TaxTMI 
TaxTMI 
2018 (5) TMI 1384
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....10. The AO in the said order dated 29.12.2010 disallowed as bogus purchases to the tune of Rs. 10,37,732/-, labour charges to the tune of 71,81,150 and bogus sundry creditors to the tune of Rs. 53,15,886/-. Being aggrieved by the order passed by the AO the assessee preferred an appeal before CIT(A)-8, Kolkata which was disposed off on 22.09.2015 by allowing the same. Being aggrieved by the order of CIT(A) the revenue preferred instant appeal before the Tribunal with the following grounds :- "1. That the LD. CIT(A) has erred in deleting the addition of Rs. 10,37,732/- on account of Materials Purchased when the assessee was unable to substantiate the purchase neither at the assessment stage, nor at the remand stage, in spite of being given ample opportunity to do so. 2. That the LD. CIT(A) has erred in deleting the addition of Rs. 71,81,150/- on account of Labour Charges when the assessee was unable to produce even a single labourer neither at the assessment stage, nor at the remand stage, in spite of being given ample opportunity to do so, though each and every of the 83 labourers were present for work for each and every day of the year as per the weekly payment re....
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....2011 where from it appears that the assessee has given a list of 19 parties for the total purchase amount . Notices were issued to 15 parties by the AO , out of which 6 parties did not give any reply though considerable time was given to them. By a letter dated 11.07.2011 the assessee was asked to produce ledger, bill, voucher and cash book to substantiate his claims of purchase. These documents were produced by the AR on 21.07.2011 for verification purpose. There was no reply from the seller parties. He further pointed out that notice was sent to M/s Bhadrak Builders and the same was returned unserved with the postal remark "not known". Subsequently the AR produced the ledger of one party M/s. B.Builders and claimed that by mistake the same was given as M/s. Bhadrak Builders. Such information was given only after confronting with the facts mentioned above. However, the genuineness of the claim could not be verified. According to him the CIT(A) has picked up and shown some of the parties and deleted the addition made by the AO. 7. The ld. Counsel appearing on behalf of the assessee submitted that the return for A.Y.2008-09 was duly filed in time and the AO has not pointed out an....
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....ssee who engages the labourers. Therefore there was no contract. The laour payments are made respectively to the respective labours which is appearing from the records and not disbelieved by the CIT(A). He did not justify the action of the AO of disbelieving the labour charges as a result of "unserved " letters those were sent to all the 83 labourers. The CIT(A) further added that the labourers are on the move and working in different cities/different projects/different hirers and also are illiterate/low literacy. Therefore sending of letters is just perfunctory infructuous mode as that enquiry has been conducted. In the practical real life of business it is not the assessee's prime requirement/responsibility to act as a census agent and verify the residential address when in majority of cases will be that labourers do not have long enough period of residential address. The assessee itself pays the wages to the labourers. 11. We have considered the rival submissions and perused the relevant records. It is evident from the remand report dated 22.07.2011 that the AR by a letter dated 03.06.2011 submitted that no sub contract was given for labour expenses and all payments was made ....
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....aid in the year under consideration. We have also seen the weekly register of wages which is maintained by the assessee. We have seen the ledger and the cash book which have been placed before the AO. It appears from the register that the names and addresses of all 83 labourers are written serially in the register and all have received the money by putting thumb impression on the same. It is a fact that the labours are paid by the assessee directly and not through contract or sub-contract. Therefore section 194C of the Act is not attracted. We have also perused the profit and loss account for the year ended 31.03.2008 and the amount of works bill is of Rs. 1,37,60,588/- out of which labour charges are to the tune of Rs. 71,81,150/-. Therefore we do not find any infirmity in the order of CIT(A) and confirm the same. Thus ground No.2 raised by the revenue is dismissed. 15. Ground No.3 relates to the deletion of addition of Rs. 53,15,886/- on account of sundry creditors. While disallowing the amount of Rs. 53,15,886/- under the head "sundry creditors by the AO it is observed that during the scrutiny proceedings the assessee was asked to furnish the details i.e. name and address of ....
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....h four parties did not give any reply to the notice. By letter dated 11.07.2011 the assessee was asked to produce ledger in support of his claim. The documents were produced by the AR on 21.07.2011 for verification purpose. Further that the existence of one of the parties namely B.Builders was also proved by the assessee by producing the ledger & VAT registration certificate. The other unserved party is an individual and the balance differences in respect of the other 3 parties are petty amount which was substantiated by the assessee as due to non reconciliation of balance. 19. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the amount of sundry creditors in question was treated by the AO as the income of the assessee by holding the relevant creditors as bogus since the assessee had failed to furnish the relevant details called for by the AO in respect of the said creditors. During the course of appellate proceedings before ld. CIT(A), it was contended on behalf of the assesee that proper and sufficient opportunity was not given by the AO to furnish the said details and being satisfied with the same, the ld....