2017 (8) TMI 659

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....f Rs. 3,36,994/- made by disallowing stone expenses; (3) Deleting addition of Rs. 2,20,066/- out of total addition of Rs. 3,36,994/- made u/s 37 by disallowing labour expenses; (4) Deleting addition of Rs. 3,05,455/- made u/s 37 by disallowing sand expenses; (5) Deleting addition of Rs. 76,978/- made u/s 37 by disallowing hire charges and crane loader expenses; (6) Deleting addition of Rs. 3,35,000/- out of total addition of Rs. 5,44,160/- made by disallowing JCB (Hot Mix Plant); (7) Deleting addition of Rs. 1,60,000/- made u/s 40A(3); (8) The appellant craves liberty to raise additional ground and to modify amend the ground of appeal at the time of hearing." 2. Facts in brief given rise to the present appeal are that, the case of the assessee was picked up for scrutiny assessment and the assessment was framed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) vide order dated 25.03.2013. While framing the assessment the Assessing Officer made addition on account of disallowance of stone expenses liability of Rs. 56,18,294/-. The Assessing Officer further made disallowance u/s 37 of the Act ....

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....at the Ld. CIT(A) has called for Remand Report from the Assessing Officer and the Assessing Officer has not adversely reported in respect of these expenses. 5.3 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The Ld. CIT(A) has decided this issue as under:- "I have gone through assessee's submission and AO's findings. The main basis of addition in this case was that the AO had issued notices for appearance to the various supply creditors outstanding at the end of the year for expenses etc. as claimed by the assessee pertaining to the earlier years. The main suppliers were those of stone, granular sub-base and creditors in respect of hire charges & crane loader expenses. Besides the above, the AO also made addition on account of current year's purchases on the adhoc basis. The AO had initially noticed that the assessee had produced only copy of ledger without any bills & vouchers. The confirmations produced were required to be test checked through statements of some of these creditors. Out of the various persons whom the AO has listed out for examination under different c....

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....ors. All the persons have confirmed the account related transactions with the assessee sh. Sampat Kumar Jain. The creditors also mentioned that the accounts were duly maintained by the assessee & his accountant. He was also provided copies of identity documents, confirmed amounts & note diaries etc. which had details of accounts of these parties in the books of assessee. In his forwarding letter, the AO has not commented adversely on the findings required to be verified on account of additions made in the original order. Apparently the creditors named by the asessee in the original list were not bogus if on test check basis statement of the 9 persons who were examined by the AO vide remand proceedings are to be considered. On his part the assessee has discharged the onus cast upon him. Under the circumstances, except for those creditors who on cross examination by the AO either did not confirm the assessee's version or those who did not appear before the AO for examination viz. Sh. Ramdev Gurjar, the other creditors outstanding could be said to be verified on test check basis. Thus out of the addition made by the AO under the following heads- Sto....

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....fore, same cannot be sustained in view of the fact that the assessee has not placed any bills and vouchers for supporting its claim. Hence, he restores the finding of the AO on this issue. On the other hand he restricted the disallowance on adhoc basis. Therefore, we set aside the order on this issue and confirm the finding of AO. This ground of Revenue's appeal is allowed. 7. Ground no.3, is against restricting the disallowance made out of the Labour Expenses. 7.1 Ld. Departmental Representatives supported the order of the Assessing Officer. 7.2 On the contrary, Ld. Counsel for the assessee supported the order of the Ld. CIT(A). 7.3 We have heard the rival contentions, the Ld. CIT(A) has restricted the disallowance on adhoc basis at the one hand he has confirmed that the assessee has not keeping proper record and the Assessing Officer has made disallowance @ of 5% of the total labour expenses that appears to be justified. Therefore, we set aside the order of Ld. CIT(A) and restore the finding of the AO. This ground of Revenue's appeal is allowed. 8. Ground no. 4 is against deletion of addition of Rs. 3,05,455/- made on account of disallowance on Sand Expenses. 8.....