TaxTMI 
TaxTMI 
2016 (1) TMI 1031
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....-. 4. The assessee has paid total wages of Rs. 94,31,368/- during the previous year. The learned assessing officer (Hereinafter called "the AO") asked the assessee to produce the wages register. From the wages register it was observed by the AO that most of the payments have been endorsed by the thumb impression and at places there were no proper stamps. It was also observed by the AO from the month wise summary of the wages that there was no consistency in the amount of the wages being paid and there is sudden abrupt rise in the amount of the wages paid during some months like March and December. The AO observed that there was no co-relation between the wages paid and work done for different months. Therefore, it was observed by the AO that the Gross Profit ratio of 19.2% shown by the assessee is low as compared to normal gross profit ratio in this line of business. Therefore, 15% the total wages paid i.e. Rs. 14,14,705/- was dis-allowed by the AO for want of proper check and verification and added to the total income of the assessee vide assessment orders dated 24/12/2010 passed u/s 143(3) of the Act. 5. Aggrieved by the assessment orders dated 24/12/2010 passed u/s 143(3) ....
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.... the Auditors. The learned AC was provided with all the relevant details, explanations, information and from time to time to substantiate all the figures of Profit & Loss A/c during the Assessment Proceedings u/s 143(3). No irregularities were found by the learned AC during the verification process. The Ad hoc disallowance of Rs. 14,14,705 @ 15% of Total Wages of Rs. 94,31.368/- is purely based on surmises and conjecture and not substantiated by any authentic evidence. To substantiate the above, the Ld. A.R. relied upon the following judicial pronouncements. Appellate order No. CIT(A)C-1-AP/411/07-08 dated 31/12/2008 in case of M/s Rushi Housecon Pvt. Ltd. which has been upheld by the H'ble ITAT, Bench D, Mumbai as per order ITA No. 1153/MUM/2009 dt 25/03/2010. Unless there is a limitation put by the law on the amount of its expenditure, a lesser amount than the amount expended cannot be allowed merely because the assessing authority thinks that the assessee could have managed by paying lesser amount as a prudent businessman - Jamshedpur Motor Accessories Stores v. CIT (1974) 95 Taxman 664 (Pat). Punjab & Haryana High Court in the ca....
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.... appeal on merits after perusing the material on record and after hearing ld. DR. 9. We have observed that the assessee is engaged in the business of Civil Construction as Civil Contractor. The assessee has paid wages of Rs. 94,31,368/- for which the assessee has produced the wage register before the AO, in which in some cases, there was no thumb impression of the workers and in some case, the stamp has not been affixed as per findings of the AO, thus in nutshell there were some deficiencies in the wage register as noted by the AO. However, The AO has not brought on record any cogent material that these wages are bogus or fictitious and are not paid by the assessee but has rather brought out some generalized technical deficiencies in the wage records maintained by the assessee but has not pointed out any specific defects. The AO has not pointed out specific defects in the wage register rather he chose to make adhoc disallowance based on general and technical deficiencies in the wage register. The books of accounts of the assessee were duly audited by the auditors and no defects were pointed by the auditors. The AO has also not rejected books of accounts u/s 145 of the Act. The a....
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....(A) erred in deleting the addition of Rs. 5,84,752/- made by the A.O. out of salary and bonus expenses without appreciating the fact that the assessee did not submit the details of above expenses during assessment proceedings without which necessary verification could not be carried out in the assessee's case." (iii) "On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the above addition on the basis of fresh evidence produced/submitted before him and thereby did not follow the provisions of Rule 46A of Income tax Rules." (iv) "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in holding that submission of details of sub-contract charges along with the photocopies of bills of sub-contractors and deduction of TDS from such sub-contract charges are sufficient compliance of query raised by the A.O. when no details as per specific queries of the A.O. (asking for names, address, amount paid, TDS deducted etc. so that verification could be made) were furnished during the assessment proceedings. (v) "On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in....
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.... not filed further desired details by 16-12-2011 but filed further replies on 19-12-2011 and 20-12-2011. The AO framed the best judgment assessment u/s. 144 of the Act vide orders dated 16-12-2011, whereby several disallowances were made of the expenses aggregating to Rs. 3,27,97,131/- under various heads by the AO vide assessment orders passed u/s 144 of the Act dated 16- 12-2011, as under: (a) The assessee claimed following expenses in the Profit and Loss Account for the financial year 2008-09 i) Sub-contractor charges Rs.1,37,96,451/- ii) Transportation Charges Rs. 2,56,297/- iii) Wages Rs.1,53,50,684/- iv) Rent Rs. 1,85,500/- Rs.2,95,88,932/- The assessee did not filed the break-up details of sub contract charges i.e. name and address of the person, amount paid etc.,break up details of transportation charges, wages and details regarding TDS deducted and paid against the above mentioned expenses claimed in P & L A/c were not filed by the assessee and hence Rs. 2,95,88,932/- was treated as unexplained expenditure by the AO vide orders dated 16-12-2011 passed u/s 144 of the Act. (b) The....
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.... circumstances beyond the control of the assessee. Thus, the assessee submitted that proper and adequate opportunity was not provided by the AO to the assessee and the assessment u/s 144 of the Act was framed on 16-12-2011. It was observed by CIT(A) that the assessee has submitted the replies before the AO in Tapal/dak counters of the Revenue and the AO has not considered the replies filed even till 16-12-2011 i.e. date of framing of assessment order u/s 144 of the Act and the CIT(A) decided the appeal on merits after considering the replies of the assessee filed till 16-12-2011 i.e. the framing of assessment order u/s 144 of the Act, partly allowing the appeal of the assessee. The CIT(A) did not considered the replies filed on 19-12-2011 and 20-12-11 by the assessee in tapal/dak counter of the Revenue which was filed after completion of the assessment u/s 144 of the Act by the AO. a) Sub Contract Charges Rs. 1,37,96,451/- :- The CIT(A) observed that the assessee filed letter dated 01/12/2011 wherein monthwise details of Sub Contract charges along with photocopies of bills of Sub contractors were furnished. The CIT(A) observed that the assessee is a civil contract....
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....lied with Rule 46A of the Income Tax Rules, 1962 and principles of natural justice has not been complied with as the documents were additional evidences submitted by the assessee before the CIT(A) for the first time and the same was not forwarded by the CIT(A) to the AO for remand report which was required under Rule 46A of the Income Tax Rules,1962 and the orders of the CIT(A) is vitiated and need to be set aside and the orders of the AO be restored. 17. None appeared on behalf of the assessee when the appeal was called for hearing. We have observed that opportunities were earlier given to the assessee since 2013 and the assessee has not appeared despite service of notice and hence we are proceeding with the appeal on merits after perusing the material on record and after hearing ld. DR. 18. We have observed that the assessment was framed on 16.12.2011 by the AO vide assessment order u/s. 144 of the Act, whereby the AO has not even considered the replies filed by the assessee with tapal/dak counters of the Revenue till the date of framing of assessment u/s 144 of the Act on 16-12-2011 which the AO was obliged under law to consider on merits, and the best judgment assessment ....