TaxTMI 
TaxTMI 
2010 (6) TMI 809
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....re, for the sake of convenience, these two appeals have been consolidated and hereby decided by this common order. Ground No.1 for Assessment Years 2003-04 & 2004-05 3. The issue is in respect of disallowance of payments to subcontractors by invoking the provisions of section 40A(2)(b) of the I.T. Act, 1961. For Assessment Year 2003-04 the quantum of addition was Rs. 2,50,000/- and for Assessment Year 2004-05 the quantum involved is Rs. 4,68,707/-. 4. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 24/03/2006 as culled out from the lead Assessment Year 2003-04 were that the assessee in his individual capacity was engaged in the business of civil contractor. It was noti....
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....ious details such as bifurcation of rate applied of labour work as also item-wise measurement was not given, therefore, the payments were excessive as per the provisions of section 40A(2)(b) of the I.T. Act, 1961. The Assessing Officer has decided to disallow 10% of the claim with the result an addition of Rs. 2,50,000/- was made as per the following calculation:- Shri Bharat R.Makwana Rs.10,95,758 Shri Jignesh H.Prajapati Rs. 7,15,623 Shri Rohit H.Makwana Rs. 6,88,619 Total Rs. 25,00,000 @ 10% = Rs. 2,50,000 5. Like-wise for Assessment Year 2004-05, the 10% disallowance was calculated in the following manner:- Shri Jignesh H.Makwana Rs.14,21,245 Shri Rohit H.Makwana Rs.10,35,980 Shri Deepak H.Makwa....
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....e. Since the assessee has not discharged the onus, therefore, the issue is covered by the decision of CIT vs. Shatrunjay Diamonds reported as (2003) 261 ITR 258 (Bombay). 8. We have heard both the sides at some length and also carefully perused the orders of authorities below in the light of the compilation filed before us. Certain important points as raised before us for consideration were that the accounts being audited as prescribed u/s.44AB of the I.T. Act, 1961, therefore, there was no reason to disallow the claim of expenditure. That the subcontractors were separately assessed to tax by filing their respective returns. That the TDS was deducted on the said payment and the details were furnished before the Assessing Officer. Finally....
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....e was placed on the decision of ITAT Jodhpur Bench in the case of Neha Proteins vs. Asst.CIT reported as (2004) 83 TTJ (Jd) 236. In this context, one more decision, viz. Shyam Oil Cake Ltd. vs. Asstt.CIT reported as (2004) 83 TTJ (Jd) 414 has also been cited. In one of the case of Bativala & Karani vs. Asst.CIT reported as [2005] 2 SOT 379 (Mum.) an observation was made that the unreasonableness should be based upon some subjective perceptions of the Assessing Officer and disallowance should be based upon some cogent material on record. Since in the present case, these basic requirements were wanting, hence, we are of the view that the approach of the Assessing Officer of adhoc disallowance was unwarranted, therefore, cannot be approved in ....
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....00/- was made. 10. When the issue was carried before the first appellate authority the action of the Assessing Officer was affirmed mainly on the ground that there was nothing to stop the assessee from making payment by cheque. In his opinion, once the assessee as well as the sub-contractors, both of them were having bank accounts, therefore, there was no reason for making the cash payments. Since the action of the Assessing Officer was affirmed, therefore, the assessee is now further in appeal. 10.1. From the side of the appellant, Shri M.G. Patel, Learned Authorised Representative of the assessee placed the following reliance:- Sl.No(s) Decision in the case of ... Reported in... 1. CIT vs. Kothari Sanitation & Tiles P....