TaxTMI 
TaxTMI 
2018 (6) TMI 886
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.... the ld. CIT(Appeals) out of labour charges claimed by the assessee. 2. The assessee in the present case is a partnership firm, which is deriving income from execution of labour contract job. The return of income for the year under consideration was filed by it on 22.03.2012 declaring total income of Rs. 9,11,548/-. In the said return, contracts receipts from two parties namely, Nilkanth Ferro Alloys and Cosmic Ferro Alloys aggregating to Rs. 1,76,08,511/- were declared by the assessee and against the said receipts, expenditure, inter alia, on account of labour charges was claimed at Rs. 1,25,40,767/-. During the course of assessment proceedings, the claim of the assessee for labour charges was examined by the Assessing Officer. In this ....
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....the Assessing Officer on account of labour charges and since the submission made by the assessee in support of its case on this issue was not found acceptable by the ld. CIT(Appeals), the later confirmed the disallowance made by the Assessing Officer out of labour charges for the following reasons given in his impugned order:- "It is evident from the assessment order of A.O that the labour payment to the extent of Rs. 38,68,613/- was treated as bogus labour charges due to the fact that P.F/ESIC was not deducted against such payment. A.Os' contention of treating the labour charges as bogus was also considered in the premises of nature of job woks carried on by the assessee, method of employment of labourer, identity cards of lab....
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....rted by the appellant which relates to Cosmic Ferrow Alloys Ltd. the assessee could not substantiate whether these employees are deployed directly by M/s. Cosmic Ferrow Alloys Ltd. or by Makali Enterprise. As per business pattern the appellant normally issues I. Cards to maintain its identity for sending them to the aforesaid concerns. As these I. Cards are essential in order to verify the identity of labours before deployment therefore documents submitted by these labours should have been in the possession of the assessee had it been genuine. As the assessee failed to produce the I.D. Proof of all the labours and documents deployed by it concern and mere submission of I.D. Proof without back up details on which basis even there few cards a....
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....ge registers placed on record and submitted that all the relevant details regarding the labour charges claimed as per the said registers were available before the Assessing Officer for verification. He contended that the Assessing Officer as well as ld. CIT(Appeal), however, brushed aside this vital evidence and made a disallowance out of labour charges merely on the basis that there was no deduction made by the assessee on account of PF & ESI contribution. He contended that the net profit of the assessee from the business of execution of labour contracts after the disallowance made on account of labour charges comes to more than 27%, which by itself shows that the relevant wages were not bogus as alleged by the authorities below. He conten....
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.... the basis of two wage registers was doubted by the Assessing Officer mainly on the ground that the wages claimed therein were not subjected to deduction on account of PF & ESI contribution. Although the reason for not deducting PF & ESI contribution from the said wages and maintaining separate registers for such wages was explained by the assessee, the Assessing Officer as well as the ld. CIT(Appeals) did not accept the explanation of the assessee and proceeded to treat the relevant wages as bogus mainly on the ground that there was no deduction made by the assessee on account of PF & ESI contribution. As rightly pointed out by the ld. Counsel for the assessee, the net profit of the assessee's business after such disallowance comes to more....