Without prejudiced to the above and in the alternative:- a) That at the most the ld CIT(A) could have applied a net profit rate on the gross contract receipts of Rs. 22,29,386/- which was subject matter of subletting rather sustaining the addition of entire gross receipts. b) That on the facts the provisions of section 40A(3) are not applicable so as to warrant any disallowances under the said section. 3] That the petitioner may kindly be permitted to raise any additional or alternative ground at or before the time of hearing. 4] The petitioner prays for justice & relief." 2 Vide grounds No.1(a) & 2(b), the grievance of the assessee relates to the confirmation of addition of Rs. 22,29,386/- made by the Assessing Officer on account of gross contract receipts. 3. The facts related to this issue in brief are that assessee was engaged in the business of supply of labour for civil and technical job works assigned by M/s. Binani Cement Works Ltd., Pindwara. The assessee filed his return of income on 29/09/2009 declaring an income of Rs. 6,31,114/-. Later on, case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer....
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....g opened a bank account at Neem Ka Thana and this bank account had not been disclosed to the department. The Assessing Officer rejected the assessee's contention by holding that the assessee had given contradictory explanation at different stages to escape the tax liability. As regards the receipt of Rs.1,79,776/-, it was explained by the assessee that the said work done pertained to last financial year and the bill was tendered in March, 2008, however, TDS was deducted in April, 2008. The assessee also stated that the register and other bank accounts were lost in the transit and therefore, could not be produced. The Assessing Officer did not find merit in the submissions of the assessee and made the addition of Rs. 24,09,162/- (Rs.22,29,386/- + Rs. 1,79,776/-) by observing that the assessee had not disclosed the said receipts. No separate addition was suggested for other defects by observing that the addition on account of suppressed receipts would cover the additions and disallowance to be made except that specific addition for contravention of provisions of section 40A(3) of the Act. 4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and made the follow....
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....id not carried all this contract work till December, 2008. The copy of sub-contract agreement is enclosed herewith. From this agreement it is pertinent that all expenses to complete this work was on account of sub-contractor, no expenses has been debited in the Books of Accounts of sub-contractor in lieu of Net Profit of Rs. 1,50,000.00. As a dispute arised with sub-contractor, even this sum of Rs. 1,50,000.00 being Net Profit also not received. The only error on the part of the assessee is the receipt of Rs. 24,09,162.00 be applied or at the most a Net Profit recoverable from petty contractor of Rs. 1,50,000.000 must be added in the income of the assessee, by learned A.O. instead of total receipts of Rs.24,09,162.00. 2. Regarding Rs. 1,79,776.00 we are enclosing herewith a payment vouchers of FLSMIDTH in which bill dated 16.03.2008 which relates to Assessment Year 2008-09 not covered under the assessment year. This controversy must have arose in the mind of the A.O. because this amount was deposited in April, 2008. '"Assessee has not debited any expense relating to contract receipt of Rs. 24,09,162.00. The findings given by the learned A.O. in his order at para (a) of ....
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....d only after the audit of the books of the assessee and it was supposed to take into consideration all the receipts and expenses. Learned CIT(A) also observed that the case-laws relied upon by the assessee were distinguishable as these were regarding application of NP rate on the suppressed sales, whereas in assessee's case it was the receipts, which had not been shown while expenses had been claimed. Learned CIT(A) confirmed the addition of Rs. 22,29,386/-. As regards addition of Rs. 1,79,776/- claimed to have been related to last financial year, learned CIT(A) observed that the assessee had submitted copy of payment voucher of FLSMDTH Pvt. Ltd. as per which, the bill was submitted on 16/03/2008, which represented services charges for cooling fan and as the assessee was following mercantile system of accounting, so the addition in this year was not tenable. Learned CIT(A) directed the Assessing Officer to verify as to whether the said amount had been shown in the A.Y. 2008-09 on accrual basis. Now, the assessee is in appeal. 7. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the entire receipts had been ad....
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....gular books of accounts. As regards to the remaining amount of Rs. 1,79,776/-, we do not see any infirmity in the direction given by the learned CIT(A) to the Assessing Officer to verify from the record as to whether the said amount was accounted for in the earlier year, but can't be added in this year. 10. The next issue vide grounds No. 1(b) & (c) and 2(b) relates to the sustenance of addition under section 40A(3) of the Act. 11. The facts related to this issue in brief are that the Assessing Officer made an addition of Rs. 97,360/- by observing that the assessee had debited Rs. 5,11,800/- in the audited books of accounts, which were related to the cash payments towards charges paid for the meals to the labourers and staff members in cash. The said addition was made by the Assessing Officer by observing that the assessee had not filed complete details to show how many employees/labourers dined in each month and as to whether the condition of their employment require free meals provision or not or the assessee was making any recovery from them. When the assessee carried the matter to the learned CIT(A), he enhanced the disallowance to Rs. 4,86,800/- by observing that the pro....