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TaxTMI 
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TaxTMI 
2018 (6) TMI 553
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....ur expenses and piece work charges. 2. The adhoc addition at 5% of labour expenses and piece work charges confirmed by CIT(A) is unjustified, unwarranted and excessive. 3. The Hon'bie CIT(A) erred in confirming addition at Rs. 24,82,241/- on account of VAT refund. 4. The addition made by A.O. at Rs. 24,82,2417- and confirmed by CIT(A) on account of VAT refund is unjustified, unwarranted and excessive when the assessee has paid VAT and refund of the same is not final. 5. The assessee denies liability to be assessed to interest u/s. 234A, 234B & 234C of income Tax Act 1961. Without prejudice the interest levied u/s 234A, 234B and 234C is unjustified and unwarranted. Apropos disallowance of labour exp....
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....itted in assessment proceedings, that sum of Rs. 8,97,18,318/- is shown as sub-contract piece work and sum of Rs. 1,37,53,409/- under the head labour contract. The total of aforesaid sums is Rs. 10,34,71,727/-. That the assessee has claimed piece work charges at Rs. 10,34,71,727/- in Profit & Loss Account. That thus there is no variance as observed by A.O. in respect to piece work charges claimed as per books of accounts and VAT Audit Report. That the observation of Assessing Officer for making addition on this ground is factually incorrect. That the labour charges paid by the assessee are in cash. It is a matter of common knowledge that labour charges are paid in cash considering the sites are at replaces and are not supported by banking f....
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....isallowance of total of these expenses is found reasonable and justified. Accordingly, addition of Rs. 61,63,854/- (5% of Rs. 1,98,05,360 + Rs. 10,34,71,727) is, hereby, confirmed out of Rs. 1,33,17,977/- made by the AO." 5. Against the above order, the assessee is in appeal before us. 6. We have heard both the counsel and perused the records. The Learned counsel of the assessee submitted that assessee is engaged in the activity of execution of government contracts of executing works for PWD Department. The area of execution of work is spread out at remote places. Payments made by the assessee on account of piecework are recorded in the books of account. These payments have been made through banking channel and tax deducted at source.....
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....sidered the submissions and perused the records. We find that assessing officer has made ad hoc disallowance out of the labour expenditure for absence of proper vouchers. The assessing officer has also referred to discrepancy between figures of assessee and that as per VAT audit report. The ld. Commissioner of Income Tax (Appeals) in his order has given a finding that assessing officer's observation that the figures by the assessee are at variance with VAT audit report, is not correct. Furthermore, the ld. Commissioner of Income Tax (Appeals) has observed that assessee's profit shown this year was better than that declared in the preceding assessment year. Despite finding so much fallacy and by rejecting the disallowance by the asse....
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....erty in the profit & Loss account. In response to this the assessee claimed that he accounts for VAT refund on receipt basis hence the same is not shown in the Profit &Loss account. The assessee further stated that VAT refund is finalized after finalization of tax audit. This was not accepted by the Assessing Officer. He observed that this is also not acceptable as the assessee is expected to have full knowledge of his own books of accounts and transactions for the year, which is audited and closed. He held that the Assessing Officer made the addition of the said amount. 10. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) confirmed the addition by holding as under: 10.2 The appellant in the VAT retur....
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....usal of order would indicate that in the case of assessee in VAT assessment order dated 20/01/2016 passed u/s 23(3) of MVAT Act 2002 by ACST Washim demand of Rs. 404.62 lacs has been raised against assessee for the year under consideration. The assessee filed an appeal against aforesaid demand. The appeal of assessee is allowed and refund of Rs. 23.52 lacs is determined vide order dated 25/04/2017. Thus real income of assessee in respect to VAT refund accrues in Financial Year 2017-18 and same is liable to be assessed in assessment year 2018-19. (P-16 - 19) [Vol.-l]." Reliance on: i) (2017) 184 TTJ 0275 (Mum.) Asian Paints Ltd. vs. DCIT ii) (2011) 55 DTR 0014 (Punjab & Haryana) CIT vs. Nuchem Ltd. 13. Upon care....