TaxTMI 
TaxTMI 
2011 (7) TMI 1267
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....he learned CIT(A) erred in confirming the entire addition of Rs. 34,53,812 made by the learned Assessing Officer in respect of alleged inflated labour charges, without appreciating the fact that the appellant has paid consolidated charges to the contractors towards godown charges, inward transport, octroi, warpins, sizing, beam setter, dropin charges, weaving, jobber, clipping, folders, outward transport, electricity, mill stores spares, lubricant and hamal charges, which are claimed under the head 'labour charges'. 2. Learned representative submit that whatever is decided in the case of B K Textile Corporation ( AY 2004-05 and 2005-06), group appeals which were heard alongwith this appeal, will follow in this case as well. It is agreed ....
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....e expenses. It was also accepted that similar exercise was also conducted by other group concerns, and that no job work is outsourced by any of the manufacturing concerns, and that the grey cloth shown to have been manufactured through outsourcing is actually made with the help of the infrastructure of the concern claimed to be outsourcing the work. The statements of some persons, whose bank account cheque books etc were so found, were also recorded and they confirmed that they are salaried employees of the group concerns and that they donot get anything other than their regular salaries, that their PAN cards, income tax returns and all such documents are only with the employer, that all the transactions in these accounts are being done by ....
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....itted that the rate at which contractors are actually paid is Rs. 4 and Rs. 4.50 in the years 2004-05 to 2006-07, and not Rs. 6 as observed by the Assessing Officer, and, in consideration of payment so made, the contractors have rendered proper and sincere services. The Assessing Officer rejected these submissions, noted that ,as evident from the material found during search proceedings, the assessee was engaged in systematic and large scale inflation of expenses, that the net profit disclosed by the assessee in all these years in exceptionally low between 0.5% to 2%, and that the assessee has not produced any stock register for verification. The Assessing Officer adopted the labour charges allowable at Rs. 1.50 per meter, as admitted by th....
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....ri and Jagmohan Mayrna, have all stated to be employed on salary basis, and bank accounts in their names are maintained by the employer. They have further stated that they sign on blank cheques and hand over the same to the employer. It is also established that cheques are deposited into bank accounts of the above mentioned labourers and cash is withdrawn by the employer. The AO has also found that the assessee has claimed the labour charges @ Rs. 6 per meter, whereas the actual payment has ranged from Rs. 1.5 to Rs. 2 per meter. Keeping in mind the other expenses, the AO has allowed labour charges @ Rs. 3 per meter. This, according to me, is fair enough and I, therefore, hold that the order of the Assessing Officer does not suffer from ....
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....nted out to the learned counsel that, as noted by the Assessing Officer, stock records were not produced before him, and this factual observation of the Assessing Officer has neither been challenged in appeal before the CIT(A) nor controverted even in the statement of facts on record. The statement of the learned counsel regarding availability of stock records before the Assessing Officer is thus not borne out of the material on record, and, therefore, we cannot proceed on the basis that the stock statements were indeed produced before the Assessing Officer. As there was no contemporaneous record of quantities, we need not be guided by the stock registers which were not available at that point of time. We, must, therefore uphold the action ....
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....able at that point of time, whereas the years before us pertain to earlier period. To sum up, while we confirm the action of the authorities below in principle, we remit the matter to the file of the CIT(A) for the limited purposes of making corrections of quantities and rate difference, if found admissible, in the light of observations made hereinabove. We direct the assessee to fully cooperate in expeditious disposal of the remanded proceedings and make it clear that in the absence of assessee's furnishing the required details and pointing out specific mistakes, if any, in the computations in Tax Audit Report quantitative details and computations in the assessment order, no relief will be admissible. We also direct the CIT(A) to give a du....