TaxTMI 
TaxTMI 
2015 (10) TMI 797
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....y the Bench on 21.6.2013. By the MA order dated 27th September, 2013 the MA was partly allowed and the recalled matter was posted for hearing on 7.7.2014 before us. 3. Facts of the case are that the assessee is carrying on civil contract works and filed its return of income for A.Y. 2009-10 on 30.09.2009 declaring income of Rs. 10,88,270. During the course of assessment proceedings the assessee was asked to produce vouchers for the expenditure towards labour charges, sand, dust, freight charges, etc. The Assessing Officer held that major portion of expenditure was not verifiable and due to such non availability of vouchers for more than 48% of the expenditure claimed, the book results were to be rejected u/s. 145 of the Act and the incom....
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.... not impressed the way such register was maintained, instead, the AO was of the view that all the individual vouchers for all the labourers for their weekly labour payments needs to be maintained. For this reason, the AO has rejected the books of account and resorted to estimation at 12.5% on the gross receipts minus recoveries. The CIT(A) stated that nothing wrong could be attributed to the way the evidences were maintained for labour payments, nevertheless he pointed out that maintaining individual vouchers could be more authentic. The CIT(A) further stated that there is no mala fide intention on the part of the assessee and merely because leakage of revenue is suspected from maintaining the evidences for labour payments, the whole lot of....
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....ents along with the books of account on 14-11-2011 including the labour vouchers obtained from all the 33 members along with the above mentioned sheets with either signatures or thumb impressions of all the labourers acknowledging the receipt of payments made to them. 10. The AR submitted that though the assessee produced bills and vouchers in respect of expenditure claimed in the profit & loss account along with books of account and other relevant details as sought by the Assessing Officer on 14.11.2011, the Assessing Officer issued a letter on 23.11.2011 mentioning that "Please state as to why income should not be estimated as no proper bills and vouchers are furnished". Copy of the assessee's letter submitted on 14-11-2011 as well....
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....No. 4) of the assessment order. Copy of the assessee's letter dated 16-12-2012 is brought on record as document No. 9. 12. The learned DR relied on the order of the Assessing Officer. The learned DR further submitted that these impressions appeared to be similar and hence cannot be relied upon. The learned DR pointed out that in point No. 6 the Assessing Officer stated that vouchers should be available from the persons to whom the payments were made, either their signature or thumb impression should be available. Only then it can be said that the expenditure is verifiable. The DR stated that instead of signature or thumb impression of individual labourers 33 honest members have been selected as agents which makes the expenditure unve....
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....ion but to disallow part of the expenses on ad-hoc basis. Therefore, the CIT(A) was not justified in allowing the expenditure claimed by the assessee in toto. Considering the totality of the facts and circumstances, we are of the view that a disallowance of 5% of the expenditure under both the heads would serve the purpose. We order accordingly. The ground raised by the department is partly allowed." 16. The learned counsel further submitted that following decision in the case of Sainath Real Estates (P) Ltd. the disallowance shall be restricted to 5% of the cash payments. 17. In our opinion, since the assessee has proved that it has produced proper bills/ vouchers and the Assessing Officer has confirmed the availability of relevant n....