TaxTMI 
TaxTMI 
2017 (10) TMI 622
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....hrough bearer cheques. During the year, an amount of Rs. 7,36,129/- has been paid to Shri Dinesh Ojha and Rs. 22,73,130/- was paid to Shri Dagdu Kadam . As per the assessee the actual payments through Shri Dagdu Kadam were to the tune of Rs. 16,07,870/- and not Rs. 22,73,130/-. It was stated during the course of statement recorded u/s 131 these were collected for the purpose of disbursement of the labour/wages and also produced sheet of signatures of the recipient of the labour payments. However, the AO issued show cause notice dated 13.2.2013 to the assessee to show cause as to why the payments to these two persons should not be treated as non-genuine, which was replied by the assessee on 19.2.2013 submitting therein that Mr.Dagdu Kadam is a supervisor who is responsible to visit and look after various sites and pay daily labour/salary on the sites also. However, the AO did not accept the contention of the assessee on the ground that Mr.Dinesh Ojha in his statement recorded on 25.4.2012 stated that he has not taken any cash and denied to have made any such payments, however, Shri Dinesh Ojha stated that he gave cash payments when requisition was received from the Supervisor. The A....
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....e AO is directed to verify the amount of Rs. 16,01,807/- and /or Rs. 30,09,259 from relevant records and disallow the amount relating to current year only." 5. We have carefully considered the rival contentions and perused the material placed before us including the orders of authorities below. We find that the assessee is a contractor and developing/working on various sites for which labourers were employed and supervised by Shri Dada Kadam and he used to disburse the salaries in cash at the sites by taking the same on the basis of requisition from Mr. Dinesh Ojha who was cashier of the assessee. During the course of hearing before us, the assessee produced the some sample receipts taken from the laborers which proved that the assessee has maintained books and other records of the payments to the laborers. It is customary in the business of construction to pay wages through the Supervisor/munshis and therefore, we are in agreement with the conclusion drawn by the ld.CIT(A) that all these payments were not genuine. However some reasonable disallowance should meet the ends of justice as the assessee has failed to furnish the necessary documentary evidences before the lower author....
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....ing 28.81 % profit on the amount of WIP and allowing 20% towards cost to be incurred at the final stage of execution of the work. In the appellate proceedings, the ld.CIT(A) dismissed the appeal of the assessee after considering the reply and arguments of the assessee as incorporated in para 6.1 of the appellate order by observing and holding as under : "6.2 I have considered the facts and circumstances of the case, the submissions of the appellant and the assessment order. It is verified fact that billing of the goods physically delivered to the clients was not done and same were accounted in work-in-progress. It is strange to the Accounting Standards/norms that once goods are delivered to the clients, the same amounts to sale and there is no justification for retaining the amounts of such sale under work-in-progress. In fact, delivery of goods in case of movable articles amounts to completed sale and it is liable to be accounted as sales. Retaining such amounts in work in progress is complete negation of a transaction and amounts to its wrong accounting when it is included in work in progress. The AO has discussed in detail bringing on record that the delivered goods amo....
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.... on behalf of the various clients. The nature of business of the assessee is such that materials are normally delivered at the sites of the customers/ contractor's and necessary modifications and fittings are done at the site of the project. At the yearend incomplete work is shown as WIP. This is a regular feature in business of the assessee. The WIP is automatically accounted for in the next year and also billed accordingly depending upon the completion of work and profit on the said amount is offered to tax accordingly. We find merit in the submissions of the ld.AR and has gone through the previous years in which the ld.CIT(A) has deleted the similar additions made by the department. The department has not further appealed before the higher forum. In view of these facts and circumstances we are of the considered view that the order of CIT(A) is not correct in upholding the additions and therefore we reverse the same and direct the direct the AO to delete the addition. 11. The issue raised in ground no.3 is against the confirmation of disallowance of Rs. 15,70,393/- being 10% of the cash expenses incurred . 12. During the course of assessment proceedings, the AO observed tha....