AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 663
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....nd circumstances of the case in the hands of the assessee. 3. The brief facts of this issue are that the assessee is an individual engaged in the business of civil contract and labour contract. The assessee had filed its return of income in the A.Y.2015-16 on 27/05/2016 declaring total income of Rs. 1,12,82,240/-. The assessee is running a proprietary concern in the name and style of M/s. M.J. Construction and Senghani Associates. 3.1. A search and seizure action was carried out u/s.132 of the Act in the Runwal Group of cases and assessee being a labour contractor of Runwal Group was also covered in the said search action. In the course of said search action carried out in the premises of the assessee, certain incriminating documents were found and seized wherein it was noticed that certain unaccounted payments made in cash by the assessee were found. The assessee explained at the time of search itself in the form of statement that the source of these unaccounted payments are unaccounted receipts of Rs. 8,70,00,000/- from M/s. Runwal Developers Pvt. Ltd., for the contract work carried out for them. In other words, in the course of search of the assessee unaccounted labour payment....
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....d as unaccounted income of the assessee. It was also pleaded by the assessee that in the line of business of labour contractor, labourers have to be paid on a periodic basis which is normally weekly / daily and if the labour contractors are not paid in time by the client, labourers cannot be paid in time and this may result in stoppage of work. So, the clients of labour contractors ensure that payments to the latter are not delayed. Accordingly, the claim of the assessee made in his statement on oath at the time of search action that M/s. Runwal Developers Ltd., had made contract payments in cash as per temporary arrangement with the assessee cannot be rejected unless there is some specific evidence to show otherwise. The ld. CIT(A) observed that Runwal Group in the hands of M/s RDPL has offered amounts of Rs. 7,36,15,000/-, Rs. 6,69,62,205/- and Rs. 1,25,00,000/- for taxation as additional income on account of undisclosed sales of shops, residential premises etc. in its project 'Runwal Anthurium' for A.Ys. 2014-15 and 2015-16 respectively. M/s RDPL has not retracted from the said disclosure except that it claims that the said amount of on-money is taxable in the year when ....
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.... labourers and labour contractors for various projects. Payments to labourers are made in cash whereas payments to sub-contractors are made in cheque. Q.14 Please give exact detail and source of cash payments made to the labourers. Ans. Sir, in case of all the works being executed, source of cash payment is withdrawal from bank which are duly reflected in my books of accounts. But, in case of project ' Runwal Anthurium' being developed by M/s. Runwal Developers P. Ltd., major source of cash payment is cash received from Runwal Group against contract work done by us as they had no bank balance to clear our bills through official banking channels. An informal arrangement was reached between us and Runwal group employee Sujmata Rao that as soon as they will get funds, the bills raised against the contract will be cleared and after encashment, the cash will be returned to them. Till date, we have received total amount of Rs. 8.70 crore in cash against bills raised by M/s. M.J. Construction and M/s. Senghani Associates. These amounts were collected on difference occasion in last one year by my son Mr. Sanjay Senghani from Miss Sujata Rao, employee of Runwal Group. Once, ou....
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....ghani Associates. From the residence premise of Shri Himmatbhai Senghani certain loose papers were seized. The papers contain details of labour payment made in cash. Shri Himmatbhai Senghani was confronted with the same. The relevant extract of his statement recorded under oath is reproduced hereunder: Q. 13 "Please go through Page No, 36 to 64 of Annexure-A1 ,and comment on the same. Ans. These pages contain the details of payments made to labourers and labour contractors for various projects. Payments to labourers are made in cash whereas payments to sub-contractors are made in cheque. Q.14 Please give exact detail and source of cash payments made to the labourers. Ans. Sir, in case of all the works being executed, source of cash payment is withdrawal from bank which are duly reflected in my books of account But in case of project Runwal Anthurium being developed by Runwal Developers Pvt. Ltd. the major source of cash payment is cash received from Runwal Group against contract work done by us as they had no bank balance to clear our bills through official banking channels. An informal agreement was reached between us and the Runwal Group, the bills raised against the co....
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.... said person were only by account payee cheques and after duly deducting taxes as applicable. There were no payments made by the assessee group to them which are paid in cash or are unaccounted or paid through any unexplained sources for that matter." 8.4 On the subsequent query to the issue of payment made to Shri Himmatbhai Senghani, the representative of the assessee has submitted explanation which reads as under:- "The present submissions are being made without prejudice to the fact of the assessee any vehemently denying any unaccounted payment made to Shri Himmatlal Senghani alias Shri Himmmat Patel as mentioned in the past submissions made by them before your goodself in the past hearings had with you. It would have to be appreciated that in case it is still being alleged by your goodself that the what has been stated by the said Shri Himmatbhai Senghani may be true and in case your goodself proceeds to frame any addition on account of the same, please note that while the same would be incorrect owing to the reasons already provided to-your goodself, in case the receipts are being considered to be on money taken by the assessee company, then the credit towards the expense....