TaxTMI 
TaxTMI 
2022 (11) TMI 462
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....eal, the assessee has raised following grounds: "1. The learned CIT(A) erred in confirming the disallowance of Rs. 12,47,574/- being 10% of labor charges paid in cash. 2. The learned CIT(A) further erred in confirming the disallowance of Rs. 79,48,296/- being 10% of sub contract expenses paid." 3. The issue arising in ground No. 1, raised in assessee's appeal, is pertaining to disallowance of 10% of labour charges paid by the assessee in cash. 4. The brief facts of the case, as emanating from the record, are: The assessee is a firm and is engaged in the business of construction of roads, small bridges, irrigation, etc. in remote areas. For the year under consideration, the assessee filed its return of income on 01/11/2017, declaring t....
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...., site address etc have not been submitted. In the absence of all these details, it is not possible for the AO to cross-examine the claim of labour charges of the assessee. Assessee's explanation is not supported by proper evidences. Further, as discussed above, the labour charges claim is not found to be verifiable in the absence of proper details etc as discussed in above Para. Therefore, considering the nature of business, quantum of labour expenses in cash and non submission, non compliance at various occasions, 10% of the labour charges paid in cash is disallowed and added to the total income of the assessee. Disallowance and addition on this account comes to Rs. 12,47,574/-. Penalty proceedings u/s. 270A of the Act are initiated s....
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.... submitted that no disallowance was made on this issue in these assessment years. 7. On the other hand, learned Departmental Representative ('learned DR') vehemently relied upon the orders passed by the lower authorities and submitted that assessee is required to maintain some records particularly when it is in a continuous business since past so many years. 8. We have considered the rival submissions and perused the material available on record. In the present case, assessee has claimed to be in business of construction of roads, small bridges, irrigation, etc., in the remote areas, since past 30 years. As per the assessee, it takes the contract for construction from PWD, Central Railways, etc. During the year under consideration, assess....
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....pted. Since, in the present case neither assessee could provide complete details in support of its claim nor Revenue treated the entire payment to be bogus, therefore, we deem it appropriate to restrict the disallowance of labour charges paid in cash to 5%. We order accordingly. As a result, ground No. 1 raised in assessee's appeal is partly allowed. 10. The issue arising in ground No. 2, raised in assessee's appeal, is pertaining to disallowance of sub-contract expenses. 11. The brief facts of the case, as emanating from the record, are: During the assessment proceedings, upon perusal of profit and loss account it was noticed that assessee has debited sub-contract charges amounting to Rs. 7,94,82,965. Accordingly, the assessee was asked ....
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....CIT(A) vide impugned order dismissed the appeal filed by the assessee on this issue, by observing as under: "14. The appellant has neither provided details during assessment proceedings nor at appellate proceedings complete names, addresses, telephone numbers, nature of work carried out by them with evidences, supporting bills and agreement before the appellant and the sub contractors. On these circumstances and lack of evidence, genuineness of the transactions could not be verified. Regarding the fact that similar issue was accepted in earlier years, reliance is placed on Hon'ble Supreme Court's decision in the case of Instalment Supply (Pvt.) Ltd. & Radhasoami Satsang Vyas, wherein it has been held that each assessment year is a....
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....the assessee has not provided complete names, address, telephone No. of the sub-contractors, nature of work carried out by them with evidence, supporting bills, work orders, agreement between assessee and the sub-contractors, etc. From the record it is evident that even after receipt of PAN details of the parties, to whom sub-contract amount was paid by the assessee and TDS being deducted, no further action was taken by the AO either by issuing notice under section 133 (6) of the Act or by issuing summons under section 131 of the Act to these parties, in order to determine the veracity of assessee's claim. It is also evident that the AO has also not cross verified the details of TDS amount furnished by the assessee from the record available....